COMMENT
Car pooling has been in vogue for a long time; the paying guest concept has been there for at least a century, tour operators have been looking after all needs of their clients for several decades, but real ‘sharing economy’ has blossomed on the strength of modern technology.
The success of Under, Airbnb, TaskRabit is not a fluke but made possible because these companies mastered the art of taking full benefit of the available technology. They are successful because they provide hassle free and cheaper quality services that once were provided by well established companies in their fields. Carpooling is an example of large-scale sharing of private goods. The car owners bought a car that exceeds the immediate needs of most buyers. The buyer may be a lone traveller most of the time, but when buying the complete unit he/she buys excess capacity.
Another point worth considering is that most of the private cars remain idle for most of the time. This means that the potential economic value of the vehicles is not utilised. Sharing this facility bring some additional revenues for the owner. This is also true for a house that might have five bed rooms but only two occupants. Things like bikes, computers, and toys fall under the same category. Individuals buy these items for their personal use but what they buy has excess capacity that can be used by others when the actual owner is not using them.
All this excess capacity is what makes the sharing economy possible.
Car pooling in earlier years was between the neighbours or office colleagues who both used to go to office and come back the same route. Other individuals, needing a ride on the same route, at the same time every day, were not included in the pool because of lack of 24/7 communication. The same basic concept, technologically assisted, has been applied to nearly every aspect of modern life. And it’s enabled cost savings, convenience and environmental benefits on a large scale.
So the earlier concept of a collaborative economy has now been strengthened with the introduction of technology into the concept. Sharing economy is more visible in the transport sector because a lot of people own cars. The sharing economy giants like Uber, Airbnb, eBay, TaskRabbit owe their success to the combination of Big Data analytics, low-cost cloud storage, and prevalence of social media and widespread use of mobile devices. Online reviews are at the heart of the sharing economy.
The introduction of technology into the sharing concept has made all the difference. We are well aware that easy to use digital technologies, for example GPS, has empowered the service providers to quickly make and respond to requests for goods and services.
Sharing economy is a threat to hotels with large structures, car rental companies having large fully owned fleet of cars. These rental-based business models demand not only capacity but also infrastructure. Hotels for instance have to maintain properties, clean rooms, take reservations and provide a host of other services. In the same way car rental companies have to maintain and store cars that are not in use, schedule pick-ups and drop-offs, build and staff rental offices, and provide customer service.
Sharing economy companies like Uber and Airbnb don’t have to worry much about infrastructure. Yet Uber provides transport to more people in cities where it operates than the largest tax company. According to an Uber blog, it provided 140 million car rides in 53 countries and more than 250 cities in 2013 without owning any cars or employing any full-time drivers. Uber is operating successfully in Lahore and has recently launched its services in Karachi. Booking tickets and hotel rooms through Airbnb is popular in technology savvy middle class of our country.
Realistically speaking, the distinctive feature of the sharing economy through the use of technology is less about sharing and more about reducing costs by enabling vast numbers of customers and freelance workers to do business with each other, under the umbrella of the companies’ brands.
Sharing economy is a disruptive force in a slew of industries, particularly travel, consumer goods, services, taxis, bicycles and car rental, finance, music, employment, and waste. And the disruption may be long-term if the new businesses permanently change consumers’ attitudes towards ownership. The success of sharing economy companies lies in the trust that they have created among their customers. They select their partners after due diligence and make sure that they provide best services at minimum cost.
Sharing economy’s crudest form was visible even at the turn of this century in our villages where there is only one mechanic for repair of tube wells. He set the tunes of each tube well to a different rhythm. In case of malfunction, the tone of the changes and the villagers did not have to call him as he would himself rush to repair the fault.
The technology has also empowered technicians to remain available with their regular clients 24/7. This they do with analogue mobile phone sets where they can be approached through SMS or a call. But this facility does not provide the customer with a wide range of choices. There is only on mechanic who would come if free. A sharing economy company can be approached through its specific app.
A family for instance desiring to go to some place in the city has simply to send the request through that app and the nearest Uber vehicle would be at his door in minutes as the Uber fleet is large and all the drivers are selected after proper checks. The ride would be cheaper and comfortable than normal taxis available in Pakistan.
Sharing economy concept is new in Pakistan, but it is likely to spread very fast as the people are empowered with smartphones. Currently the usage of smartphones in Pakistan is 27 percent of all mobile phones used in our country. Few observers in the last few decades recognised carpooling as a vanguard phenomenon, but that’s what it was. The same basic concept, technologically assisted, has been applied to nearly every aspect of modern life. And it’s enabled cost savings, convenience and environmental benefits on a large scale.
The modern sharing economy is a new concept even in the developed economies but it is spreading there at a very fast pace. According to Copper Price Waters, the sharing economy has shown stellar growth. From modest roots, the international sharing economy reached about $15 billion in 2014, and it is on track to reach $335 billion by 2025. Public opt-in to the collaborative economy almost doubled from 2013 to 2014. Another report states that investors committed $4.93 billion to 71 deals related to the sharing economy in 2014, up five times from 2013.
The writer is a staff member
