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Growth of the Sharing Economy 2 | Sharing Or Paring? Growth of the Sharing Economy | 3 www.pwc.com/hu Sharing or paring? Growth of the sharing economy 2 | Sharing or paring? Growth of the sharing economy | 3 Contents Executive summary 5 Main drivers 9 Main features of sharing economy companies 12 Business models 13 A contender for the throne 14 Emergence of the model in certain key sectors 16 I. Mobility industry 16 II. Retail and consumer goods 18 III. Tourism and hotel industry 19 IV. Entertainment, multimedia and telecommunication 20 V. Financial sector 21 VI. Energy sector 22 VII. Human resources sector 23 VIII. Peripheral areas of the sharing economy 24 Like it or lump it 25 What next? 28 About PwC 30 Contact 31 4 | A day in the life of the sharing economy While he does his Yesterday Peter applied for an online Nearby a morning workout, Peter data gathering distance young mother 8:00 listens to his work assignment 12:30 offers her Cardio playlist on Spotify. on TaskRabbit. home cooking So he can via Yummber, 9:15 concentrate better, and Peter jumps he books ofce at the space in the opportunity. Kaptár coworking ofce. On Skillshare, 13:45 16:00 he listens to the Nature Photography On the way home for Beginners course. he stops to pick up the foodstuffs he 15:45 To unwind, he starts ordered last week from watching a lm on Netflix, the shopping community but gets bored of it and reads Szatyorbolt. his book, sourced from A friend shows him Rukkola.hu, instead. a new Hungarian board game under development, on Kickstarter. Next week he’s going on holiday in Italy 18:00 He likes it so much with his girlfriend. he orders one too. Peter books a place to stay on Airbnb, 18:30 and sorts out the transportation using BlaBlaCar. He’s late for dinner Peter wants to assemble the furniture with his friends, he bought at the weekend, 20:00 so he calls an Uber car. but he doesn’t have The Uber driver is a screwdriver. using Waze to get advance Luckily, he manages warning of accidents and 19:00 to get hold of the tool avoid trafc jams. he needs quickly through Miutcánk.hu. 20:15 23:00 After supper the friends ride home on MOL Bubi At the usual monthly community bicycles dinner with friends, they are trying in the pleasant summer out home dining. evening. Sharing or paring? Growth of the sharing economy | 5 Executive Summary The “sharing economy” companies that are emerging on the back of radical changes in consumer habits – Couchsurfing, Airbnb, Uber and their peers – have overturned entire sectors with their so-called “creative disruption” in the space of only a few years. We can safely say that they are associated with one of the most important global trends and success stories of recent years and, with all certainty, of years to Growth forecast of the sharing economy come, and – although controversial – they are and sectors with a traditional going to bring profound changes to our business environment. Certain sharing economy players operating model have grown into global companies in the space of only a few years. In July 2015, according to an analysis by the Wall Street Journal, Uber’s value Sharing Traditional had topped 50 billion dollars, making it worth economy operating model more than 80% of the S&P 500 companies, while Airbnb was valued at 24 billion dollars. A related study by PwC shows that while in 2013 the sharing economy companies in the five sectors where the new business model is the most c2c lending and tool hire prevalent earned sales revenue of 15 billion community nancing dollars, by 2025 this will have risen to 335 billion (crowdfunding) dollars, so half of the revenues in these markets will go to companies with a sharing-based model. 2013 online B&B, hostel distance work $15 bn $240 bn c2c home sharing book lending 2025 car sharing car rental $335 bn $335 bn online music DVD rental and video streaming Source: PwC 6 | We at PwC continuously monitor and keep our Along with these factors, one of the main reasons clients informed about the changes that affect for the success of the sharing economy them and impact their operation. As one of the companies is the considerable cost advantage world’s leading providers of professional resulting from their economies of scale: global services, in keeping with the spirit of the sharing players entering the local market have a lower economy, we too are happy to share our fixed cost ratio for their services than local knowledge and experience with others. In this participants. Moreover, their business model study we will attempt to outline, comprehensibly enables them to expand extremely rapidly, as and comprehensively, everything that a business breaking into a new market only entails minimal decision-maker needs to know about the costs for them. phenomenon. The purpose of our study is not to analyse every aspect in the minutest detail, but A universally accepted, standard Hungarian to give our readers a broader overview. definition has yet to emerge, but nevertheless we can apply the following definition