(The rise of Uber and Airbnb)
In recent years we’ve seen the rise of a new type of organisation, one that has a fundamentally different approach to providing traditional services. Instead of owning the necessary equipment and property, and employing the front line employees that deliver the service, they simply look to connect buyers with sellers. And they make a percentage for doing so. I’m talking about companies such as Airbnb and Uber. Both of whom have applied this approach known as the ‘Access Economy’ to the hotel and taxi industries with enormous success.
How is the Access Economy different to the existing models?
This model allows these companies to operate with fewer overheads, giving them the ability to scale up and down more easily. If we start by looking at Airbnb’s rivals, the traditional hotel chain, they have to provide the hotels, branding, marketing, hire and train staff, maintain properties and then buy the uniforms, beddings, food and drink. Not to mention taking the bookings and taking payments. This makes a hotel chain a huge organisation with many levels of management which requires a massive capital investment to get started, grow and then maintain momentum. In contrast if we then look at Airbnb, their only direct responsibilities are for branding and marketing, the online booking process, and hiring and training a small and largely centralised staff. Without the burden of maintaining properties their start-up costs are much lower. And this advantage is further exploited when they come to expand, as once the infrastructure is in place they can essentially add more beds without incurring any additional costs.
The time was right
While some examples of these models have happily existed in various forms for decades, it was a combination of several key factors which combined to create the right circumstances for an explosion of the models use and effect.
The first two factors…
- Mobile Technology – Both the increased speed of mobile data and a maturing app market for mobile devices
- Internet – Users are much more experienced and comfortable using online services
…have been steadily improving for many years, laying the ground work for the final and most important factor. The global recession of 2008 created millions of potential customers for these companies, all suddenly aware of the need to try and save money when and wherever possible. In addition millions are eager to exploit new opportunities to make money by renting out their spare room or by turning your car into a taxi as a second job for a couple of hours a day. It’s in connecting these two large groups of people that the access economy has found its massive potential. Disruptive companies like Airbnb and Uber will undoubtedly have people asking what other industries it could turn on its head.
For more information;
Sharing Economy – https://en.wikipedia.org/wiki/Sharing_economy
Access Economy – https://en.wikipedia.org/wiki/Access_economy
TED Talk on New Power – https://www.ted.com/talks/jeremy_heimans_what_new_power_looks_like
