Recently I was lucky enough to attend the Sharing Economy Conference. The conference was focused on celebrating how the sharing economy is changing the way people buy goods and services in the UK, and asking questions to explore the future of the sharing economy.
As a peer-to-peer lending pioneer, Zopa is part of the sharing economy, so it was interesting to hear different viewpoints on the industry. Here are some of the key points that came out:
The impacts of the sharing economy
The sharing economy creates positive impacts across the private, public and charity sectors.
For example, there are lots of examples of it enabling fairer prices than previously available, such as Airbnb, which has dramatically reduced the cost of accommodation for some tourists by offering an alternative to traditional accommodation like hotels
Balancing supply and demand
The most important factor for a sharing economy company to be successful is having enough liquidity. Liquidity describes how quickly an asset, such as a room to rent or money to lend, can be bought or sold on the platform’s market.
So when supply-side customers offer their goods or services on a platform with good liquidity, demand-side customers accept them quickly. Equally, when demand-side customers look for goods or services on a platform with good liquidity, they find available options fast. Having good liquidity requires getting a great and timely balance of supply-side and demand-side customers.
An elegant business model will keep supply-side customers for a long period over many transactions, and the same goes for demand-side customers. In other words, it is vital to find a product market fit that makes both sides happy. With Zopa, for example, this works because supply-side lenders get great returns from their investment, whilst demand-side borrowers get market-leading loan prices with award-winning customer service.
Why the sharing economy is growing
The traditional economy doesn’t always have the answer for our needs today. This is especially true when we think about the growing demand for convenience. This is where sharing economy businesses have been able to step in. One example is easyCar club, which allows customers to borrow cars in their neighbourhood, instead of having to travel to the nearest car rental location.
A big driver for the sharing economy was the last recession – it made people more inclined to try things they wouldn’t have considered before. For example, more people might consider renting out their homes, using companies, like Under the Doormat, to subsidise their own holidays when budgets have to tighten.
Finally, there’s technology. Technology connects us to each other as never before and these new technologies allow for a better balancing of demand with supply.
Some nice inspiring words that made us smile…
Idealism has become realism. The sharing economy believes and realises that anything is possible.
Sarah Constant is Head of Marketing Analytics at Zopa.