Ahmed Medien, business developer at Melltoo, looks at the rise of the sharing economy
At the end of last year, peer-to-peer financial company, Lending Club, entered the New York Stock Exchange with a $5.4 billion initial public offering surpassing expectations.
The San Francisco-based company enabled $6 billion in loans between individual creditors and debtors since inception in 2007.
Lending Club and many new start-ups are leading the shift towards a new sharing economy.
The peer-to-peer “sharing” economy is sweeping grounds. This new ecosystem has created market opportunities not only for individuals to make (extra) income, but also for new business models to grow. An example is “redistribution markets”, for which Amazon and eBay are predecessors.
Besides recycling and upcycling, owners sell their assets on new markets that were inaccessible before. Several entrepreneurs have followed suit with technologies that enable “people helping people”. Now, the sharing economy encompasses individuals renting out underused assets, skills and even time spent on providing a service.
THE RISE OF THE SHARING ECONOMY
The market for sharing services and assets is estimated to be worth $785 billion in 2013.
Benita Matofska, founder of UK-based advocacy group, The People Who Share, said: “Just in the UK alone, the sharing economy currently represents 1.3 percent of GDP, and is predicted to rise to 15 percent of GDP within five years. It’s an early-stage market but with huge growth potential.”
According to the American advocacy organisation, Peers, every day there are 66,600 rides on Lyft; 274,000 items sold on the handcraft marketplace Etsy and 140,000 people sleeping under an Airbnb roof.
Freelance website, Elance-Odesk, alone enables $2 million dollars of daily work transactions between employers and contractors. These product-service systems are more complex than B2C’s since peer-to-peer transactions require delicate management of user-based supply and demand, trust and controlling fraud and transaction friction. Trust is the number one currency of the new sharing economy. Companies such as Airbnb and Uber have ingrained trust as a vital part of their corporate values. It comes through their generous insurance policies and offerings to their users and contractors.
The sharing economy is now tied to “collaborative consumption”, underpinned by product-service systems, redistribution markets and collaborative lifestyles. In product-service systems, renters and rentees share the use of a tangible asset such as an apartment or a car. In redistribution markets, people pass their ownership of certain assets to new owners. In collaborative lifestyles (this is the scientific name for it), people share or rent skills and time from other professionals.
In redistribution markets, ownership is simply transferred between buyers and sellers. Resell becomes a new addition to the “repair or recycle” attitude we have towards unused items. Due to a lack of trust and transparency in traditional classified marketplaces like Craigslist or OLX, a crop of new “social classified marketplaces” have arisen.
Several start-ups such as Wallapop in Spain, Carousell in Singapore and Melltoo in Dubai have created social marketplaces that facilitate the C2C sale of personal belongings. What is notable is their emphasis on a mobile experience with features such as geolocalisation to buy nearby and built-in chat to speed up communications.
The social experience is designed to build trust and a sense of community among users, reinforcing the spirit of the sharing economy. These start-ups have found a natural audience in people who have left web classifieds to buy and sell on social media such as Facebook or Twitter.
THE RISE OF THE SHARING ECONOMY IN THE MIDDLE EAST
The Middle East and African market has absorbed this new trend. Project-based and equity crowdfunding websites such as Zoomaal (Lebanon) and Eureeca (UAE) have enabled millions of shared dollars to launch new community projects and businesses everywhere in the Middle East.
Petty lending website, MyC4, in Kenya allows cheaper payments collection and distribution to underbanked communities in African markets.
Zoomaal says that it is bringing Arab creativity back. It helped launch 78 successfully funded projects in 11 countries in the MENA region. Sharing at Zoomaal transcends beyond pooling resources together.
In an email conversation with me, Ahmad Dimachkie, Zoomal’s marketing head, wrote: “At Zoomaal, sharing actually takes on a number of meanings. For starters, we let people share their dream. Whether those dreams come in the form of tech ideas, short films, community projects…we give them a platform to not only bring those great ideas to light, but to life!”
Nabbesh, a freelance job marketplace, allows its users to rent out their skills in an entrepreneurial move to solve the high unemployment rates in MENA. Unemployment rates in MENA topped 11 percent in 2014 compared to a world average of six percent. Sharing has also allowed entrepreneurs to replicate successful business models across regions.
The previously underserved nascent markets in Africa and Asia have now their own p2p (peer-to-peer) market platforms sharing and selling ownership, tasks and skills.
THE RISE OF THE MICRO-ENTREPRENEUR
Micro-entrepreneurs are a new wave of entrepreneurs who are not actively seeking the new billion dollar idea. Some of them have been disfranchised from the traditional job market, while others want to make their own living on their terms.
The sharing economy is providing new income possibilities for these groups. In the Middle East, new e-commerce platforms are matching supply and demand between a large consumer market such as handcrafters.
Little Majlis is a DIY handcraft marketplace in Dubai. It provides logistics and a payment gateway to small shops and boutiques in the GCC countries.
“Little Majlis provides a platform for independent Gulf-based artisans, designers and small scale merchants of ‘hard to find’ things, to set up their own e-commerce shop within a supportive environment, legal framework and with relatively low overheads,” said Annabelle Fitzsimmons and Anna Bolton-Riley founders of Little Majlis.
Though you have to apply to sell, Little Majlis is hosting more than 100 boutiques on its platform.
“Little Majlis is all about helping start-ups and small businesses,” they told me after their successful event with the Dubai Fashion Festival. Little Majlis targets the expat community in Dubai who are often cut out from their country support network or regular job industry.
“The Gulf can be a transient place for expats; many talented people arrive in the region having left behind jobs and a support network. Little Majlis allows individuals to trial their creative business ideas without investing a lot of time, infrastructure and money.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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