Spurred by Airbnb’s imaginative marketing stunt with the distinctive blue house floating on the Thames last week, Jasmijn Muller reflects on the power of the peer-to-peer economy.
The peer-to-peer economy has transformed our lives over the last few years as more online platforms allow people to share goods, skills and services more easily than ever before. New business models are springing up all around the world.
Providing temporary or shared use of goods or services is nothing new. Consumers have been renting holiday cottages, sharing cars and using eBay for a long time. The recent rapid growth of the peer-to-peer economy is however driven by digital technology that enables refinements of the model in order to serve new market segments and enter new sectors.
The peer-to-peer economy is often pleasantly referred to as the ‘sharing economy’, but the truth is that almost all peer-to-peer services are profit-driven, just like any other provider of accommodation, taxis, goods or services. So much so that bigger brands and venture capital firms are now investing heavily or partnering with new peer-to-peer companies in order to establish a foothold in the collaborative economy.
Airbnb, a private rental platform which allows owners to rent out their spare rooms or vacant homes to travellers, is probably the most frequently cited example of a successful player in the peer-to-peer economy. As recently as 2013, Airbnb was considered a ‘small threat’ to traditional hospitality companies. It now has a listing of more than 1 million properties worldwide, generates over 10 million stays per annum and is valued at some $10 billion.
The rise of Airbnb is testament to the power of the peer-to-peer economy: providing an easy way for people to monetise their extra space and an attractive alternative for those seeking an authentic experience and more unique, value for money accommodation. Much of Airbnb’s success can also be credited to its imaginative marketing campaigns. You only have to look at the buzz created by the company’s marketing stunt in London last week to understand why Airbnb is so refreshingly different. To celebrate the legalisation of Airbnb in London, the company held a contest where the lucky winner and three friends spent the night in a cute blue house – complete with a front garden – floating gently down the Thames. They even managed to time it so that the distinctive blue house sailed by City Hall during the televised Mayor’s Question Time.
A central question about the collaborative economy, however, is about its long-term impact: will peer-to-peer platforms become viable mainstream alternatives to traditional providers, or will they forever serve smaller, niche markets? After initially dismissing private rental accommodation as a ‘small threat’ to the hotel industry, Euromonitor International recently revised its view, noting instead that peer-to-peer companies are indeed starting to compete with traditional hotels – not just for the experience-hunting ‘Millennials’ market, but also for the lucrative business travel trade.
If Airbnb is the poster company for peer-to-peer trading, it is far from the only one. A whole range of online start-ups are now offering a wide variety of goods, skills and services, including:
- Ridesharing and taxi services (Uber, BlaBlaCar and Lyft)
- Flightsharing (Cojetage)
- Crowdshipping (Entrusters and Nimber)
- Redistribution markets (Furniture Re-use Network and Freecycle)
- Crowdfunding and peer-to-peer lending (Spacehive, Zopa and Lendahand)
- Currency exchange (We Swap and Crowd Transfer)
- Personal and Household services (Taskrabbit, Angie’s List, and Taskhub)
- Artisans (Etsy and Shapeways)
- Cooking and cooking lessons (VizEat and Travelling Spoon)
- Trip planning and sharing (Gogobot)
- Tours and activities (Adventure.com and Ventoura)
Some of the traditional players have started to buy out or team up with their new peer-to-peer competitors. Zipcar was acquired by Avis. B&Q set up ‘Streetclub’, which builds local networks to trade tools and share DIY skills.
The collaborative economy is often criticised for not operating on a level playing field, with lower operating costs, ‘ambiguous’ tax status and, importantly, exemptions from the sort of strict regulation that more traditional suppliers face. Set against these perceived advantages, however, are the significant quality, trust and branding hurdles that every peer-to-peer operator has to overcome.
That notwithstanding, the collaborative economy is clearly here to stay. A 2014 Nesta study found that a quarter of the UK population has used a digital peer-to-peer platform to access goods, skills and/or services. That proportion will inevitably grow over the next few years, with more and more people embracing the peer-to-peer experience. As with any other dot-com trend, many of these new entrants will fall away through some combination of hubris, a flawed business model, or simply failure to be noticed in the crowded online marketplace. But if the past is any predictor of the future, then the best of these new players will not only ‘stick’ – they will thoroughly disrupt their respective industries and give traditional players a lot to think about.
Image courtesy of Airbnb