We are witnessing a significant transition in the way goods and services are supplied to buyers. Once upon a time you were actually limited to what you could buy locally. After the rise of industrial revolution, and the following globalization, choices increased and costs went down.
But, inevitably, industries have gone through varying degrees of concentration, and market share is now divided amongst a few mega firms. The unfortunate – even understandable – consequence is that choices are again reduced, as firms are focusing only on what they sell broadly.
More recently, we’re seeing the raising of a new way to buy goods, services, and even ideas. It’s what people refer to as Sharing Economy. In a few words, people with private excess capacity, are making it available to others who want to purchase or rent it.
- Why buy new goods from big brands, when you can rather buy pre-owned goods on eBay?
- Why buy your own car when you can rather share cars on demand via Car2Go?
- Stay at hotels or rather stay at homes through Airbnb?
- Taxi or Uber?
The supply was always there, this is the common link of all the above examples.
And you can add further “items” to the list: excess time on weekends, excess seating capacity on our drives, available lodging capacity at home, available funds sitting in savings or checking accounts…
The new ways to deliver value are gaining traction on expanded markets, thanks to two vital factors that are up taking these new collaborative economy models.
Technology has a key role in the emerging collaborative economy. A limited access to information was a given and structural constraint on supply for established markets. Technology breaks are actually releasing new supply people couldn’t access before.
Technology is changing the markets’ contours, shifting the basis of supply and demand, AND generating the reaction of incumbents.
Incumbents are fighting not new emerging competitors who are supplanting them, BUT just the potential threats their markets are open to. Technology is one thing, people sharing the capacity enabled by the technology and purchasing it, is another one.
But what is really fuelling the capacity increase in the emerging collaborative economy? It is the willingness people have, both to supply and to purchase this existing excess capacity.
Globally and with anyone.
And for a broader (much broader) items’ range.
We are just at the beginning, but we can expect it will follow the more than familiar innovation diffusion curve, with the more than familiar actors: innovators, early adopters and early majority, these last looking for something that really works.
The dynamics of change are in place; it is only a matter of time before many of us start referring to the collaborative economy. Price, long tail and a general convenience are compelling.
This could be enough, but…
But what does this mean for established industries?
They’ve actually operated under a fairly stable supply-demand equilibrium for decades. There are demand and supply dynamics that companies are moving up and down in their favor.
But now, the expansion of supply through part-timers are moving any supply chain out, with increased quantities AND reduced prices.
Not only does it expand the choices of things available to people, but it also enables all those priced out of a market to enter it. Further, some existing buyers will decide to have a look at these new offers.
And this IS ultimately disruptive.