In 2017, the idea of a 'collaborative economy' has enveloped society. Businesses from the UK, to Spain and Romania are no longer looking inward - rather, outward, toward peer-to-peer (P2P) participation and community. In fact, some of the best-known P2P platforms include Uber, Airbnb, eBay and Spotify.
Consequently, business is becoming greater and reaching a wider audience. In fact, peer-to-peer transactions generated by the UK's five most prominent sharing economy sectors stand to grow by 60% or £8 billion in 2017 alone, per recent predictions from PwC.
Subsequently, the UK government has made a collaborative economy 'a priority' and aims to make the UK a 'global centre for the sharing economy'. Indeed, by 2025, it is projected total transactions in the UK sharing economy could reach £140 billion, up from just £13 billion in 2016: proving the progressive nature of today's P2P business.
The five key sectors of the collaborative economy:
- Peer-to-peer accommodation: households sharing access to unused space in the home or renting out a holiday home to travellers.
- Peer-to-peer transportation: individuals sharing a ride, car or parking space with others.
- On-demand household services: freelancer marketplaces enabling households to access on-demand support with household tasks such as food delivery and DIY jobs.
- On-demand professional services: freelancer marketplaces enabling businesses to access on-demand support with skills such as administration, consultancy and accountancy.
- Collaborative finance: individuals and businesses who invest, lend and borrow directly between each other, such as crowd-funding and peer-to-peer lending.
Certainly, in industries where cost pressures are mounting, such as healthcare and retail; the collaborative economy could be highly beneficial.
Rob Vaughan, economist at PwC, comments:
"Innovation will remain crucial to success in the sharing economy. Several established players branched out into new service offerings in 2016 and we expect them to invest significantly in these this year. The success of these new services will be an acid test of whether sharing economy platforms can eventually become the established leaders of their markets, or will forever be known as the 'disruptors'."
Participation in Europe
A report by Nielson has found that willingness to share assets with others is significantly higher in developing regions such as in Asia-Pacific (78%) and Latin American (70%) in comparison to regions like Europe (54%) and North America (53%.)
However, at least 275 collaborative economy platforms have been founded in Europe; facilitating 28 billion euro worth of transactions in the past few years.
In terms of European audience, a third of consumers have heard about the collaborative economy and participation is highest amongst the young (aged 35 and under) and the well-educated. Nearly 6 in 10 European consumers who have participated in the collaborative economy did so to save money, compared to around 4 in 10 who did so for community purposes.
Cost saving motivations seemingly more crucial to consumers in Southern European countries, such as Spain and Italy, who have experienced high unemployment levels and weak economic performance since the global financial crisis.
The findings analysed showcase the UK and France as collaborative economy trailblazers - with over 50 collaborative organisations founded and others continuing to grow. Organisations such as 'Funding Circle' in the UK, founded in 2010, allows investors (retail, institutional and government) to lend money to small and medium sized businesses. To date, funding Circle has originated over £2.5 billion loans since its creation.
Following the standard set by the UK and France is Germany, Spain and the Netherlands, each contributing over 25 collaborative economy organisations; while less than 25 collaborative economy organisations were previously established in Sweden, Italy, Poland and Belgium.
Evidently, the idea of a collaborative economy has transitioned into something more. Today, it is a residual, socio-economic trend that is fundamentally changing the way societies - and consumers - operate around the world.
OnBuy MD, Cas Paton, comments:
"Today's economy is prime for sharing - from freelance platforms changing the way we work, to food-sharing platforms changing the way communities connect - it's time for businesses to embrace the concept. In doing so, businesses across the globe can achieve a sustainable way to appeal to a modern-day audience, with a far higher reach that is readily accessible."
Certainly, whilst the rapid development of sharing platforms is considered as an opportunity which is beneficial to the economy, it could prove a challenge for policy makers and regulators to keep up with the pace.
However, though areas such as the UK and France appear to be more progressive than elsewhere in Europe, the fact remains that the trend is continuing to infiltrate boarders; albeit more slowly, as trepidation subsides and the urge to connect increases.