Technology has emerged as the key enabler for the adoption of the sharing economy. Companies are now using global positioning system (GPS), data analytics, and artificial intelligence (AI) to connect consumers with owners in real-time.
Listed below are the technology trends impacting the sharing economy theme, as identified by GlobalData.
Social media and the sharing economy
Social media has significantly influenced the way people travel, dine, and shop. For example, travellers visit websites like TripAdvisor and Airbnb to plan their itineraries and look at ratings on Zomato before choosing a restaurant. Individuals active on social media are happy to trust others’ opinions online, which has been the backbone of the sharing economy. Online reviews posted on a website like TripAdvisor provide first-hand user experiences. This transparency is helpful for anyone booking an Airbnb or planning a trip to a local restaurant.
Social media accounts are also used to validate users registering on apps. According to a study conducted by Adapty in July 2020, 88% of users provide incorrect data in registration forms. Signing into sites via Facebook or Google improves the customer experience and ensures that businesses receive accurate customer information. It also enhances security with the help of a temporary code that can only be accessed through the customer’s registered mobile phone.
Artificial intelligence (AI)
Sharing economy platform providers use AI to improve customer experience. According to GlobalData’s Emerging Technology Trends Survey 2020, 45% of executives believe that AI will play a vital role in improving efficiency in their existing business operations over the next three years. Analysing user data such as age, location, previous searches, and browsing history allows for a more personalised service.
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Airbnb has developed an embedded listings technique that takes data from previous search sessions and identifies similarities between listings to generate recommendations. Ride-hailing companies like Uber and Lyft use AI to decide prices, offer discounts, and select the most direct route. A 2020 report from Evergage found that 92% of US customers expect a personalised experience, up from 85% in 2019.
A sharing economy company’s success rests on using data to offer better services and a more personalised experience. This requires collecting and storing vast amounts of user information, including (but not limited to) personal, medical, and financial information. In most cases, individuals access sharing economy platforms from personal devices that lack standard enterprise-level security. When combined, all these factors highlight the importance of sharing economy companies’ investment in cybersecurity.
There is also the threat of steep fines and legal action over data breaches and their aftermath. For example, in 2017, Uber paid $148m to all 50 US states and the District of Columbia for its failure to report a cyberattack that exposed the data of 57 million Uber customers and drivers.
Blockchain and sharing economy
According to the Blockchain Council, the major challenge with the sharing economy’s current business model is that its profits are not shared fairly among all involved. Instead, most of the profit generated is captured by the large intermediaries that operate the leading sharing economy platforms.
Blockchain technology can potentially introduce a new, decentralised sharing economy business model. With blockchain, software applications will no longer need to be deployed on a centralised server but can run on a peer-to-peer (P2P) network that no single company controls. Currently, various start-ups are working on a new sharing economy business model that removes the need for third-party intermediaries. These companies offer decentralised sharing economy platforms developed on blockchain technology or are integrating it into their existing platform.
For example, Open Bazaar allows the sale and purchase of goods without the need for a third party to host the data and charge a transaction fee. Similarly, LaZooz and ArcadeCity are decentralised and community-owned platforms that use blockchain technology to enable a car-sharing service. In November 2020, Airbnb unveiled plans to extend R&D into distributed ledger and blockchain technology.
While blockchain could potentially disrupt the sharing economy, its impact to date has been negligible. Blockchain technology is expensive and slow in terms of transaction completion, therefore widespread adoption is unlikely until these issues have been resolved.
This is an edited extract from the Sharing Economy – Thematic Research report produced by GlobalData Thematic Research.