How to understand the opportunities and challenges of the "*** sharing economy"

——Talk about O2O, On Demand and the Sharing Economy

Zhou Hang | Director of the Society for Humanistic Economics and founder of Yidao Yongche

The Internet has always given birth to many "big words". O2O, On Demand, the sharing economy, to name a few. These "big words" have become industry gimmicks that the media rush to comment on, and they have also become the basis for "storytelling" for capital to compete for favor. That day, Xiaoyan from Sequoia raised an interesting question: "Does the sharing economy require personalization or efficiency?" Before I talk about the discussion, let’s first clarify the differences between O2O, On Demand, and the sharing economy, and then discuss the issue of the “sharing economy”.

O2O, as the name suggests, is online to offline diversion. The core problem it solves is how offline merchants find users online. In the past, offline service companies mainly relied on natural geographical location customer flow, advertising and branding, word-of-mouth and user habits to "acquire customers". Now O2O helps them bring online customer flow. In this field, the most typical model is “group buying” in the traditional sense.

Actually, On Demand is another concept. It is more of a service that meets people's needs for speed (efficiency). Car use and "door-to-door service" are both included in this category. Compared with traditional commercial services, this model first abandons the shelf model that started with products and merchants in the past, and instead completely starts with user needs and satisfies users' immediate service experience through intelligent matching. In addition to using cars, many door-to-door services have also emerged in the current market, such as door-to-door housekeeping, door-to-door car washing, and door-to-door manicures... But the problem is that in addition to services that require extremely high timeliness such as "using cars", there are a large number of long-tail services. Life services do not have high requirements for matching speed and timeliness, but have higher requirements for personalized selection. This may be one of the reasons why On Demand has not spawned large companies other than cars.

***The biggest feature of the sharing economy is that individuals use idle resources to provide services.

When talking about "*** enjoyment", I would like to talk about it from three points: the supply side, the consumer side user experience, and the platform business model.

1. Supply side

As far as the sharing economy is concerned, its supply side is undoubtedly very individual. Because it organizes a large number of individual, idle resources, which themselves have their own characteristics and vary widely. Different resources have their own "personalized" attributes, and the characteristics they present are inherently non-standard, non-uniform, and non-standard. Therefore, they are difficult to "manage" in the traditional sense. Just like we cannot require that the Yidao car platform only has drivers wearing white gloves, black suits, and driving Passats (but we can expect that in addition to Passat, we can also experience Magotan, Tesla, A6L, Bentley, Bugatti...) . Because the Internet has very extensive connectivity, it greatly facilitates organizations to supply resources, forming a powerful "elastic supply network" in the cloud. When demand increases, more supply is stimulated; when demand weakens, supply automatically decreases. The supply of the sharing economy shows very obvious characteristics of the "cloud economy".

2. Consumer user experience

Consumer user experience is a very challenging issue in the sharing economy. As we mentioned earlier, since the supply side is non-standard, flexible, and non-standard, it has become more difficult to provide a standard, unified, and predictable user experience on the consumer side. Looking at this issue in the larger context of the times, the public’s aesthetics and tastes have long been deeply educated by the standards of the industrial era. Our concepts and behaviors will naturally tend to a kind of "industrial era" logic - expecting to receive standard, unified, and predictable services. For example, McDonald's and Home Inns anywhere in the world will provide consistent products and services (even if they are not good). We have become accustomed to the more reliable, but almost uniform, dull, and impersonal experience of the industrial era.

At present, the sharing economy brings new challenges to the industrial era, just like the industrial era challenged and transformed the traditional agriculture and handicraft era many years ago.

Pre-industrial products and services were all produced by small-scale manual operations, and only a few wealthy people could obtain more refined, spiritual, and artistic products or services. The standard and replicable production model in the industrial era, the production scale determines the cost capability, and large-scale production creates a greater desire for large-scale markets. Therefore, the industrial era provides a more equal and consistent large-scale consumption experience, but it also Allowing users to lose the fun of on-demand customization. The creativity of the entire society has been suppressed. The most typical example here is the famous "Chaplin movie" in the industrial era, which mostly reflects the ridicule and anxiety about the sameness, rigidity and loss of individuality in the industrial era.

If we believe that the sharing economy will be the general trend in the future. So as a practitioner, how should we create a new experience of the sharing economy? And let this experience transcend the cookie-cutter standardization of the industrial era, allowing users to form new expectations and standards in terms of concepts and behavioral habits? This is the key to real success for all of us entrepreneurs involved.

