Tricky predictions: How users, producers may adapt to shared consumption

In collaborative systems, the role of the users may switch between ''consumers'' and ''producers''

A few decades ago, Samuel Goldwyn had said “Only a fool would make predictions, especially about the future”. I am very much in sync with this classic Goldwynism and would stay away from grand pronouncements. Nevertheless, I am curious enough to think and make observations about certain trends and postulate how they are likely to pan out over the next few years. Embarking even on this limited exercise is tricky when it comes to a fast evolving space such as the “sharing economy”.
 
Over the last few years, sharing economy is a much used and abused term. For starters, it is important to unpeel what it truly is and what it isn’t. Sharing economy is the mutual value derived by two or more parties from an underutilised skill or asset that is shared using technology as the means of exchange. In its truest form, it is characterised by promoting consumption of underutilised assets and through building community connections. In such collaborative consumption systems, the role of the users could be either that of ‘’consumers’’ or ‘’producers’’ of the resource and the roles could also shift from one to the other. Most of us are familiar and likely users of content platforms such as YouTube and Instagram where we can be both producers as well as consumers of content. Another example of collaborative consumption that we are all familiar with are the peer-to-peer or customer-to-customer classifieds platforms starting with Craigslist, ebay and lately, OLX.

 
But the two companies that truly put the term sharing economy on the map are Uber and Airbnb. Both Uber in transportation and Airbnb in accommodation began as classic sharing-economy models. Uber allowed people to offer their unutilised cars in their free time as cabs to ferry others while Airbnb enabled users to offer their spare rooms to “guests”. While Airbnb advertising has emphasised “people, places and community”; Uber, whose business objective was to become a reliable daily alternative to taxis, squarely positioned itself on pricing, reliability and convenience. This has over time led to these models veering more towards the “access economy”.

 

To understand “access economy” better, we need to look no further than music and video streaming apps. We can access all the songs and shows without owning any of it. In this model, the emphasis is on “access over ownership” while diluting the aspects of underutilised assets and community building. And so with Uber and Airbnb, the focus has shifted to providing access which means more convenience at a lower price, ride givers have been replaced with full time drivers and fleet owners and hosts have been marginalised by property investors and professional asset managers. Further, in India, where private vehicles can’t be used “for hire or reward”, all the Uber cabs are commercial vehicles.

 
As some of the large technology platforms come under increasing scrutiny for workforce, practices in the gig economy, taxation and regulatory permits, not respecting user privacy, it is likely to lead to a movement for self-organising and self-regulating sharing platforms. The underlying technology for this urge to disintermediate the present facilitators would be based on blockchain. The best example of blockchain is Bitcoin, where the community shares the right to mine bitcoins and the computing power to write information into the blockchain along with organically created rules and rewards. It is extremely tough to visualise where this technology would head and it is likely to be fought tooth and nail by existing incumbents or co-opted by them, Libra by Facebook being one example. I would be very surprised though if we don’t see more widespread adoption of any of the blockchain applications towards the later part of next decade.

 
Now that we have established the principles of sharing economy and access economy, let’s move on from Bitcoins to more mundane matters such as our daily commute. Our cities in India are amongst the most traffic congested in the world. The answer to this vexed issue is “shared mobility”. All public transportation is shared mobility. However, the number of buses in our cities are woefully inadequate. Most cities have chosen to go with capital-intensive metros which leave us with the problem of unconnected areas and last-mile commute.
 
The biggest change on Indian roads in the last decade has been the advent of on-demand ride hailing services. It is remarkable to realise the positive impact created by these servicesby providing such a reliable transportation network in so small a time. In order to create that network and provide good quality of service such as, high availability and lower wait times, these companies have had to subsidise both the driver and the commuter, thus improving access. However, ride hailing albeit through technology, is not ride sharing as the pooling concept has not quite taken off. And with the gradual withdrawal of subsidy, as commuters are now exposed to the full cost of access including the car, fuel and driver, the danger is that it would lead to negative network effects. Demand would come down owing to higher prices and as supply starts seeing fewer rides and lower subsidies, they are likely to pull off from the platform leading to deterioration in quality of service.

 
In Bengaluru, for a regular day at non-peak time, average fare per km to be paid by a commuter for a non-AC bus is Rs 2.50, for an AC bus, it is Rs 6, for auto rickshaws,Rs 13, popular app for ride hailing is Rs 17. It is evident that there is a big need gap for affordable and convenient commute options at a price point that is in-between public transport and Auto rickshaws. There is a very good opportunity of providing a viable alternative through classic collaborative consumption model by way of car and bike pooling where a person could be both a ride taker and a ride giver. In this model, the ride giver offers their unutilised seats for others travelling in the same direction at a similar time and smart algorithmsthen match ride givers to ride takers. The ride giver is compensated for the cost of utilisation of his vehicle and effort and the ride takers get to travel at affordable prices and in comfort. This requires the creation of a trusted community and a large enough network for this to become a viable option for daily commute.

 
The other alternative is to dramatically reduce the cost of access for on-demand rides. This can happen by moving to two-wheelers and removing the cost of the driver or by promoting ride sharing on fixed shuttle routes. Many scooter rental start-ups are experimenting with different models to arrive at the right trade-off between price, convenience and unit economics. This has the potential to solve the last mile commute in a big way, there-by promoting the use of public transport.
 
Peter Drucker has famously said that ‘’The only thing we know about the future is that it will be different.’’ In the next few years, we can look forward to traffic problems in our cities being more manageable thanks to innovation that rides on both the “sharing economy” and the “access economy”.

 
CEO
redBus