SHARING ON THE GO

How mobile technology is fuelling growth of the shared economy bile

WRITTEN FOR

http://www.indiainfocom.com

VikramAdith Raman
Indian School of Business

Contents
Introduction .................................................................................................................................................. 3 What is the Shared Economy? .................................................................................................................... 3 Motivating factors......................................................................................................................................... 4 Environmental awareness......................................................................................................................... 4 Economic downturn .................................................................................................................................. 4 Sharing and saving is cool ......................................................................................................................... 4 The Mobile Effect .......................................................................................................................................... 5 Portability.................................................................................................................................................. 5 Location awareness .................................................................................................................................. 6 Real time information ............................................................................................................................... 6 Multimedia capabilities............................................................................................................................. 7 Service coverage at the bottom-of-pyramid............................................................................................. 7 Positive outcomes ......................................................................................................................................... 9 Cost savings ............................................................................................................................................... 9 Additional income ..................................................................................................................................... 9 Environmental sustainability .................................................................................................................... 9 Social welfare ............................................................................................................................................ 9 Community spirit .................................................................................................................................... 10 Conclusion ................................................................................................................................................... 11 References .................................................................................................................................................. 13

Introduction
In the last decade, mobile technologies and the Internet have brought major changes to human society, often acting in tandem. While technology has ruthlessly destroyed many an established paradigm, one paradigm which is making a comeback thanks to the mobile web is sharing. This rediscovered consumption model is making waves globally and the market for products and services that has flourished in its wake is referred to as the shared economy. Signalling a shift in behaviour from ownership to rental, the shared economy is promising to have many positive effects including improving the financial fortunes of individuals, making services and goods more accessible and affordable, and making consumption patterns far more environmentally sustainable.

This paper will study the motivations behind the rise of the shared economy, the role of mobile technology in facilitating its growth, and the outcomes of this phenomenon. Selected cases of mobile sharing platforms will be used to illustrate the concepts discussed.

What is the Shared Economy?

The Shared Economy also goes by names such as collaborative consumption, Peer-to-peer marketplaces and Pay-as-you-live. In essence the concept of the shared economy is one in which people can access more while owning lessi. The sharing model encourages a more collaborative form of ownership with people using technology to connect with each other and share resources. This model brings multiple benefits compared to restricting resources to individual ownership, which leads to underutilisation and inefficiencies.

Motivating factors
Sharing is far from a new conceptii, but recent trends have made it a far more potent model with major benefits for those who adopt it. Three main factors have provided the motivation for creation of the shared economy: environmental awareness, economic downturn and consumer attitudes.

Environmental awareness The 20th century saw sustained campaigning to make people more aware of environmental issues. This awareness has encouraged people to restructure their lifestyles to cause less damage to the environment, with sustainability being one of the most popular buzzwords in recent times. Consumers have responded by seeking out ways in which to be more green. Increased sharing has been a method used, with carpooling being an especially popular practice in many countries. The 2009 National Household Travel Survey by the US Government indicated that over 25% of trips involved carpooling, excluding family-based car poolsiii.

Economic downturn The economic crisis in a globalised world has had widespread impact and prompted much soul searching in developed as well and developing economies. Public opinion turned against consumerism and promoted greater pragmatism to help withstand financial difficulties and dampen potential shocks in the future. This new found practicality has led consumers to take a far more careful and rational approach to making financial decisions. Surveys show that young consumers are spending 67% more time making big financial decisionsiv. This additional thinking goes into looking beyond mere price tags and considering usage costs, maintenance expenses and depreciation. Such an approach is making ownership seem like an increasingly less attractive proposition. Those who do not own, would rather rent from those who do. And those who do own, would rather rent out their possessions in order to earn money to help maintain their assets.

