Currently set to be worth £20bn in the UK alone this year according to PwC, there is steep sharing economy growth, with its value estimated to hit a staggering £140bn by 2025.
As Europe’s fastest-growing Sharing Economy hub, the UK’s peer-to-peer economy has five leading segments; collaborative finance, peer-to-peer accommodation, peer-to-peer transportation, on-demand household services and on-demand professional services.
All of the companies and platforms within these sub-sectors share one common thread: the exchange of under-utilised existing assets or services between individuals for low transactions costs.
It’s clear that the UK’s sharing economy growth has substantial room to grow further, with users, volumes and profit all rising swiftly, so how can entrepreneurs take advantage of this burgeoning sector?
Finding a niche
One of the most common pieces of advice given to entrepreneurs is to find their niche, and this guidance couldn’t be more applicable for entrepreneurs looking to the reap the benefits associated with fast-growing sectors.
The business world is incredibly competitive and there is little doubt that the number of technological innovations made over the last decade have made it even more complex.
In some instances, these innovations have made it even harder for entrepreneurs to find a space where they can be inventive that is not already occupied by someone else with a similar idea. But the sharing economy growth offers plenty of opportunities for entrepreneurs to reimagine their business concept.
For example, how many people would have considered renting out their underused car, even less than five years ago? At present, car ownership is still the norm, but peer-to-peer rental services are becoming an ever more reliable and convenient alternative.
As consumers become more accustomed to the “Uberisation” of services, it’s likely that the traditional model of car ownership will change substantially. Central to the rapid uptake of ride-sharing and peer-to-peer rentals is the inefficiency of car ownership, with research showing that our cars are actually used only four per cent of the time.
To be successful in the sharing economy, entrepreneurs need to identify which items or services are a substantial investment for owners, but are rarely used – making them ripe for replacement with an alternative model to access them without owning them.
Humanising a brand
Although technology has been a principle facilitator of the sharing economy growth, consumers are still searching for a level of human interaction when it comes to digital platforms.
What makes any business successful is its ability to engage with its customers, form strong relationships and build trust.
For digital brands, the key to building effective relationships is recognising that if you’re going remove “human” interaction in one aspect, you need to reintroduce it in another.
This can be a more direct decision to add a recognisable face to your brand, or adopting a more indirect approach and ensuring that customers are connecting with one another and building an organic sense of community.
Consumers buy into brands they can engage with on a personal level. A sharing economy platform is nothing unless it can grow meaningful relationships with its user base, and a brand can only do that when it has a personality or community for users to engage with.
Growing a community
An integral part of any sharing economy brand is the community that it creates. In most instances, the community is mainly shaped by its members, with the brand acting as a facilitator of these relationships.
However, what makes a truly successful sharing economy platform is creating relationships that are built, and maintained, on trust. As a user, you want to be assured that if you rent out a room in your house, for example, that you can trust the person coming to stay, and trust that the brand will help you rectify any problems that arise.
By encouraging email or phone contact before a transaction, recommending that users meet at the start of the rental and implementing a rating system that offers transparency, entrepreneurs can create a platform that engenders confidence in their brand.
With the sharing economy growth predicted at 60 per cent in 2017 alone, there is certainly room for entrepreneurs with new and innovative ideas to enter the market.
Ultimately, entrepreneurs who invest in ideas which reimagine typical models of consumption, build transparent communities and make their brand engaging on a personal level, will be able to take full advantage of a sector with phenomenal potential for sharing economy growth.
Richard Laughton is CEO of easyCar.com