The sharing economy is a fast-growing industry that many startups are launching in. However, because the sharing economy is still fairly nascent, it's highly probable that we haven't fully grasped the wide-ranging implications of this budding market. In this blog post, Ceren Süngü Kalpaklıoğlu of Pabbler (and Graduate of the Istanbul Founder Institute) outlines how companies in the shared economy space can effectuate a broad positive change in the world.
In this new and developing world, there are countless ways to overcome our problems and attend to our needs. There used to be only “large companies”, which, while dominating the sectors, were only able to provide certain services. If a company becomes they monopoly they can concentrate their wealth and power. The problem of monopolization has been a constant problem, and the U.S government is trying to fight against this phenomenon through antitrust laws since the 1980’s. Regarding this fact, as Pabbler, we focus on the problem of efficient pricing on global customer courier services. With the help of the companies which participate in the shared economy, we aim to transfer the money to individuals, which the large companies earn.
Sharing economy is a form of exchange of goods and services among people in the society without any profit concern. However, the practice of sharing changed its meaning when it became market-mediated. Regarding the market growth in shared economy, PwC states that there is a huge opportunity for these types of platforms, positing that the market will reach $335 billion by the year 2025. Online platforms adopted a major role in incorporating practice of sharing into a business-model. With increased technological developments it became much easier to communicate and gather crowds through online platforms. This opportunity, created by technology, is fertilized by societal changes.
Studies have shown that millennials are adopting a different mindset: instead of valuing the ownership of products, they value access to goods and services. With Pabbler, our main focus is to develop an online platform that leverages this trend in shared economy to create value through social innovation. We have our travelers obtain a much comfortable way to carry the goods and earn as much as possible. Then we send the items to our travelers’ home or hotel and as soon as they bring the product to the target country, we assign a domestic logistics company to get the product from the traveler and transport it to the shopper and enable the traveler to earn without the necessity of changing their travel plans or meet someone they doesn’t know.
What are the factors that motivate us to create value for society through a sharing economy platform?
It’s Affordable
Think of a world where there is no ownership, and borrowing is the norm. Using the same resource with multiple people distributes the cost of the service or product across people and naturally increases the marginal benefit of users. The fact that shared economy platforms do not own any physical resources, allows them to offer reduced prices. Researches show that sharing platforms can create up to 30 to 60 percent reduction in the prices. One other reason why sharing platforms are affordable is because of the low barrier of entry.
For example, just carrying 1 kg box from New York City to London incurs a cost of $20 to a cargo plane. However, everyday millions of people carry their luggage without reaching the allowance specified by the airline procedures and rules. Meaning, an individual flying from New York to London who has luggage of 14 kgs - where the airline allowance is 20 kgs - misses out on $120 income without even noticing.
However, the conventional logistic firms - with all these expenses, warehouse, overhead, and operational costs included - cannot apply fair price policies. They’re accustomed to charge more in order to make their ends meet.
It Creates Greater Trust Between Users
Yes, it is very good to afford the item in a much cheaper way; however, the issue of trust is always the major question in this type of business. The nature of sharing brings multiple interactions between users. This creates familiarity in participants and once users get to know each other, the following interactions become frictionless. One other courier of trust comes through the review mechanisms and feedback for users. Regardless of the quality of service, both providers and consumers create an account to join the platform by using their names, photographs and some relevant information. Sharing more information gives the platform a chance to use statistical tools to foster building trust between providers and customers. It is generally the concern of providers to build the trust. The users generally never care about the driver as soon as they arrive at the destination, they trust the company - Uber.
For instance, it is easy to meet someone in your hometown and share your device, car, home etc. However, if you are new to a country, you may not feel as comfortable as you are while sharing. This is one of the main reasons why people prefer to use those famous platforms such as airBNB, Uber, BlaBlaCar, etc... Just like when you are traveling abroad, you never consider carrying someone else’s product; however, as we all know, with the help of social media, there are only six degrees of separation. Thus you are even just six degrees apart from a famous celebrity you are in favour of. Thus if your friend asks you to bring something from a foreign country for him/her, you may reconsider to put your friend’s package in your luggage.
In order to make the world a better place, we built a platform, in which you may earn money while carrying the item globally which actually your friend’s friend asks. By this way, you both make your friend’s friend happy and you monetize your luggage.
It Disrupts Monopolized Industries
Markets that require massive initial investments - such as buying a hotel, taxi, or plane company - end up in monopolization. Sharing platforms create a more homogenous distribution of such facilities across the people in the society. Now, people can use their houses as part-time hotels, cars as part-time cabs, and luggage as part-time cargo. Going forward, this perception of freedom leads us to the freedom of economy. Corporations, hotels, and companies run by conglomerates used to be in charge of the money which had a significant impact on income inequality.
Because there is often no freedom of choice, some decisions have already been chosen for you. Decisions such as the source of the electricity you use, curriculum in the school, or the way in which you contribute to economy. A disruptive attitude in the economy sets borders apart from the untouchable ideals of the society and happy citizens. Shared economies give people the chance to become individuals, and just by being an individual, it makes one ‘a citizen of the world’, which is an extension of the idea of entrepreneurship. This concept was initiated and developed by such companies as Airbnb, Uber, BlaBlaCar, and other services. These applications gave people the opportunity to make their own money by providing a service to the people through what they have, where they are going, or simply providing the service of driving people. They contributed to the economy by creating platforms consisting of the people having the chance to exchange money and services. Accordingly, both sides became individual-based, both on their giving and taking.
So does that mean users had the chance to explore themselves, their own identity and what they do with their newly earned money?
This helped making people’s dreams of being who they truly were come true, which meant that people were free to invest in what they desire, not in the things that society said they have to invest in.
We at Pabbler believe that the sharing economy has gained attention because of the changes in social values and increased technological enhancements. There is a lucrative opportunity to create value through a platform-based system. Because of this new development, it’s important to remember to not stay in your comfort zone and use convenient methods, but to be brave and try these new sharing platforms and discover their unique value.