I think this requires us to establish a new experience standard for the sharing economy and advocate a new civilization for the sharing economy. ?This experience should first be full of personality, surprises, and expectations. In this, the relationship between consumers and suppliers is equal, which is different from the concepts of "I am humble and customer is respectful" and "customer is God" in the industrial era. Both consumers and suppliers need to respect each other, and services should be sincere, full of emotion, and personalized, so that users will ignore the small problems caused by the "non-standard" attributes of shared resources and invest in a an experience of emotion, surprise and anticipation. In this process, although the provider's service is not standard, it is full of sincerity that "I will give you the best I can provide." Airbnb and many domestic inns have done a very good job in this regard, making people willing to abandon monotonous hotels and choose B&Bs full of surprises. Abandon the eight-legged "standard" and enjoy the surprises with all your heart.

With an equal relationship and a reasonable platform mechanism, strangers are willing to conduct transactions based on a relationship of trust; suppliers can truly provide sincere services, and in turn, users will use an inclusive attitude. Understand and resolve issues in service.

I believe that only by establishing and advocating a new civilization of equality, trust and tolerance, and making sincerity, personalization and surprise a new experience of shared civilization, can "** The "enjoyment economy" has become a new era that is completely different from traditional industrial civilization.

3. Platform business model

In addition, the business model of the platform is also a very challenging issue in the sharing economy. First of all, the shared economy is more like an "informal economy" than the economy in the industrial era. It is more about individuals as business entities rather than an economic form in the form of companies. In order for users to accept non-standard services, "shared economy" services must have a price advantage over "formal" services. Only in this way will users "buy in" if they are willing to try it. It also creates an opportunity to experience the new features of the sharing economy that are different from the traditional economy, thereby gaining a sense of surprise and accepting and promoting this approach. Therefore, the "low price strategy" is the basis for the sharing economy to expand from a niche, early adopter service targeted at young people and sensitive groups to a universal, mass service. Low price is an important feature of the sharing economy, and it is also the first stage of the rocket for sharing economy companies to quickly move towards scale.

Can the "low price strategy" achieve sufficient scale to make low prices the norm without subsidies? This is a big challenge, and I believe many companies also hope to do the same. At present, some platforms hope to gain pricing power after monopoly and then raise prices later. However, this idea is not realistic. Because it deviates from the basic principles and characteristics of the enjoyment economy-that is, making cheapness and low prices the norm. The sharing economy will form a certain scale after low prices, and the cost will gradually decrease through scale amortization and network effects.

But there may not yet be a way to get costs low enough to maintain low prices over the long term. Such a result will lead to "endless subsidies and unstoppable medicines."

Therefore, the sharing economy still needs other forms of business innovation to support the implementation of low-price strategies, and "innovation" can also take the form of cross-border cooperation. In this process, the most sharing economy products add their density, scale and traffic effects to other cross-border products or service experiences, using value transfer to make long-term low prices more possible. If the scale effect and value transfer can be well combined, long-term low prices will be guaranteed; at the same time, the platform can also obtain income from cross-border transactions. Especially for Internet companies, they are inherently asset-light. When a company has a certain scale effect and maintains a stable and reasonable business income structure, costs will not expand accordingly. Enterprises can form a stable business model.

Speaking of costs, we need to pay attention to some "pseudo-*sharing economy" forms in the industry. Essentially, what these platforms provide are only online services. The way they organize resources still relies on fixed assets and B2C models, but they package themselves into a new sharing economy. Such a model will cause an enterprise to fall into a strange circle - the heavier its assets and the larger its scale, the worse its marginal effects will be. Because the asset acquisition cost is fixed, it does not have the characteristics of "universal resources" flexibility. Enterprises cannot guarantee that every fixed asset will be in good working condition under the ideal model in real time, and the service density of fixed costs will inevitably have extremely sparse time periods. The growth of supply and demand is not linearly synchronized, so it is easy to fall into the "bullwhip effect" in the supply chain. As a result, these companies will gradually fall into the trap of becoming larger in scale and suffering greater losses. Not to mention their management model, to use a vivid metaphor, the "pseudo-enjoyment economy" forcibly organizes and controls employees like assembly line workers in the industrial era, and turns the "service" itself into an industrialized product. This itself goes against the character and human nature of the current era.

True *** enjoyment requires "removing the false and retaining the true".

***The sharing economy is exuding charm, but it is also full of challenges. These charms and challenges are especially reflected in user experience and business models. This is also a never-ending journey that requires entrepreneurs in the sharing economy to be more diligent, harder working, smarter, and use innovation to solve the problem. Let’s work together for a more efficient allocation of social resources, a warmer service experience, and a social state of sincerity, trust and tolerance, and jointly welcome the new light of the shared economy.

Originally published on the author’s official account: Speak without raising your hand, welcome to follow