Sharing and saving is cool Sharing gained a surge in popularity with the advent of the Internet. All of a sudden, a huge amount of information became available online. Digitisation of many goods such as books, music and movies meant that by unbundling information from its physical carrier, many goods became little more than a series of bits and bytes that could easily be stored, transmitted and consumed over the Net. While this

form of sharing was often illegal, it laid the foundation for behavioural shifts that have resulted in more collaborative consumption.

Another recent development is that members of the millenial generation are not as concerned about traditional status symbols as previous generations were. No longer is it so important to own a house, or to buy ones first car. In fact, in the social networked age, people have ample opportunity to brag to a wide audience about how much they share. The economic climate has also contributed to a shift in behaviour, with people increasingly keen on bragging about their ability to find deals and get the best bargains.

The Mobile Effect

Mobile technologies have fuelled the growth of the shared economy by providing consumers capabilities that have made sharing of a variety of products and services much more efficient. A discussion on these capabilities follows with cases used to highlight how mobile technologies are enabling a host of exciting new businesses to help people share better.

Portability The portability of a mobile device helps the sharing revolution in many ways. Firstly, consumer segments who are frequently on the go do not get excluded simply because they are often away from a fixed Internet connection. Travelling professionals or holiday goers can remain connected through their smartphones no matter where they are. Mobile computing is not only pervasive, but also constantly active. Consumers frequently interact with their mobile phones, and such engagement encourages spontaneity in sharing.

This portability has been exploited by many services to bring a change to the way we use vehicles. Zipcar (www.zipcar.com) allows users to share their cars with other users on the platform. People in need of a vehicle can use Zipcars mobile app to book a vehicle, track it to its location and for certain cars even unlock the car after finding it. With 731,000 members and 11,000 cars in major cities, the need to own a vehicle is drastically reduced for people who will require a vehicle infrequently. Taking the environmental sustainability theme to the next level is Liquid (https://www.doliquid.com/) which allows users to share bicycles. Studies show that 21% of British citizens own a bicycle but do not use it. By allowing others to rent their bicycles, Liquid helps ensure these green wheels can be properly utilised.

Both these services will typically need to be accessed by users who are on the move. By packaging themselves as mobile apps, they give users the power to carry a vehicle in their pockets.

Another fast rising company that has found the portability of mobile phones to be a boon is Airbnb (https://www.airbnb.com/). Airbnb is a popular holiday rental service on which users share spare rooms with holiday makers who can use the platform to discover, book and pay for the rooms. With over 10 million nights booked and a booking every 2 seconds, Airbnb has become a credible alternative to hotel stay. Once again, the value of being able to reach users who are on the go is clear, as users on holiday require portability in order to gain value from such a service.

Location awareness While portability allows sharing services to be accessed from anywhere, location awareness capabilities such as GPS and cellular triangulation are key features that enable sharing services to understand where a person is, thereby offering them much more targeted information relevant to their location.

A great example of a mobile app making waves using location tracking is ParkMe (http://www.parkme.com/). Parking in urban areas tends to be difficult and time consuming to find. Paid parking sites tend to be very expensive. In addition, searching for a parking lot can often be a frustrating experience, especially during busy hours of the day. However, there will be people who have parking sites available at home that may not constantly be in use. ParkMe has created an app to help connect these supply and demand sides on a mobile platform. People who have parking lots available can share their information online, and this will be made available to drivers. Drivers can access the app on the go and search for parking lots in a specific place they are headed to. Similar to Zipcar and Airbnb, drivers can use ParkMe to book and pay for a parking lot. Using GPS, ParkMe will then guide the user to the booked parking lot. This is an excellent example of how a service makes use of mobile technologys capabilities to help consumers share in order to earn money, save cost and time, and make the experience of a common activity a lot less frustrating.

