The ‘sharing economy’ has taken the world by storm, offering consumers the opportunity to use often under-utilised assets when needed. The term ‘sharing economy’ is often mistakenly applied to efficient models of matching supply with demand, but where no sharing and collaboration is involved. Companies give you access to products and services via an app – such as a slab of beer (Tipple) or a massage (Zeel) – are tremendously different from platforms like Relay Rides, DogVacay or Go Get, which are purposely built for the sharing of often underused assets.
A somewhat controversial example of the sharing economy is oBike, a Singapore based company. oBike offers dockless bikes for hire, meaning they do not have to be returned to a designated docking station like other bike sharing systems in many large cities, such as Melbourne, London, Berlin or Amsterdam. Users pay a small fee per half hour on top of a membership fee that is refundable upon request. The bike is unlocked when its ID is entered into the app or QR code scanned with a smartphone. After they are finished being used, they can be left anywhere convenient but in a safe area. The bikes are fitted with a GPS tracking chip that allows users to find bikes nearby. There has been an explosion of bike sharing start-ups worldwide, particularly in densely-populated cities in South_East Asia, where the flexibility of the service leads to increased use. However there are a few issues facing the bike sharing companies. Due to the low pricing structure, companies are either unprofitable or have very small profit margins. Another issue is the increased costs due to damaging of bikes, and they may soon have to deal with government regulations as well, with some city municipalities impounding due to them being left anywhere and everywhere, including rivers, trees and blocking public footpaths. Finally, there are many companies that offer a similar service, such as Reddy Go, MoBike and Ofo, meaning that it can be difficult to differentiate one company from another, besides the app and the style and colour of the bike. The rise of so many companies is indicative of the change in consumer mindsets, from owning your own bike to renting as you need it.
Another local, more established example of a business in the sharing economy is Flexicar. Flexicar is a car-sharing company based only in Melbourne, and they have plenty of options that offer users the chance to hire cars around the city when they need it. Their pricing structure is similar; however the annual membership directly affects the hourly rate. There are four memberships types; Intro, Light, Moderate and Regular. The Annual membership fee is $49 across all tiers; however the key differences are the decrease in hourly rates (from $13.50 (Intro) to $8.95 (Regular), daily rates ($79 – $55 per day) and additional driving fees ($0.39 – $0.25 per day). Luxury cars, SUVs and people movers all cost more as well. They have a large range of cars, and all you have to do is swipe your membership card and you are ready to go. While obviously the major advantage of car-sharing is the reduced congestion on the roads, some cons include; access or lack of availability when needed, particularly during rush hour, and the minimal options available, meaning you may have to plan ahead, reserving ahead of time so that you can ensure the car is available when you need it.
The rise of the sharing economy is due to the reinvention of traditional market behaviours, such as renting, lending, swapping and sharing, through technology, and the change in the millennial generation behaviours, moving away from the traditional ownership model. What this trend also means, is that due to changes in pricing, companies in the sharing, collaborative and on-demand economies are going to have to find creative billing solutions to service their new pricing needs.