In just a few years, the sharing economy has risen from being a mere novelty to becoming the new way of doing business for several industries. Companies like Uber and Airbnb have both proven that tech companies can challenge well-entrenched traditional institutions. Uber has grown to become a $62 billion company with talks of an initial public offering by 2019 already moving through the grapevine.
A Bank of America Merrill Lynch (BofAML) report forecasts the continued growth of the sector and not just in the peer-to-peer (P2P) segment. Sharing economy platforms have now expanded to cover the business-to-business (B2B) transactions. For example, Yard Club is enabling construction firms to share building equipment. WeWork is also allowing companies to rent out extra workspaces to others.
Even blockchain has made its way into the space. ShareRing, for instance, seeks to consolidate various sharing economy services on its platform and promotes the use of crypto tokens to facilitate transactions. This entry of blockchain actually introduces new mechanics that could make the space more favorable for SMB participation.
Here are three ways the sharing economy is expanding to involve businesses as participants and how it is adopting new technologies and mechanisms to facilitate transactions.
Renting vs. owning assets
For businesses, the diversity of assets being made available could be their much-needed lifeline. Many startups find it difficult to kick start or scale their ventures without having to put up additional capital to buy equipment or space. However, if they could rent these assets at affordable rates instead, they gain a lot more cash flow flexibility. They can then re-prioritize their spending and put their funds in efforts that would grow the business-like sales and marketing.
Decentralized platforms like ShareRing are encouraging more participants to share their assets. The platform aims to facilitate deals like rentals of heavy equipment, office tools, and storage space. This could help businesses transition from being “asset-heavy” enterprises to being “asset-light.” Companies could simply tap into decentralized platforms to outsource infrastructure or business processes.
These platforms also make it easy for asset owners to make money out of their potentially idle assets. The BofAML report indicates that there are idle assets worth $4.5 trillion globally that can be tapped. Other platforms even allow sharing of assets like computing resources. Many SMBs aren’t exactly maximizing their IT infrastructure during off-hours. They can then opt to share their extra bandwidth or idle computing power through platforms like Storj (digital storage) or Gladius (DDoS mitigation), allowing businesses to recoup part of their expenses in the process.
Better user experience
The availability of these platforms is also introducing better user experiences. These help users easily find the equipment or service providers they need. For SMBs, this means that they can simply rent assets through intuitive and accessible interfaces instead of having to go through the lengthy and complicated process of procurement.
The increasing admissibility of blockchain records also enhances the security of transactions on certain sharing platforms. SMBs can now rely on smart contracts and blockchain records to cover legal and documentary requirements essential in certain transactions.
For example, real estate transactions can be among the more complex agreements for businesses as these typically involve intermediaries such as lawyers, agents, and banks. Real estate platforms like SMARTRealty are changing these dynamics by allowing parties to negotiate, agree, and pay each other directly using smart contracts and cryptocurrencies. By taking out middlemen, transactions can become speedier and cheaper.
Fair and just market
Blockchain also helps cultivate fair markets through transparency and decentralization. With no centralized authority to dictate terms and pricing, participants in these decentralized marketplaces and platforms are free to price their services accordingly. Ultimately, the market decides which price points customers would prefer.
The use of smart contracts and crypto currencies also helps ensure that all agreements are properly fulfilled. Since the platforms themselves provide the escrow function, no payments are disbursed until the terms stated in the smart contracts are satisfied. For SMBs, this is an invaluable safeguard and minimizes further effort in enforcing contracts and collecting on invoices.
In addition, platforms now adopt identity management as means to guarantee that only legitimate entities participate. This helps mitigate the entry of fraudsters and discourage malicious actors. Transactions, particularly those made on blockchain-based platforms, are transparent and auditable so it’s easy for the community to expose dubious activities.
The sharing economy isn’t for individuals anymore. Sharing economy platforms are providing better mechanisms for SMBs to participate. These platforms are allowing a wider variety of assets to be shared providing businesses options to augment their infrastructure and operations. SMBs can also create revenue streams for their unused or underutilized assets.
Platforms can also provide aggregation to help businesses tap into a wide set of potential service providers using a single interface. Through the entry of blockchain into the space, smart contracts and cryptocurrencies can now help guarantee the fulfillment of services and payments. Since there’s no need for intermediaries, transactions also become faster and more cost-effective.
These benefits should encourage more SMBs to become part of the sharing economy and explore new ways to earn and run their businesses.