Real time information Zipcar, discussed above, has attempted to solve the problem of helping people find and use idle cars. However, even cars that are being driven around are often underutilised, with only one or two people travelling in a vehicle capable of comfortably supporting four or five. While carpooling has been around

for a long time, two companies trying to supercharge this practice are Lyft (http://lyft.me/) and SideCar (http://www.side.cr/). Often, trips cannot be planned well in advance as typical car pooling arrangements necessitate. These companies use mobile apps to help users find rides with a few taps of their finger. Building on the previously discussed concepts of portability and location awareness, the apps are always at your fingertips, use GPS to figure out where you are, ask you where you want to go, and use push notification to instantly notify drivers who are moving in your direction that you are looking for a ride. This ability to identify and notify the proper users to connect to each other in real time, makes carpooling a far more convenient proposition. Inbuilt payment mechanisms also allow drivers to charge for taking passengers on board, if they wish to do so. By making ride sharing even easier than hailing a taxi, the time honoured practice of hitch hiking has been taken to the next level by Lyft, Sidecar and other companies entering this space.

Multimedia capabilities Mobile phone technology has advanced to a stage where mobile multimedia capabilities are as good as that of traditional personal computers. Smartphones have the hardware and software to be used as mini-entertainment devices. Such features make them ideal for sharing the medium that was at the epicentre of the online peer-to-peer sharing revolution: music. Music is entering the shared economy once again, but this time, its perfectly legit. Rdio (www.rdio.com) latches on to mobile phones pervasive connectedness and multimedia capabilities to help people share music. Users can place their music collections online and share and recommend tracks to each other. Even artists can use the platform to directly reach their audience rather than be constrained to record labels.

Service coverage at the bottom-of-pyramid While many of the previous applications might seem to be targeted at developed economies and enhance the lives of urban users, the shared economy can also be a powerful force of social welfare, especially thanks to the power of mobile technology and the network infrastructure that has been developed worldwide. In many countries, mobile coverage has rapidly overtaken landline coverage, bringing communication to the masses in regions where people had to previously trek considerable distances in order to make a simple phone call. For example, India has 930 million mobile phone users, but only 32 million landlinesv.

In a paper entitled Leveraging Socially Networked Mobile ICT Platforms for the Last-Mile Delivery Problem, researchers at the University of Minnesotas NorthStar Initiative for Sustainable Enterprisevi describe a project to create a mobile shared economy that could potentially lead to economic betterment of people in rural areas, by leveraging the prevalence of mobile service coverage. The system they are developing will help improve last mile delivery of goods in hard to reach areas by utilising a dynamic mobile peer-to-peer network. Such a system will reduce costs for logistic firms, while providing additional income for people living in these areas. The reduced need for transport infrastructure will also increase reach of goods and services to such place, while also placing less strain on nature and government resources.

Having discussed many firms that are seeking to harness mobile technologies to enhance a shared economy model, we now come to a young firm that is looking to harness the shared economy to enhance mobile technology usage. Targeting the next billion mobile users, Movirtu (http://www.movirtu.com/) has developed a technology that enables sharing of mobile devices. By disconnecting a persons identity from the device itself, a group of users can share a phone and use it with their own data in a secure manner. This not only gives them access to communication in geographies where landline penetration is poor, it also gives them access to a host of other features that can be accessed over mobile devices. For example, banking, m-health, m-education and other services can now be delivered to economically disadvantaged people in rural areas without advanced infrastructure. All that is needed is the cellular coverage that is already widespread in many parts of the developing world.

Positive outcomes
From the various cases that have been discussed, there are multiple benefits that can be seen from adoption of mobile technologies based on the shared economy.

Cost savings Surveys show that the single biggest driver of adoption for these technologies is cost savingsvii. Cost savings result from sharing of resources, and a reduction in upfront expenditure as people purchase less, but rent more. Additionally, renting from individuals rather than businesses often turns out to be less expensive. Also, by sharing such goods, consumers are less affected by deprecation of assets such as cars.

Additional income While people consuming goods and services end up saving costs, the providers of these goods and services gain an opportunity to supplement their incomes and earn money. Smartphones connected to the Internet, combined with applications that enable easy setting up of payment systems make it extremely easy to create such a revenue stream.

