The New “Economy” that is Shaping The Future of Business
Why the Rise of On-Demand Economy won’t affect the Sharing Economy
There’s been a lot of buzz lately about the new on-demand economy. With Uber being estimated by insiders at $40 billion, companies are jumping on the on-demand bandwagon to be the next “Uber-of-X”, X being their company mission of choice. Be it TaskRabbit or Instacart, companies across the country are vying to be as successful as Uber and AirBnB, the two most notable and successful companies thus far in the on-demand economy business. While some say that the rise of the on-demand economy is going to edge out the sharing economy, the two are still vastly different in their intentions and outcomes.
Popularized recently with the immense success of Uber, the on-demand economy has created hundreds of companies looking to fill those large shoes: from companies who rent out analysts to ones who will personally go shopping for a birthday present for your niece, more and more companies are attempting to lay the Uber business model over different disciplines. On-demand companies are characterized as “the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.” With technology advancing every day, the introduction of the on-demand economy is pushing prices down, as the number of freelance workers is still extremely high in the nation. Yet this isn’t always positive news; the Economist cites this as a possibility for the company’s failures at the same time. With little pay and many available workers, companies will have to figure out novel ways to motivate, and manage, the freelance workers they employ. Creatives have gone far in applying the business model to their job of choice: Medicast operates in 3 California cities and patients use an app to record symptoms — within two hours, a doctor arrives at their location. For a flat $200/hour fee, patients have the ease of being treated in their homes, and doctors employed by the service are covered with malpractice insurance.
In car examples, Uber is to on-demand economy as Getaround is to the sharing economy. Compared to the on-demand economy, the sharing economy is “a socio-economic ecosystem built around the sharing of human and physical resources.” The major difference between the two is that the sharing economy requires some capital — to be a part of Getaround, you have to have a car; renting out your laundry machine in France means owning a laundry machine in the first place. On a large scale, companies who rent out office space for coworking must own the office space to begin with. What’s so popular about the sharing economy is the fact that it paves a way for extraneous things to become profitable: an extra bedroom becomes $80 a night, a second jet ski rakes in $30 a day, a family cabin that only gets used once a year becomes someone else’s haven for rent. Like the on-demand economy, the sharing economy relies heavily on internet and society’s constant connected attitudes to propagate their products success.
Both Types of Economy Promote Economic Stimulus
At their core, both the sharing economy and the on-demand economy are striving for the same goal: to make money. While one requires you to drive the car and the other requires you to ride, you’re getting to the same destination whichever service you choose. It’s interesting for this matter, that individuals put the two business models at odds with one another. The reality is, both these styles of services are revolutionizing the way we do business – into a much more cost efficient, quicker model than we’ve ever seen before. Emergence of Smartphone technology and wide-spread use of internet have allowed individuals to maximize their use of resources in a way never before imaginable.