The sharing economy is one of the fastest-growing business trends with investors funding over $23 billion since 2007 to businesses operating on a shared business model. The sharing economy is nothing but an economic principle that facilitates the access of products and services on a rental basis between two or more parties. This value exchange takes place through a shared marketplace or a peer-peer collaborative platform.
The explosive growth of the sharing economy is astounding. Back in 2009, there were only a handful of businesses working on this business model, but today there are thousands of sharing economy platforms operating in every sector across the globe. Airbnb was launched in 2008, Uber in 2009, and Zipcar, BlaBlaCar, etc. followed them. Renting over ownership is a shift that has taken share as technologies are making it easier to access products and services on demand.
But what constitutes the rising popularity and success of sharing economy platforms? Like any other business, the success of sharing economy platforms also depends on many factors
Let’s look into the reasons and the success factors behind the sustainability of sharing economy platforms.
Choosing a scalable business idea is the most important factor that helps you to sustain your business and earn a profit in the long run. A sharing economy platform that resolves an existing problem is capable of sustaining in the long term. If you take Airbnb, the business model offers an innovative and affordable way to book stays while at a different city or country. Similarly, Uber also was able to completely revolutionize the taxi industry. This was accomplished by combining modern technology with an innovative business idea and pricing strategy while offering a beneficial platform for both drivers and riders.
To start with, take time to research the market you are entering and make sure the fundamentals of your sharing economy business are feasible to upscale. Ensuring your business idea satisfied all parties of your clientele is key to your success in the industry.
Personalized user experience
Every business strives to meet the needs of its clientele. However, to stand out among the fierce competition, businesses need to offer something unique. It can be anything that will make a user have the best interaction with your sharing economy platform. The personalized user experience defines whether a customer will use your service again. For example, Airbnb is not just a peer-peer platform for booking apartments, it allows users to create experiences the way they want. Likewise, focus on offering personalized user experience for your customers in your sharing economy platform to expand your customer base and retain them.
Trust and transparency
All peer-peer rental platforms are built on trust as it connects two or more types of users and engages them to conduct business. Users pay attention to the ratings and feedback from other users before they choose to indulge in business with any service providers. The first step to cultivating a trusting relationship with your customers is to understand them. Collect information about your clientele so that you know how to mold your communication to reach out to them directly. You can also improve trust among users to an extent through advertising and marketing strategies.
The sharing economy platforms don’t always guarantee a professional service, but it constitutes transparency. Trust and transparency are very critical in sharing economy platforms as trusting their products and properties to a complete stranger are not easy for all. Hence it is important for you to incorporate features that increase the trust between users and the platform itself.
Safe and secure platform
Customers naturally will start using a platform that is safe, secure, and trustworthy to use. No matter how innovative your business idea is, if your sharing economy platform is not secure enough to use, it will become difficult to retain your users. So what is the ideal way to establish and maintain security into your services? The key is in infusing efficiency while offering the correct amount of friction at appropriate places.
Here are some of the methods you can employ in your sharing economy platform to make it safe and secure for all your users.
● Verification of service provider’s identity
To make your sharing economy platform safe, ensure that you verify the identification details and license (if required) of service providers. Verify all the concerned asses like apartments, bikes, cars, cameras or any other products. Perform background checks to avoid any fraudulent activities. Use real-time authentication and validation in your sharing economy platform to ensure a quick and seamless experience for your end-users.
● Integrate escrow account into the payment system
As your sharing economy platform conducts important transactions that involve numerous monetary transactions, it is important to implement safeguarding measures to protect the user groups involved. Escrow refers to a third-party entity that is not directly involved in the transactions but keeps the funds secure before the transaction is finalized.
Integrating escrow facilitates transparent transactions and ensure that the payment for the service is made. Escrow stands as an intermediary that acts on behalf of businesses to safeguard and transfer the money that neither party will have access to or control.
● Implementing a review system
These days most customers look up online before using any service to understand the quality of the provider’s service. This is why implementing a review system in your sharing economy platform is significant. Reviews not only influence the buying decisions of customers; it also is important to search engines. For example, Google’s ranking factors are primarily based on prominence and relevance. Setting up a review system can help your future customers rate the service providers based on the opinions of real customers who have actually used the service.
Build a community
The sharing economy platform that focuses on building a community succeeds in growing more flexible and scalable. Once you have a community, it is easier to create a better experience for your customer base. All user groups must have a sense of belongingness in your platform to feel like a community. The primary challenge for a highly active community is to handle the high levels of constant activities, being responsive to user questions and ensures all users are engaging in action that drives brand value.