Environmental sustainability By enabling people to share resources, the utilisation rates of these resources is greatly increased. This leads to reduced impact on the environment at individual resource level, and can make a significant difference when aggregated at national or global scales. Also, the reduced importance of ownership means that people move towards alternative models. This alternative ownership model, according to Pippa Gooodman from The Future Foundation, indicate a departure from buy-use-throw out-buy again cycle to a hire-borrow-exchange-recycle cycle. This reduction of demand will lead to less strain on a wide variety of natural resources, making consumption far more environmentally sustainable.

Social welfare The environment is not the only benefactor from sharing. Technologies like Movirtu are bringing the shared economy to the masses, helping improve welfare for people who have difficulty accessing amenities and services that others take for granted. The shared economys ability to help a multitude of people earn revenues by providing their services will also help economically underprivileged people to

link with businesses and bring them much needed income in exchange for sharing their time and efforts to help businesses reach distant geographies.

Community spirit Finally, a less tangible outcome that may nevertheless be a very important one is the ability of sharing to bring people together and create a society in which members learn to share more, waste less and use the collective power of people to achieve benefits at the personal and community levelsviii.

Conclusion
The shared economy is becoming a popular model of consumption due to a variety of socioeconomic y socioeco trends. Multiple products and services have risen in this space, riding on a platform created by mobile and web technologies. This behaviour is leading to significant economic and environmental benefits, and also helping boost social welfare. The various motivators of this new paradigm, the facilitating properties of mobile technology and the resultant benefits are summarised in the below diagram.

Today, a person could land in a foreign country with their smartphone and let the shared economy take care of their most important needs. A hypothetical traveller could use Lyft to hitch a ride in a car returning downtown from the airport. In the city, she could use Zipcar to book and locate a car that can be rented for the duration of her stay. Airbnb would find her a cosy place to stay with a nice family who stay. would be able to help her with their intimate unders understanding of the citys delights. While driving down to . the conference she had come to attend, she could listen to a selection of songs on Rdio that had been uploaded and suggested by her friends. Near the busy conference centre, she could easily locate a convenient parking spot for her rented car using ParkMe. In the process, this hypothetical traveller . would have saved money, individuals whom she rented from would have earned money to supplement

their incomes, and the sharing of resources made the trip more environmentally friendly. Such is the power and prevalence of the shared economy today, largely thanks to mobile technologies.

As more people continue to discover the benefits of sharing, the growing network effects will lead to ever greater adoption of this model. And with mobile technology becoming ever more powerful, it can be expected that many more approaches to facilitate and benefit from sharing will emerge in the near future. With a plethora of startups with innovative business models pioneering new products and services, it is safe to say that we have only begun to tap the potential benefits.

Governments, universities and businesses worldwide should encourage and develop this model and reap the widespread benefits that exist. By learning how best to leverage mobile sharing, these institutions can help the masses improve their economic well being, in a sustainable, environmental friendly manner.

References
i

"Rental Nation", TIME http://www.collaborativeconsumption.com/buzz-and-press/120901_TIME_Rental%20nation%20story.pdf

ii

"Whats The Future Of The Sharing Economy?", Fast Company http://www.fastcoexist.com/1679964/whats-the-future-of-the-sharing-economy

iii

"U.S. Department of Transportation, Federal Highway Administration, 2009 National Household Travel Survey." http://nhts.ornl.gov/tables09/ae/work/Job24716.html
iv

"Pay-As-You-Live: The Business of Sharing in the UK" http://zipcar.uk.mediaroom.com/pay-as-you-live

v

"Internet Usage in Asia" http://www.internetworldstats.com/stats3.htm

vi

"NorthStar Initiative for Sustainable Enterprise" http://northstar.environment.umn.edu/

vii

"The Rise of the Sharing Economy" http://mashable.com/2012/02/07/sharing-economy/

viii

"The New Sharing Economy", Shareable www.shareable.net/blog/the-new-sharing-economy