Circular and Sharing Economy
Though some Apps have recently emerged, for example for sharing construction or other equipment, the industrial B2B space is quite open for service providers with innovative ideas and good technology. The economics of the industry mean that first mover advantage with a powerful value proposition is crucial. We help companies active in this space research markets, understand customer buying behavior, define business models and develop strategy. We further help them design the customer journey, gain access to anchor customers and implement and optimize a service delivery system.
Powerful Economics driving “Sharing” Apps
The sharing economy is about using technology to improve utilization and productive use of services, products or asssets through sharing among multiple users, concurrently or sequentially. It’s modern origins probably go back to the founding of Ebay and Craigslist in the mid ’90s and the start of recirculation of goods. Since then numerous applications (Apps) have emerged, ranging from services provided by people, to hospitality, vehicles or industrial equipment. The power of the sharing economy can be seen in the valuations of companies like Uber or Airbnb, which in very few years have exceeded those of their more traditional brethren.
Sharing Apps have powerful economics, as the increase in utilization reduces deadweight costs and unit prices and expands markets. Furthermore, as native digital businesses, they display “network effects”: the value of the network increases with each additional connection or node, both for the new user and the already existing users, while the (marginal) cost of adding another customer or providing another unit of service is minimal. This fuels rapid growth and “winner takes all markets”: the top players have supersized market shares and small differences in skills can mean large differences in returns. They exist because technology has increased the size of the market that can be served by a single company. This implies that there will be few winners, therefore investment risk for industry incumbents in digital transformation increases. The result is binary: Companies either win or lose and there is nothing much in the middle.