Leverage the technology optimally
Most services offered by sharing economy platforms nowadays aren’t new. Sharing economy and rentals have always existed. However, the only difference is that leveraging these services was never this easy. This is mainly because the sharing economy platforms utilize modern technology to make rentals exceptionally easy and convenient for users. The added convenience increases the willingness of users to use these services even more.
For example, Uber launched its services during a time when it was troublesome and expensive for people to hire a cab. They transformed the whole process into a few button clicks so that anyone can easily book cabs from their smartphones now. Likewise, leverage the technology to make your services accessible to your users in the most convenient and efficient way.
The future of the sharing economy is bright and there are a lot of businesses waiting to try their luck in entering the industry. The qualities to stand out from the competition mainly focus on offering convenient solutions and creating a personalized user experience. The most successful sharing economy platforms have invested a lot of their efforts in increasing efficiencies, growing their community, enabling transparency, building trust, and innovating. If you want to run a sustainable sharing economy platform, invest in the above-discussed aspects to succeed in the industry and take your business to new heights.
In this post: we look at how Airbnb copycats in China have taken the Airbnb template and innovated to win in the local Chinese market.
The impact of Airbnb in China and Airbnb’s late arrival
Airbnb created a massive impact in the hospitality market in 2008. Within a couple of years of launching, it had raised a lot of money and was listing more properties each week at a rapid pace.
However, it didn’t focus on China for a long time. It was in 2016 when Airbnb opened its offices in China and started its operations. Eight years after it had conquered the American and European markets.
Eight years is a lot of time for Chinese entrepreneurs to study the impact of Airbnb and replicate the same in their own country. Truth be told, by the time Airbnb came to China – 2016 – many so called “copycats” had already emerged and had taken a large share of the Chinese short term rental market.
Airbnb’s Chinese competitors – Xiaozhu and Zhu Bai Jia
Online platforms such as Xiaozhu and Zhu Bai Jia are big hits in China. These companies had a tougher barrier to pass – when compared to what Airbnb faced when it launched in San Francisco.
You see, unlike the US or Europe, China isn’t accustomed with opening doors to strangers and letting them stay for a short duration. Xiaozhu and Zhu Bai Jia had to literally change Chinese culture to create a short term rental industry.
Zhou Yichang is a Chinese entrepreneur. He lives in a big city and works for Xiaozhu as a Customer Manager. His job is to visit homes listed on the site and help them with things ranging from clicking great pictures of properties, reviewing amenities and helping owners buy the right stuff to make guest stay a lot easier.
Many times, Zhou handholds hosts with helping them to grow and earn more money. Airbnb hasn’t got anything like this in its markets. Imagine the resources required to assign a Home Manager to each and every property listed on its platform. But, with sheer hard work and innovation, Xiaozhu have cracked the code. Bridging between hosts and guests and creating a robust vacation rental economy.
What did the Chinese platforms do to win
China was always considered as the copycat factory of the world. Observe what western companies do, and replicate the products and services for the local market. China is not a copycat anymore. In fact, today, we see more western brands copying ideas from Chinese service providers.
While these vacation rental platforms borrowed Airbnb’s template, they also innovated, introducing services that Airbnb would later mirror.
Zhu Bai Jia, a Shenzhen-based start-up founded in 2012, focuses on providing outbound Chinese tourists with short-term home rentals in some 70 countries. Besides assisting travellers looking for a home away from home, Zhu Bai Jia helps them plan entire trips, using hosts that also serve as part-time tour guides. Airbnb launched a similar service only last year.
The company’s spokesperson told South China Morning Post that – “When Airbnb launched ‘Airbnb Trips’ last year, we laughed. The joke in our sector is that ‘China used to copy Silicon Valley, but now it is Silicon Valley that copies China.’”
What’s the lesson – contextual service delivery
The lesson for entrepreneurs who wish to launch short term rental platforms, such as an Airbnb clone is this – no matter how similar looking your platform is to Airbnb, certain services will have to modified to suit the market you are serving in. This is called contextual business delivery.
Not only local culture, many times local regulations push businesses to the limit. And businesses have to adapt or die. New age short term rentals are disrupting the Asian hospitality markets today. Make yours count by delivering the best services suited to your market.
How much does it cost to build a clone script from scratch
A robust, modern day clone script needs to be built on the latest technology stack. And add to it the resources you need to design, build, test, and launch the platform. In today’s demanding market, where it is a challenge to hire experienced developers, it will cost you anywhere close to USD 60,000 to develop an Airbnb clone script from scratch.
