The sharing economy is expected to grow significantly in the coming decade; by 2025 it has the potential to reach revenues on par with its retail counterparts, concludes a research by PwC. While the growth potential is strong, certain challenges still need to be met.
Big four firm PwC has developed a research program called ‘mega-trends’. With this program, the consulting firm investigates the big changes that are disrupting its clients’ organisations - and the economy as a whole. A facet of the research looks into the ‘collision’ between traditional and innovative business models. One such area of collision is arising from the fact that consumers increasingly value access over ownership. This trend is currently playing out in a dynamic collection of sectors that is often labelled ‘the sharing economy’, reports PwC.
The sharing economy is made up of a variety of activities, the most significant being peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music video streaming. Growth has been strong in a number of these categories. For instance, crowd funding has grown significantly, in 2012 $2.7 billion was raised to fund projects, up by 80% from 2011. For accommodation, 80% of travellers say they would be happy to rent someone else’s holiday house, in the UK the average Airbnb host earns £2,822 and rents its apartment on average for 33 days.
The report found that there is significant room for growth in the peer-to-peer sectors as global revenue in peer-to-peer businesses may develop from $15 billion now to $335 billion by 2025. The sharing economy would then encompass roughly the same size as the traditional rental sector. In the UK, this could account for around £9 billion of revenue flow for sharing related business activity by 2025. According to PwC, growth rates for the sharing economy are expected to be impressive, with the highest year-on-year growth to be found in peer-to-peer lending and crowd funding, online staffing solutions and peer-to-peer accommodation.
While there is strong potential, the report also pointed to a number of issues that the peer-to-peer market will have to deal with within the coming decade, including ‘unknown’ regulative pressure and fiscal challenges. The authentic identity and uniqueness of businesses, as they scale up, may also become an issue.