How will the “sharing economy” affect product strategy?
Fast Company has well written and interesting article on the “Sharing Economy“. The key idea is as follows: Instead of buying goods outright (cars, lawn mowers, electric drills), one can “rent” them. The benefits to the consumer are clear to see: lower costs, lower waste, more green. The benefits (or dangers?) to companies producing/pushing goods on consumers is less well understood.
Definitely worth a read; it has some good data points:
- Car owners use their cars ~8% of the time. i.e. 90% of the time the car lies unused. Wow.
- By one estimate, this sharing economy is a $110B market size. Predictably, the VCs are all over it (although they call it “underused asset utilization”) and have invested heavily in this space.
- The average person sharing a car makes ~$250 a month, enough to offset a chunk of their car payment
So where can one apply this to? Sharing homes, yes. Sharing cars, yes. Sharing office space, yes. Some of this makes me uneasy. Sharing a lawn mower should be fine; sharing a couch would be a no no for me (I have young kids in the house).
What interests me is the impact this could have on large companies. Why buy a car when you can rent one? Why buy that bike, when you can share it? Why go through a bank when you can do peer to peer lending? It seems like some leading car companies are already getting their act together on this (e.g. Daimler has a prototype service for renting cars). But I think more is needed. Companies need to think through whether their products/services would be disrupted by this idea and see how their product strategies / revenue models need to be rethought.