The rise of the sharing economy is now a high-profile investment theme driven by the rapid growth of the internet.
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Established giants could face challenges or benefit from this disruptive force, Uwe Neumann, research analyst write for Credit Suisse.
Some business leaders in non-internet-based industries view a meeting with Google like a "rendezvous with Joe Black" in reference to the movie of the same name, in which a media mogul meets Death in the form of a young man.
Traditional industries may still be breathing, but Google serves as a reminder that their time is up. The sharing economy is also a disruptive force to existing industries, as it continues to record rapid growth.
According to Crowd Companies, participation rates in sharing services could double in 2015. Industry researcher Nielsen reports that 68 percent of adults globally are willing to share or rent goods. Sharing is not a new idea, so why is it becoming such a disruptive force? The main reason is that there has been a shift from physical to digital merchandise. The latter has gained considerable traction as the internet expands to mobile communication devices and other things.
This makes it possible to coordinate peer-to-peer or business-to-people services in a more efficient and secure manner. Many internet-based sharing platforms and marketplaces such as Uber, Spotify and HomeAway have emerged, and the number of users is growing quickly.
Companies to watch include non-listed venture-capital funded firms such as Uber, Blablacar and Airbnb, valued between 5 billion dollars and more than 50 billion dollars in the gray market.
Why is it that sharing firms appear to be so attractive and why do investors value them at much higher amounts than traditional rental companies?
Industry researcher PricewaterhouseCoopers identifies five main sharing-economy sectors: peer-to-peer lending and crowdfunding, online staffing, peer-to-peer accommodation, car sharing, music and video streaming...
It expects the sharing-economy to grow to 335 billion dollars in sales over a ten-year period. Half of which would be generated by the new sharing-economy internet platform firms.
User base and engagement rates are also important for incumbent internet giants such as Facebook, Google, Amazon, LinkedIn or Priceline.com. In the past three years, the value of the listed internet-based companies cited earlier has increased by between 80 and 300 percent on growing sales of 20 to 30 percent per year.
Are such growth rates now in jeopardy due to the rising success of sharing-economy internet platform firms? Could these newcomers have a negative impact on the business of well-established companies?
The users of the new internet platforms still engage much less than those who use platforms of more established companies. But if the newer platforms continue to grow, they will have the option to enter into new businesses, and to also compete with the internet giants.
It is natural that Uber or Airbnb would want to look at other markets such as advertising and retail. ■