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The Sharing Economy: an Exploratory Study on Revenue Models of Belgian Digital Platforms and Sharing Initiatives Karijn Bonne Artevelde University of Applied Sciences

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The Sharing Economy: an Exploratory Study on Revenue Models of Belgian Digital Platforms and Sharing Initiatives Karijn Bonne Artevelde University of Applied Sciences AUTEURS The sharing economy: an exploratory study on revenue models of Belgian digital platforms and sharing initiatives Karijn Bonne Artevelde University of Applied Sciences ABSTRACT At present, all kinds of sharing initiatives are active in Belgium, and many still are being launched. Within the sharing economy, peers, consumers or private persons give each other temporary access to (otherwise unused) goods. It is called a two-sided platform economy: platform owners match con- sumers with needs and suppliers with haves. Key to success is to build and maintain a critical mass of users on the platform. Although the sharing economy seems a growing business, the question arises whether these platforms are able to evolve into valid businesses. The focus of this paper is how sharing initiatives generate revenue, especially since sharing, lending, swapping, etc. are often free of charge. Nicky Malfliet Platform owners (N=20) of (mainly) Belgian sharing initiatives were interviewed. Results of the study Artevelde University of show that the transactional or commission based model is used the most. However, there is no one- Applied Sciences size-fits-all approach to create, deliver, and capture value. Therefore, many platforms combine various revenue models for different target groups or services. Some platforms started without any earnings in mind because the founders value(d) sustainability and social issues more than financial ones. Of course, without earnings, the platform cannot expand and must eventually evolve towards extra re- venue stream and towards another model. Each model has its issues: the transaction-based model is a ”low margin, high volume model”. Another downside to the transaction model is that peers can skip and bypass the platform. Finally, the most general issue within the sharing economy, is the struggle to reconcile social values and profit. Keywords: sharing economy – digital platform – revenue models – business models Vicky Franssen Binnen de deeleconomie in België bestaan heel wat verschillende soorten deelinitiatieven en komen er Artevelde University of nog steeds bij. Peers, consumenten en privé personen geven elkaar tijdelijk toegang tot (ongebruikte) Applied Sciences goederen in de deeleconomie. Het is een tweezijdige platform economie: platformeigenaars matchen vraag van consumenten met aanbod van leveranciers. Een kritische succesfactor hierbij is een kritische massa van gebruikers op het platform hebben. Alhoewel de deeleconomie een bloeiende business lijkt, stellen we ons de vraag of deze platformen kunnen groeien tot waardige ondernemingen. Deze paper focust op het verdienmodel van deelinitiatieven mede omdat delen, lenen, swappen etc. vaak gratis wordt aangeboden. Platformeigenaars (N=20) van (voornamelijk) Belgische deelinitiatieven werden geïnterviewd. De resultaten tonen dat het transactie of commissiegebaseerd model het vaakst wordt gebruikt. Maar er is duidelijk geen standaard verdienmodel dat waarde kan creëren, leveren en capte- ren voor elk soort platform. De meeste platformen combineren daarom verschillende verdienmodellen voor verschillende doelgroepen of diensten. Sommige platformen starten zonder enige inkomsten om- dat de oprichters duurzaamheid en sociale waarden boven financiële stellen. Zonder inkomstenstroom Christel De Maeyer kan het platform natuurlijk niet groeien en opschalen en daarom evolueren de meesten naar bijkom- Artevelde University of stige verdiensten of een ander verdienmodel. In het algemeen heeft elk verdienmodel zijn nadelen. Het Applied Sciences meest gebruikte model, transactiegebaseerd, is een “lage marge, hoog volume model”. Daarenboven kunnen gebruikers het platform makkelijk passeren en rechtstreeks bij de aanbieder gaan. Tenslotte blijkt de algemene uitdaging in de deeleconomie om sociale waarden met die van profit te verzoenen. Keywords: deeleconomie – digitale platformen – verdienmodellen – businessmodellen Marilyn Michiels Artevelde University of Applied Sciences 81 The sharing economy 1. INTRODUCTION involved and if sharing/giving/lending is for free (Verdegem, 2016). Finally, Acquier et al. (2017) describe the sharing econo- 1.1. The sharing economy my as based on three foundations: an access, a platform and a community based economy (Fig 1). The latter involves plat- According to Google Trends, the first search for the term “shar- forms that value contributing to a community project, creating ing economy’ worldwide took place in 2009 (Demary, 2015). In social bonding and promoting a social mission more than eco- August 2015, Flanderstoday.eu