on the basis of We will explain what exactly the sharing the main features and characteristics: economy means, how it works and what factors have led to its emergence. We will explore in detail the occurrence of the phenomenon in In the sharing economy users certain key sectors, and present the related regulatory issues, as well as the societal, • share with each other economic and political implications. • their idle capacities and resources (e.g. fixed assets, services, money) During our investigation of the phenomenon we • on an on-demand basis (as and identified the following 4 main social and when the consumer need arises), economic changes that have contributed greatly usually via an IT platform, to the rapid spread of the model: • on the basis of trust, ascribing particular importance to personal 1. The spread of advanced digital platforms and interaction and the community devices experience, • with an eye on sustainability. 2. Efforts to use material resources more efficiently, economic rationality In this study we have investigated 7 key sectors 3. New consumer needs – closer cooperation and where the sharing economy is already substantial a change in attitudes to ownership, more or has high growth potential. We analysed the environmentally friendly consumption choices main forms it takes, some interesting examples, the trends and their impacts, with a special focus 4. Social changes – globalisation and on the participants that operate in Hungary. urbanisation Sharing or paring? Growth of the sharing economy | 7 With sharing economy companies, too, we can distinguish between consumer-to-consumer 1. Mobility industry (c2c) and business-to-consumer (b2c) business Car clubs (car sharing), real-time vehicle sharing models. (ride sharing), parking space rental, on-demand car and bicycle rental, community-based traffic and The c2c model involves collaboration between navigation applications “equal partners”, as the providers and users BlaBlaCar, Uber, Lyft, Wundercar, Zipcar, services are brought together through the BMW DriveNow, Car2Go, MOL Bubi, Waze intermediation of a company that is independent from them, via its (IT) platform. Most of the 2. Retail and consumer goods well-known players, such as Uber, Airbnb or Everyday functional objects (e.g. for housework and Couchsurfing, work with a c2c model. household tasks, kitchen, sport), food sharing, closet sharing, shopping communities, community gardens In the b2c model, the provider of the service and Peerby, Shareyourmeal, Threadflip, Poshmark, the operator of the intermediation channel are Piqniq, Yummber, Miutcánk.hu one and the same: so the users obtain the resources they need from one company, via its 3. Tourism and hotel industry own platform. An increasing number of traditional companies globally are using this new Monetised home sharing, non-monetised home sharing, home exchange, community tourism b2c business model to supply products to their services, coworking offices consumers, creating new revenue streams in the process. Examples include Daimler (car2Go) and Airbnb, Couchsurfing, HomeExchange, KAPTÁR BMW (DriveNow); but the MOL Bubi (community bicycle scheme) also works with a b2c model. 4. Entertainment, multimedia and telecommunication Although innovation is a natural by-product of Online music and video streaming, wireless market competition, and indeed one of its main community networks driving forces, the operation of sharing economy Spotify, Deezer, YouTube, Netflix, Fon, Ott One, companies raises many regulatory problems. UPC Wi-Free • In terms of taxation and employment, the sector is in a grey zone, so from a budgetary 5. Financial sector perspective whitening it up, thus increasing Community financing (crowdfunding), c2c tax revenues and the number of registered lending, community innovation (crowdcreation) employees, could be an objective. Kickstarter, Indiegogo, Lending Club, Zopa, InnoCentive, Creative Selector, MagNet Bank • Participants in the sharing economy – even those who provide their services professionally on a full-time basis – have 6. Energy sector lower costs and smaller administrative burdens to contend with than the traditional Wind farms, community solar projects, virtual power plants, electricity storage solutions players, which could give them a competitive advantage. However, this type of service Mosaic, Solar Share, Sunshot, provision is hard to fit into the traditional Wien Energie, Tesla frameworks of self-employment, as this would negate the advantages stemming from 7. Human resources sector its simplicity. Provision of various services, odd jobs • The feedback systems operated by the sharing (household tasks, distance work, etc.), online teaching economy platforms do have a considerable self-regulatory effect; however, adequate TaskRabbit, Sorted, SkillShare, Polyglot klub protection for the users (health and safety, asset security, quality problems) is not assured in every case when it comes to events or faults that cannot be foreseen.
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