As the coronavirus pandemic continues to spread around the world, the global economy faces one of its most crippling challenges in recent history. Barriers in manufacturing, distribution, and retailing, have been springing up left and right as governments scramble to come up with measures preventing healthcare systems from being overwhelmed. Lockdowns and quarantines seem like death sentences to entire industries, but resilience and adaptation are inherent in business.
The disruptive emergence of the sharing economy in the past decade is one of the strongest examples. And its evolution signals hope for the future of the world economy.
Sharing economy or shareconomy began as a means to profit off of idle assets. But sharing assets has been around for thousands of years. The difference lies in the development of the internet. It has proven the most effective tool in bringing people with means and people with needs together at an unprecedented rate. The earliest and best examples are Aibnb and Uber.
People, who were not necessarily entrepreneurs, would rent out their cars or houses that are not in use to others who are looking for alternatives to traditional transportation and accommodation businesses. This peer to peer concept was simple, but its ingenuity quickly transformed their respective industries. They even transformed views regarding ownership – since using their services significantly reduces the need for owning cars or houses.
Today, the sharing economy has evolved into something more encompassing of numerous transactions over the internet. It is also increasingly being used to describe business to business mutual interactions. Some of the most prominent e-commerce websites like Amazon, Ebay, and Alibaba have now become platforms shared by small businesses to showcase their wares. Even the delivery of sold goods is being outsourced to different businesses. Although not as apparent as ride or home-sharing, these online shopping malls are also success stories of the sharing economy.
If assets are shared and there is mutual success between supposed competitors, then what does competition look like in this sharing economy?
Forbes described the shift in competition as double-sided using the scooter-sharing app, Wheels, as an example. Wheels changed their business model to accommodate the needs of both their users and contractors. Although the users ultimately drive revenue, contractors play a vital role in keeping the business going and relevant. According to Forbes, this new focus on laborers creates another layer of competitive advantage by growing and enriching their supply lines. They further add that both the community of consumers and contractors can be considered users in the sharing economy.
Outsourcing and Freelancing
The gig economy has closely been related to the sharing economy since their infancy. The former is defined by its system of filling temporary positions in organizations with independent contractors. It can even be said that the gig economy is a huge and essential part, but a part nonetheless, of the sharing economy.
If the sharing economy is changing the concept of ownership, the gig economy is changing the concept of employment. Companies now widely share talents and skills in the form of outsourced help or freelance services. Although this is not entirely a new occurrence, digitalization has been an enormous help, even in industries that are not traditionally linked with this degree of detachment. Because of this, there has been a surge in interest in fields that are more accepting of these arrangements, particularly now that the outbreak is at full swing.
But its implications are far from temporary. Soon, there will also be a rise in the number of students earning their bachelor’s degree in accounting, graphic design, computer programming, and all industries that can seamlessly transition between office and elsewhere settings. These programs too will be delivered online or at least at a distance.
The industries that are not readily receptive to this change because of logistical challenges will also eventually find ways to accommodate these demands.
Toptal Enterprise has published an interesting article differentiating talent economy from gig economy. They claim that the former is a sign that traditional employment is dying. They explain that in the talent economy, the end-user or consumer buys the skill and expertise of the talent and the platforms they use merely enable those transactions.
The Future is Together
So, what do all these mean for the future of the global economy? A lot of experts lament the current situation and generally don’t have high hopes for the foreseeable future. The devastation the coronavirus outbreak has been causing is believed to leave long-lasting implications that will change the world.
But it’s not all doom and gloom. There are several experts who think that although large-scale change will be inevitable, a more humane and universally better economy and even society will emerge from all the strife. According to the BBC, an excellent combination of state socialism and mutual aid can be the new norm. In this future, the sharing economy may play a pivotal role.
The widespread distribution of goods, talents, skills, and opportunities will undoubtedly bring a more dynamicc and resilient economy whose players won’t easily succumb to similar threats to come.