I just want to start this article by saying that this isn’t an advocation or a dismissal of the sharing economy, rather a study of the potential effects it may have on the supply chain.
The best way to explain the sharing economy is to illustrate the companies that use its model best: Airbnb and Über. Perhaps you’ve seen this image that has been flowing through social media that was originally tweeted by @tomfgoodwin:
Our current economic model is highly inefficient, because existing infrastructure already owned by consumers is under-utilized. The sharing economy currently provides a limited opportunity for consumers to monetize their privately owned resources that already exist in the economy instead of paying companies to create additional infrastructure in order to meet their needs (Click to Tweet). Understandably, companies that utilize this business strategy have created quite a stir, especially in the hospitality and taxi industry. This change, drastic as it may be, can potentially bring greater efficiency to businesses across the world, especially in the supply chain.
Shifting Supply & Demand
The recent success of the sharing economy could largely be due to the fact that this economic model gives consumers more power. Specifically, with the technology that we have access to today, demand can be created and shared through a digital platform, and can instantly be recognized and then met with the appropriate supply.
A good example of this is how Über is able to respond within 5 minutes to someone that needs a ride:
Über understands this model very well, and fully expects that the demand for their service will increase exponentially in years to come. This is because the infrastructure to expand their market is already in place, and all Über needs to do is recruit more drivers as demand rises.
With the success of companies like Über and Airbnb, there has been a surge of new businesses that have begun to emerge with similar business models in many other sectors of the economy. There has even been a LTL trucking company that has adopted some of the principles that Über uses.
It may appear that businesses created in this new economy could be potentially detrimental to the current manufacturing, logistics, and hospitality industries, but this isn’t necessarily true.
Why the Sharing Economy is a Distinct Possibility
The sharing economy is an interesting and in-depth concept to think about, but put rather simply, it is just an extension of the internet of things (IOT). The information generated by the IOT allows us to make informed decisions about our infrastructure, our customer’s needs, and predictions for the future.
Companies like Über and Airbnb are absolutely dependent on the IOT for their business models. They have successfully utilized the information that they’ve gathered from the IOT to make their service platforms as seamless as possible.
If consumers become accustomed to the idea of being able to individually interact with the supply chain, there will be significantly greater opportunity for efficiency in the supply chain. The infrastructure and resources that are privately owned are currently and under-utilized, and if logistics companies were to have access to this, they would have a much larger infrastructure. This will simultaneously benefit logistics companies as well as the owners of the private infrastructure that would be utilized.
If Sharing Economy Will Be More Efficient, What Are the Potential Costs?
Here is the tough part for many of us. The IOT is already posturing to disrupt many industries, and has caused drastic changes to businesses across the economy and world. Many have successfully adapted to the changes caused by the IOT and have been able to see increases in their bottom line and provide better service, but this was not done without effort.
There are also several large companies that were not so quick to adapt, and have since gone out of business, such as Blockbuster. So, changes of this nature tend to be met with resistance until they are absolutely necessary to respond to. This resistance is not without reason, especially due to several highly documented legal issues that have been publicized in the past five years regarding the sharing economy.
What is Happening Now?
As citizens are able to monetize their personal infrastructure (vehicles, houses, parking spaces, etc.), this will create a collective of individuals and companies working together to monetize their respective assets. The potential effects this change will have on all industries is hard to quantify, but it’s been speculated that this new economic relationship will yield significant improvements to efficiency, transparency, and effectiveness in business.
The implications that this economic shift will have for the logistics industry are potentially beneficial. If a hospitality company were able to utilize the the privately owned resources in the sharing economy, managing supply chain logistics, especially in the hospitality industry, would become much simpler. Drawing conclusions from arguments earlier in this post, it can be speculated that the partnership between logistics companies and businesses in the sharing economy could bring greater efficiency and reduced costs to the supplier, the hospitality logistics company, and the client.
How Can We Prepare?
There is evidence proving and refuting that this economic shift will happen, but the purpose of this blog is not to do either – its goal is to promote awareness that the shareable economy has the potential to change current business models across all industries.
The best way to prepare for this potential economic shift is to research the business models that have the greatest potential to disrupt your own industry as much as possible. Fortunately, most all business models that emerge from the sharing economy can be studied with relative ease.
If there is a potential benefit that your company can gain from a new business in the sharing economy, it may be wise to consider building a relationship with that company. A good example of an early adopting partner of a business in the sharing economy is American Express and their recent partnership with Airbnb last December.
All things considered, the sharing economy is a highly polarizing subject and will likely have many critics and supporters, but the essential ideas behind what make it possible are undeniably interesting.
Additionally it’s difficult to refute the successes of the most prominent players in the sharing economy, namely Airbnb and Über both with a collective value of just over $50 billion. Furthermore, as technology improves, the capabilities of companies in the sharing economy will become more effective. Technology and the IOT is set to become the lifeblood for all businesses in the future, and the sharing economy’s current form can be clearly seen as a direct extension of how integrated the IOT has become (Click to Tweet).
Improved business models, greater efficiency, and transparency are potentially things that can be expected from traditional businesses that partner with new companies emerging in the sharing economy. All this is still theory, but the success from companies like Airbnb and Über cannot be denied, and so it is wise to understand how these new methods of business can benefit the supply chain.
Axis Worldwide offers a wide spectrum of “Industrial & Hospitality” supply chain logistics/managed freight services for Fortune 500 companies. Our expertise, experience, and buying power allows us to offer the best transportation rates and frequent transit times within the US, Canada, Mexico, Asia and Europe. Through our licensed, US bonded facility in Southern California and other facilities, we provide warehouse and distribution solutions to our clients. Our freight services include air freight, both domestic and international, ocean import/export, less than truckload, full truckload, and emergency ground expedites. We also provide emergency air freight services 24/7.