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.