published: “The sharing econo- nomic maximalisation. my has arrived in Flanders and the rest of Belgium, even if most people don’t know about it yet. Awareness and levels of partici- Indeed, many sharing initiatives have no revenue model. With- pation are low […], but the idea of sharing appeals to people, in a business model that describes how a company creates and which leaves local companies in this innovative area of business provides value for its consumers a revenue model defines how feeling optimistic” (Mundell, 2015). Today, all kinds of sharing the payments are converted into profits (De Maeyer & Bonne, initiatives are well-known and embraced in Belgium, and many 2016). Since sharing, lending, swapping, etc. is often free of platforms have been and are still being launched. For example, charge, the way in which sharing initiatives generate revenue, in 2016-2017, several new initiatives arose in Belgium, such as in particular, and influence the economy, in general, may be in- JoinUs2Eat (eating together with strangers in teresting and debatable, and forms the main someone’s house), Flavr (cooking for others), “Note that many platforms focus of this paper. SurrounThings (lending and letting goods) did not start from the and Helpper (time banking). JoinUs2Eat, how- beginning with a nicely This paper is structured as follows. First, busi- ever, did not really attain the necessary num- working high-tech ness and revenue models in general and in ber of cooks to succesfully get started and platform or app. the sharing economy are described. Then, the Flavr stopped only two years after it started, ” methodology of the present study is present- eventhough the platform was well-known and quite a success. ed, followed by its main results. Finally, some conclusions are The platform could not generate enough revenue, since there drawn and discussed. were insufficient transactions on the platform. Platforms need to reach an adequate critical mass to survive, but many fail to do so and do not evolve into a financially viable business and eventually, they shut down (Piscicelli, Ludden, & Cooper, 2018). Although the sharing economy seems a growing business, the question arises whether these platforms are able to evolve into fully-fledged businesses. This paper focusses on the revenue model(s) of (sustainable) Belgian sharing platforms. Several definitions on the sharing or collaborative economy have been published. One of the first books on this topic was “What’s mine is yours” (2010), in which Botsman and Rogers described how the collaborative economy changes our lives. Botsman defines the collaborative economy as “an economic system of decentralized networks and marketplaces that unlocks the value of underused assets by matching needs and haves, in ways that bypass traditional middlemen.” (Botsman, 2015). What makes this sharing economy new, is that a participant is not only helping a friend but can also help a stranger, and this not only for free, but potentially for money (Sundararajan, 2016). This sharing economy thus opens new ways of generating rev- enue (Kathan, Matzler, & Veider, 2016), for suppliers as well as for the platform owners. Frenken specifies that within the shar- Figure 1. Combining the cores of the sharing economy ing economy, peers, consumers or private persons give each (Acquier, Daudigeos, & Pinkse, 2017) other temporary access to (otherwise unused) goods (Frenken K., 2016). Still others define the sharing economy in a stricter way and stress that there is only real sharing if no income is 82 Accountancy & Bedrijfskunde, 2019 1.2. Business and revenue models, in general and in the get paid for doing so, and make a profit (Teece, 2010). With- sharing economy in the Business Model Canvas (Oosterwalder & Pigneur, 2010) that visualizes a business model in nine boxes, the revenue A business framework for creating customer value is called a stream can be seen at the bottom: which earnings and costs business model. It is the conceptual model of a company and can be distinguished and what is finally the return (earnings it defines how the company creates and provides value for minus costs). Fig. 2 illustrates some revenue models to get that consumers and how the payments are converted into profits stream or revenue in the field of e-businesses or online servic- (De Maeyer & Bonne, 2016). It thus reflects a management’s es, like getting money from advertisers, getting paid per use, or hypothesis about what customers want, how they want it, and getting a license fee. how the enterprise can organize to best meet those needs, Figure 2. Revenue models used by e-businesses or online services (+50 Business & Revenue Model Examples, 2017) 83 The sharing economy Typically, the prevalent business model consists of two players: referred to as non-profit platforms, do not have any business companies, producing goods or services which customers – be nor a revenue model since sharing, lending, swapping, etc. is
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