Sharing Economy: Technology Trends

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Technology has become the primary enabler for the adoption of the sharing economy. Businesses are now using Global Positioning System (GPS), data analytics and artificial intelligence (AI) to connect consumers with owners in real time.

Below are technology trends impacting the topic of the sharing economy, as identified by GlobalData.

Social media has dramatically influenced the way people travel, eat and shop. For example, travelers visit websites like TripAdvisor and Airbnb to plan their itineraries and check ratings on Zomato before choosing a restaurant. People active on social media are happy to trust the opinions of others online, which has been the backbone of the sharing economy. Online reviews posted on a website like TripAdvisor provide a first-hand user experience. This transparency is helpful for anyone booking an Airbnb or planning a trip to a local restaurant.

Social media accounts are also used to validate users who register on the apps. According to a study conducted by Adapty in July 2020, 88% of users provide incorrect data in registration forms. Connecting to sites through Facebook or Google improves the customer experience and ensures businesses receive accurate customer information. It also enhances security using a temporary code that can only be accessed through the customer’s registered mobile phone.

Artificial Intelligence (AI)

Sharing economy platform providers are using AI to improve customer experience. According to GlobalData’s Emerging Technology Trends Survey 2020, 45% of executives believe AI will play a critical role in improving the efficiency of their existing business operations over the next three years. Analysis of user data such as age, location, previous searches and browsing history allows for more personalized service.

Airbnb has developed an embedded listings technique that takes data from previous search sessions and identifies similarities between listings to generate recommendations. Ride-sharing companies like Uber and Lyft use AI to decide prices, offer discounts, and select the most direct route. A 2020 report from Evergage found that 92% of US customers expect a personalized experience, up from 85% in 2019.

cyber security

The success of a sharing economy business relies on using data to deliver better services and a more personalized experience. This requires collecting and storing large amounts of user information, including (but not limited to) personal, medical, and financial information. In most cases, individuals access sharing economy platforms from personal devices that lack standard enterprise-level security. Combined, all of these factors underscore the importance of investment by sharing economy companies in cybersecurity.

There is also the threat of steep fines and legal action for data breaches and their consequences. For example, in 2017, Uber paid $148 million to all 50 U.S. states and the District of Columbia for failing to report a cyberattack that exposed the data of 57 million Uber customers and drivers.

Blockchain and the sharing economy

According to the Blockchain Council, the main challenge of the current sharing economy business model is that its benefits are not shared equitably among all parties involved. Instead, most of the profits generated are captured by the big intermediaries who operate the major sharing economy platforms.

Blockchain technology has the potential to introduce a new decentralized sharing economy business model. With the blockchain, software applications will no longer need to be deployed on a centralized server but can run on a peer-to-peer (P2P) network that no company controls. Currently, various start-ups are working on a new sharing economy business model that removes the need for third-party intermediaries. These companies offer decentralized sharing economy platforms developed on blockchain technology or integrate it into their existing platform.

For example, Open Bazaar allows the sale and purchase of goods without the need for a third party to host the data and charge transaction fees. Similarly, LaZooz and ArcadeCity are decentralized and community-owned platforms that use blockchain technology to enable a car-sharing service. In November 2020, Airbnb disclosed plans to expand R&D into distributed ledger and blockchain technology.

While blockchain could potentially disrupt the sharing economy, its impact to date has been negligible. Blockchain technology is expensive and slow in terms of completing transactions. Therefore, widespread adoption is unlikely until these issues are resolved.

This is an edited excerpt from Sharing economy – Thematic research report produced by GlobalData Thematic Research.

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