The platform economy has made life easier.
- Equity crowdfunding and peer-to-peer lending connect investors directly with those needing capital.
- On-demand digital marketplaces empower buyers, sellers and renters.
- The gig economy injects more employment flexibility into the workforce than ever before.
- And digital ecosystems provide users with unprecedented access, opportunity, information and choice.
This disruption of traditional structures, business practices and consumer-provider relationships has undoubtedly made our lives easier.
At the heart of the platform economy is a simple ambition to democratise economic power and give people more financial freedom and flexibility. More than this though, digital platforms also democratise consumption.
The sharing economy 2.0 is removing single-asset ownership as we know it. Driving this economic evolution is a post-ownership generation of users who are not looking to accumulate and will likely grow up with co-working and co-living as the norm.
Already we are seeing a growing desire for smarter consumption and an appetite for a circular economy, demonstrated by the transition from product sales towards leasing, service and sharing-economy business models. Second-generation platform businesses now operate in an environment where consumers are fully au fait with using a transactional model to ‘consume’ homes, cars and belongings. Canoo’s electric-car subscription service is a fantastic example of how quickly consumer priorities are changing.
But we don’t all engage in the platform economy in the same way.
Despite the globally ubiquitous brand names of Airbnb, Uber, Etsy and Fiverr, different community sectors engage with digital platforms in different ways.
For instance, there are lower levels of female participation across the platform economy as a whole, but platforms such as Upwork, 99designs and Esty report higher levels of engagement and popularity among women. This is, of course, incredibly exciting, because it means that platforms have the potential, through new innovative applications and better customer stratification, to engage and benefit the entire community.
Platforms, in short, can play a major part in building inclusive economies.
So what’s next for platform-economy businesses given that we have a burgeoning post-ownership generation, who are environmentally conscious, technologically sophisticated, and who would rather collect experiences over things?
Travel and leisure is one sector where the points of the compass are aligning and where the size of the opportunity is nothing short of gargantuan. What travellers want has changed, but traveller numbers will continue to show strong growth, with demand propelled by a booming global middle class.
Millennial and gen Z travellers, in particular, prioritise adventure experiences over the accumulation of assets, demonstrated by general spending on tangible goods dropping, while experiential and travel expenditure climbs. This massive demographic will continue to shape the entire sector in new ways and platforms will be a core enabler of this.
Travel agencies and airlines are already evolving to dynamically combine all trip elements. AirAsia’s ambition to become more than just an airline, through data-based initiatives and new platform businesses, is a fantastic example of this.
Platform businesses will continue to evolve, search out ways to add value to customers, and also dream up ways in which users can become both the consumer and producer (‘prosumers’, if you will).
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Everyone can now leverage their enterprise and their personal balance sheet through the ever-evolving world of rental asset intermediation, through their labour capital, or through the utilisation of their capital and risk profile through peer-to-peer investment and insurance. Global optimism and the level of innovation in the sector will continue to grow, economic friction will continue to be reduced, and the great democratisation of investment and consumption will continue to shape our world in new ways.
Commerce is evolving, consumption is evolving, and our expectations for how our consumption affects the environment and the people within it is becoming more sophisticated.
The platform economy has undoubtedly made life easier. But I see it going a step further. Through rental asset intermediation, financial intermediation, the flexibility of the gig economy, information convergence, circular and inclusive economies, and a generation who are not looking to accumulate, it might just help in making our lives better too.