2014 was a rough year for Uber’s image, but you wouldn’t know it based on the company’s financials. Despite just turning six this year, Uber is projected to earn $10 billion in gross revenue in 2015 and was recently valued at over $50 billion. Uber’s incredible success despite the company’s current PR problems reveals one simple truth; their ‘share based’ business model is rock solid.
Companies around the world are starting to explore these new business models that deliver improved customer experiences and disrupt a range of traditional industries. With the global sharing economy reaching $15 billion in 2014 and projected to grow to $335 billion by 2025, this new model isn’t a fad – it’s the new way to do business.
Old idea – New normal
The core concepts of a sharing economy isn’t entirely new; companies such as Napster, eBay and even Craigslist all followed similar tenets. Strong communities built around sharing have had a major impact on consumers, creating an environment where customers are more trusting and more willing to take risks.
Companies like Uber and Airbnb are building on this style of consumption, creating affordable solutions that place consumers at the centre of completely new experiences.
The Middle East
This new way of doing business is transforming industries and redefining user expectations around the world and the Middle East is no exception. A number of innovative companies are already looking at how they can leverage this shift in consumer behaviour and improve on existing solutions.
Careem represents one of the most well-known platforms, offering Uber style transportation services in a number of the region’s major cities. Easily accessible through a user’s smartphone, the service provides luxury transportation quickly and easily.
Another platform that has popped up in the UAE is Yumamia. Branding itself as the place “where home cooks & hungry foodies meet,” the platform places users at the centre of an expansive network of talented home chefs. Chefs are able to share their food will a larger audience (making money in the process) and hungry customers get access to a range of home cooked meals.
With more and more services popping up across the region, it’s clear that Middle Eastern entrepreneurs are in tune with this new style of business. It will be very exciting to see what influence the region’s unique cultures will have on this new business model.
Where it’s headed
It is unlikely the sharing economy will end with taxis, vacation rentals, and home cooked meals. Even now it is expanding rapidly and is primed to have a big impact in the coming years.
As consumers start to become more accustomed to sharing their belongings and spaces, demand in traditional industries will likely decrease. Rather than competing with a single new participant, companies will find themselves competing with millions of individuals who are willing to rent the exact same products for a fraction of the cost.
It won’t be long before the majority will no longer debate the merits and dangers of the sharing economy. It will simply be the new way we do business. Traditional companies will fight it, but in trying to do so they are setting themselves up to fail. Along the way there will be growing pains, but the fact is this new sharing economy is here to stay.
What are your thoughts on the ‘sharing economy’? Be sure to let us know in the comments below or tweet us @PAYFORT.