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Many economists believe that the economy as we have come to know it will seamlessly merge with the modern day sharing economy at some point in the near future. At the center of this transition is Airbnb. Started by two roommates in San Francisco. They put out an airbed mattress and offered free breakfast to travelers.
Considering how expensive SF was (and still is today), the two roommates got themselves bookings in a flurry. They brought on another mate of theirs to code a platform and allow anyone to list their room or home to earn extra income. This is the power of sharing economy.
Where are we headed?
The world will look different in the future. There are already companies working to disrupt the real estate industry as we come to know it today – both residential and commercial real estate. Instead of buying or leasing office spaces or residences, we all will just become members of a large platform – which will allow us access to any office or residence across the city, state, country or even the world. This is the future, and it looks darn interesting.
In a perfect sharing economy, people will make effective utilization of resources. In a perfect sharing economy, it will be platforms who will own most real estate and we the people will end up subscribing for spaces. Seems bleak? Not at all. We will still be able to own properties, but imagine changing office spaces and moving anywhere seamlessly. The sharing economy won’t mean that people move aimlessly, but it means, we don’t have to be bogged down by expensive leases or pathetic real estate choices. At present, change is taking place at a rapid pace. The question we need to ask is this – what will the future look like?
It is futile to try and fight.” Rajeev Menon, Marriott’s COO for Asia Pacific (excluding Greater China), agrees: “This is a business model that’s here to stay.”
What does the transition look like?
The transition – sharing economy – will gather pace and will impact major economies first. Today, categorizing the world in to developed and developing world seems to be too old school. Economists say that Asia will be the recipient of cutting edge innovation in the sharing economy. Besides, business and millennial travel will change forever. Hotels will start to operate as lean bed and breakfasts and equip themselves to change in a much better way. And a lot of new business – such as sharing cars, parking spaces, storage spaces – will crop up in fast growing economies.
A lot of employment will be generated at the small and medium scale level, and if governments act quickly by creating an encouraging atmosphere for such businesses to flourish, then a lot of tax income can be generated – which means boosting local economies.
Growth is gaining pace
The short term rental economy is growing fast. The entire local hosting (short term rentals) industry generated about $169 billion in 2018 – per Skift. HomeAway had predicted that the short term rental industry would grow anywhere between two to four times – nearly as fast as the global economy. HomeAway claims that 82% of its current users prefer local hosts than fancy hotels. Given this acceleration, it is hardly surprising that investors are flocking to the short-term rental sector.
Asia at the center of short term rental innovation
Asia is touted to be at the center of sharing economy’s fruits of labor. Nielsen research has found that the Asia-Pacific residents were the most willing in the world to participate in sharing, with 81% willing to rent or share others’ assets and 78% willing to rent or share their own (vs. global figures of 66% and 68%), and of the top 10 countries most likely to do so, four are in Asia: China, the Philippines, Thailand, and India. And with 135 million outbound travelers (UN World Tourism Organization), China is well positioned to influence global trends.
Millennials are changing the travel industry
Business travel is now opening up to the short term rental market. With more such aggregators – like Airbnb – pop up, more the chances of businesses spending their money on affordable, innovative local hosts than large hotel chains. The Global Business Travel Association claims that in 2016 alone, business travelers spent nearly $1.3 trillion – with an average growth of 7% year-on-year.
Airbnb and its major competitor Booking.com have created services exclusively catering to business travelers. Offering self check in, free WiFi, flexible booking and cancellation policies among others. American Express Global Business Travel has already partnered with Airbnb to facilitate expensing.
Today, the newer generation of business travelers are combining business and leisure travel together and act as the main catalyst for short term rentals.
Condé Nast Traveler claims that nearly 8 out of 10 millennial business travelers wish to stay at short term rentals than at hotels. This trend is visible in the world’s fastest growing economies.
Evolving Business Models – create your own rental economy
The short term rental practice is now being applied to other aspects of personal and business lives. It’s not just renting rooms or villas, today small businesses are offering coworking spaces, car parking slots at stadiums, malls, and self storage spaces in big cities such as New York and London. This growth is mainly due to two reasons:
One – the existing services – such as hotel chains – have turned out to be expensive, pushing the economy to create innovative, low cost supplies – like short term rentals. Two – easy, affordable access to technology platforms – which enable anyone to create a platform and disrupt any part of the global economy has also played a major part.
We have crafted the perfect Airbnb clone for precisely this purpose – to enable anybody to create their own sharing economy. At Rentcubo – we have taken everything that is good from Airbnb and have recreated the platform to suit multiple businesses in a shared economy. Rent out homes, car parking spaces, coworking desks, or self storage spaces. Rentcubo is designed to work just like Airbnb. Rent anything, rent like Airbnb.