The dawn of technology has ushered in an era of ubiquitous connectivity and transparency in the ever-cherished customer-client relationship. Although brand loyalty still dictates the flow of the market, a new generation of financially savvy entrepreneurs has succeeded in leveraging these innovative technology solutions to provide more competitively priced services for customers. In the midst of a global economic slowdown, affordability is the need of the hour.
Fortunately, the world’s most expensive city Singapore has adapted well to accommodate this new diverse model of selling the product experience. ‘Owning’ is just not as much of a buzzword as ‘renting’, ‘subscribing’ and ‘borrowing’ are, because frugal Singaporeans are on the lookout for sustainable products and services that can be rented and sold at their disposal to give them an ample stream of cashflow at their disposal.
Collaborative economy is the name of the game, and it is the outcome of a true democratisation of conventional businesses with the aid of technology and social media, for the benefit of the consumer’s needs. The sharing economy has helped kickstart several entrepreneurial ventures across a wide spectrum of categories such as finance, music, hospitality, fashion, etc.
Some of the hottest online business portals like Airbnb , Kickstarter, Indiegogo and Netflix owe the success of their business models to the collaborative economy ideology.
The collaborative economy can be further categorised into three types:
- Product Service Systems – The premise of this model is all about businesses directly offering users the option of renting their products without any mandatory condition to fully own it by paying a higher price.
- Redistribution Markets – These marketplaces are a platform for users to purchase or offer second-hand goods to fellow members in the consumer community. Such products can be donated, offered at a cost, or exchanged via a barter swap.
- Collaborative Lifestyles – In this model, people share and exchange intangible assets such as time, space, skills, and money with people sharing similar interests in order to accomplish a shared objective.
What gave rise to collaborative consumption?
The collaborative economy movement has recently picked up pace in Singapore out of necessity due to the crippling cost of living that businesses and consumers have been suffering from alike. The spike in population and inflation coupled with diminishing resources has ushered in a much-needed frugal living model.
The outreach of social media and boom in mobile technology has empowered individuals with transparent services and an abundance of information, which is facilitating the growth of shared consumption.
Understanding the implications of the collaborative economy
Reputation and transparency are the cornerstones for any collaborative economy-based business model. A brand must cultivate a good social media presence along with proactively implementing top-notch CRM tools and integrating with portable trust scores such as TrustCloud to foster a bulletproof relationship with their customers.
Innovation is the real driving factor behind any successful collaborative economy-based business initiative. Reputed brands such as BMW and Peugeot have already led the way with the launch of their own car-sharing ventures known as DriveNow and MU respectively.
Renowned fashion giant ASOS also witnessed great consumer enthusiasm firsthand with the launch of the ASOS marketplace, which permits customers to sell pre-owned clothes to fellow fashion enthusiasts in the community.
Rapid Rescue mobile app is another great medical emergency tool developed by Red Cross for Singaporeans, which can instantly alert over 12,000 Red Cross-certified first-aiders in the country.
The collaborative economy has also helped address the problem of expensive corporate real estate for aspiring entrepreneurs. From the year 2010, over 20 co-working spaces have popped up over the country that allow a large number of employees or freelancers to share workspaces at incredibly cheap rates.
Thanks to the prosperity exhibited by crowdsourced financing portals like Kickstarter and The Lending Club, the finance game has been completely turned on its head as well. Entrepreneurs can now conveniently market and successfully fund their project ideas without being forced to undertake a hefty business loan. Business models derived from the principles of collaborative economy are usually complemented by safety measures such as deposits and additional insurance.
Trust however, is the asset that makes or breaks the shared services offered by a company or an individual. With a tad bit more regulation and tweaking in economic policies, Singapore can become the global leader in the number of successful shared economy initiatives.
The author is Country Manager (Singapore) of imoney.sg
The views expressed here are of the author, and e27 may not necessarily subscribe to them
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