We took a look at the state of the sharing economy last year, but things change quickly. What's new and need to know for the sharing economy in 2017?
2017 Sharing Economy Forecast
Earlier, consulting firm PWC forecast the sharing economy would grow to a valuation of $335 by 2025, and this estimate still holds. PWC is forecasting another banner year for the sharing economy in 2017. They expect the sharing economy to grow beyond its predominant niches (which include automotive and hospitality) and enter insurance, medical, legal, and more.
As the sharing economy infiltrates new niches, consumers and marketplace owners can expect to see additional challenges and opportunities for growth.
Millennials, marketplace early adopters, are being joined on marketplaces by the over-50 set. PWC expects this to continue, as more adults get over their initial reservations around the sharing economy. Broadening the user base will boost revenue for service providers and marketplace owners, although the new demographic may have differing desires than existing users.
Where once the sharing economy was viewed as on the fringes of e-commerce, 2017 is seeing greater mainstreaming of marketplaces. An AirBnB-Quantas ad partnership is just one example of a sharing economy startup being embraced by a major company. The hotel chain Hilton partnered with Uber; hotel guests were encouraged to use Uber to get to their hotel or get around the city.
E-commerce professionals have to wonder if such partnerships will remain the exception to the rule, or if established chains and sharing marketplaces will continue to explore new partnership models.
A traditional-sharing partnership has benefits for both sides. The marketplace gains visibility among a new user base, which may not be existing service users. The established brand gets to capitalize on the social media buzz and Millennial credibility of the sharing economy startup, increasing its brand exposure and trust among a new audience. There appear to be advantages for both sides, but no data yet to support the hypothetical benefits.
The Changing Face of Marketplaces in 2017
Corporations are projected to join the marketplace user community in 2017. Some corporations are already using marketplaces to find new talent, connect with freelance workers, and more.
To remain relevant, existing marketplaces have begun introducing complementary services. We've already seen Uber introduce a food delivery option (UberEats) to better compete with food delivery services. By increasing services, marketplaces can expand their revenue while offering their user base the convenience of using a service they already know and trust to access other services they desire.
The sharing economy is increasingly going global, finding new hubs in developing countries. India is enjoying a young sharing economy, with car sharing becoming a popular alternative to vehicle ownership. Ultimately, globalization within the sharing economy can help users access the same services they rely on at home when they travel overseas, while increasing cross-cultural connections.
2017 brings continuing education opportunities including an education conference for marketplace owners who want to remain competitive with new trends, adapt to disruptions from peers, and forge new connections with other startups or with traditional players.
Challenges for the Sharing Economy in 2017
While analysts at Bloomberg predict the sharing economy will see growth among goods rather than services (i.e. short-term tool rental), these niches have not proven to be viable thus far. Another complication for growth of the sharing economy is penetration in rural areas, which often lack the resident density to make car sharing, on-demand food delivery, or equipment sharing scalable.
With the marketplace explosion in 2015-2016, 2017 is poised to bring a necessary contraction. Some marketplaces launched without adequate funds or a user base to become self-sustaining. Others may be tired of struggling for fourth or fifth place within their niche. Smaller marketplaces may be bought up by competitors or fold, reducing competition within their niche. Some niches for peer to peer sharing may fail outright, as marketplace providers conclude their original ideas weren't viable or changing technologies alter the service or product offered.
The sharing economy is in a good place moving into 2017. Yet if one thing is sure, the year will pose new opportunities, challenges, risks, and rewards for marketplace owners, users, and service providers.