If you’ve rode an ofo bike, rented an apartment on Airbnb, took an Uber ride, played a part in the growth of the global sharing economy.

At the start, it all seemed a perfect scenario, a win-win situation for providers and users. Staying at a local’s apartment means enjoying a whole new travel experience. Commuting was made more affordable with ride-sharing, owning a car became a tad more affordable when you could use it for ride-sharing purposes. Last mile commute was made easier with bike-sharing, there wasn’t a need to own a bike that would be underutilized majority of the time.

For cars, bikes, home and other asset owners looking to share their underutilized assets, the sharing economy was an excellent opportunity to earn revenue. As the sharing economy grew, naturally, challenges as such surfaced:

High intermediary fees

Monopolistic and fragmented landscape

Trust gap

Lack of risk mitigation

High intermediary fees

Uber, Airbnb, Lyft are amongst the many centralized platforms which bring providers and consumers together to allow transactions to take place. These centralized platforms typically charge both providers and consumers a fee for the usage of their platform. The amount and increment of these fees are made at the discretion of these platforms.

Monopolistic and fragmented landscape

For certain services, taking ride-sharing as an example, if Platform A has grown to a size that it owns 70% of the market share, other ride sharing platforms would not be able to compete with them. Platform A will then no longer need to adjust their pricing model to compete with other players.

The landscape has also become increasingly fragmented. There are a variety of platforms that have similar product offerings, such as Expedia, Booking.com, Zuji.com, etc. Planning a holiday requires sitting in front of the computer for a couple of hours, with 20 browser tabs open followed by registering yourself a new account on every platform. That not only takes up unnecessary time but it also means every platform would own the same set of user data and the possibility of misuse of data would increase.

Trust gap

Issues of trust in the sharing economy typically revolve around at least one of these aspects: peer, platform, and product.

The peer would be either the provider or the user of the asset. For instance, the owner of the apartment or the tenant, or the bicycle provider or the rider. A host might cancel a reservation at the last minute, or a bike rider might abandon it on a random street.

Remember the 20 newly set up accounts you had to register? Every platform would own the same set of your personal data. This increases the chances of the your data getting compromised.

Lack of risk mitigation

Platforms also increase risk when they fail to resolve users’ problems and complaints. The people behind the platforms might even actively turn against certain users or abuse their tools when there’s human bias, discrimination and other factors in play. Unsatisfactory products can also ruin users’ experience and discourage participation in the sharing economy. Product descriptions may have been false or exaggerated, as with less-than-immaculate Airbnb apartments.

The urgent goal now, is to fix these key issues that have hindered the growth of the sharing economy to unleash its full potential.

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