A friend in the courier business recently told me that he’s bracing for a new wave of competition from – wait for it – Wal-Mart customers. Who? He wasn’t talking about Wal-Mart’s own courier service, which is now being tested to provide speedier home delivery of online purchases.
No, this is Wal-Mart’s customers joining the “sharing economy.” The company is working on tapping the unused capacity in its shoppers’ cars to deliver packages to online customers who live near the shopper’s drive home. Shoppers who want to participate tell Wal-Mart where they live, and if there’s a package going that way when they’re at the store, they deliver it in return for a discount on their shopping bill. Wal-Mart is essentially crowd-sourcing courier services.
It’s just one crowd-sourced competitor facing traditional couriers. A company called Zipments, founded in 2010, lets anyone (in selected cities) who is over 18 with a vehicle, a smartphone and a PayPal account, bid on courier services for local businesses. Yes, drivers are screened, but the company CEO says insurance and licences are the problems, not theft, fraud or late deliveries. A UBC business student is currently working on how Zipments could work for local courier company Novex.
Both of these examples illustrate how mobile technology now enables ordinary citizens to set up mini-businesses that provide dividends from previously idle capital: in these cases, their cars. Almost anything you can buy new you can now rent from a stranger. Technology is reinventing traditional market behaviours of renting, lending, swapping and bartering at a previously unimaginable scale: think eBay and Craigslist, pioneers in this field.
Of all the assets now being used more frequently thanks to the sharing economy (including spare rooms, server farms, valuable skills, underused office space), cars so far offer the most opportunity, since they are costly and typically sit idle for 23 hours a day. Hence Zipcar, Modo, Car2Go and peer-to-peer ride sharing companies, with major car companies realizing that many consumers would rather get convenient, cheap access to mobility than finance the burdens of owning a car. In the case of RelayRides or Etsy, these peer-to-peer organizing companies just arrange deals between car owners and riders without having to own anything.
The World Economic Forum (WEF) recently released a paper on this “new disruptive business model,” estimating that this year transactions in the sharing economy will generate $350 billion in revenue. The WEF report pegs the value of the ride-sharing industry alone at $117 billion.
In some cases, like CouchSurfing, its five million members don’t even exchange money – they simply agree to host their own guests when they can.
This model also works to empower small investors through crowdfunding, a democratized form of investing which raised $2.7 billion for entrepreneurs on more than 600 online sites last year. A new U.S. law allows a small business to raise up to $1 million a year through crowdfunding.
The WEF report notes that Seoul, Korea, has declared itself a Sharing City, where “residents can teach each other valuable skills, help with projects or even run errands – saving money, using resources responsibly and connecting with one another in the process.
“Cities that take advantage of collaborative consumption will tap into vast new opportunities to create jobs, attract talent, promote local investment and community-building, and offer a healthier place to live.”
And that’s without considering how this can make city living more affordable and radically reduce waste.
As regulators and incumbent industries scramble to deal with this new onslaught of threats and opportunities, collaborative consumption entrepreneurs are ensuring that no amount of marketing will force a customer to buy something that can be conveniently shared.
Watch out.
