Sharing Economy VS Uberisation: Two Distinct Concepts

EHL Editorial Team | 3 Jan, 2017

Renting a Hermès bag for one night, being driven by your neighbor turned private chauffeur with Uber, exchanging your house for a loft in Brooklyn during a city getaway… Peer-to-peer businesses are on the rise, and contributing to the growth of the sharing economy.

The 5th Saviva F&B Chair Day was held at EHL on November 24th 2016 . During the event, Dr Christine Demen Meier (holder of the Saviva F&B Chair) presented the chair's current research, which focuses on the sharing economy and its impact on the restaurant industry. Sophie Simon (journalist at the Tribune de Genève) followed-up by discussing immersion in the so-called “uberisation of services”. Here are some takeaways:

The sharing economy's beginnings can be traced back to the economic crisis of 2000. As the economy was weak and purchasing power declined, demand for goods and services collapsed. These macroeconomic factors led to a turning point in consumer habits, and paved the way for the development of new alternatives to cater to consumer needs.

While some are reluctant at the idea of doing business with amateurs, millennials are avid users of the types of services available through the collaborative economy, in fact often seeking out this type of exchange.

In order to understand the behavioural process and psychology of sharing economy enthusiasts, a consumer typology was established. Firstly, a high dependence and reliability on Internet was noted within the user population. There was also a marked interest in bartering, trading and exchange, as well as in the flexibility of the transaction process. Furthermore, collaborative platforms users were more inclined than others to share their private information.

“According to experts and restaurateurs, today, customers want free – or at least discounted – and, fast services, good value for money, healthy products, ease of use and convenienceexplains Dr Christine Demin Meier

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40% of collaborative economy service users were categorized as opportunists, since their major motivation was the optimization of their own well-being. 33% were categorized as future idealists (those not yet in possession of enough information about the collaborative economy). Refractory individuals represented 8% of the population (those who do not understand the aim of collaborative economies, and are totally opposed to its derivatives). Finally, 6% of the population felt deceived by these types of services or saw them as unfair competition.

However, while many people do not distinguish the collaborative economy from the concept of uberisation, the two concepts are, in many ways, totally opposite. Uberisation is a profit-oriented type of business with the one and only goal of high margin generation. The collaborative economy, on the other hand, is more sustainable, and oriented towards purpose and use rather than possession. The goal of collaborative economies is to protect resources and share them rather than extracting their individual benefits.

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Some of the main benefits include low startup costs -  few assets are required to settle this kind of business. Also, it is a two-sided market, which profits both interested parties. The digitalization of these economies also fulfils the needs of the "immediacy crisis" in a society where everyone wants to consume more, better and faster.  

One impact is that while “uberised” businesses are profit-seeking, most are suprisingly unprofitable. One factor is that a perpetual quest for higher margins can hinder innovation. Without research and development budgets, uberised businesses put themselves at risk of becoming obsolete, and quickly replaced.

A possible impact could also be the end of our solidarity system: "uberised” businesses do not pay taxes, and there are currently very few legal restrictions in place to regulate this type of economic activity.

Lack of regulations, fiscal uncertainty, contract shortage, legal limbo... Numerous challenges wiil need to be tackled by "uberised" businesses in order to ensure their continuity.  Many users and potential clients can be put off by security concerns. "Uberised" businesses provide an intermediary platform between supplier and consumer, but typically do not regulate or control their suppliers, which can reinforce the public's general sense of mistrust of many of these platforms. Consumer evaluations which quickly found their way into these business models can only partially remedy this sentiment of mistrust.

“I would not necessarily use all the services offered by collaborative economies. For example, meals shared with a host are usually more expensive and of lower quality than those in traditional restaurants. I paid 40 CHF for a meal during which the host's husband ate half the dish, and I saw the dirty dishes stack in the kitchen.” explains Sophie Simon

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The sharing economy is still an emerging market segment; making predictions about its future as a whole remain difficult, especially as legal restrictions and fiscal barriers are now starting to be put into place. Furthermore, many sharing economy businesses are ephemeral and do not provide the long-term consistency and value sought out by consumers. While sharing economy start-ups are still being launched daily, often supported by crowd funding, they are also fading almost as instantaneously.

In many cases, Uber’s babies and clones are not creating new value for clients, as they often lack professionalism and fail to tackle the security concerns which are important to their potential customers.

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