The fresh icons of the sharing economy are names unheard of just a few years ago: Airbnb, Uber, and Zipcar. Fueled by price transparency and consumers’ never-ending quest for the best price, they are disrupting the hotel, taxi and car rental industries.
It might be tempting for companies to write off the sharing economy because it is a relatively small piece of the nation’s GDP. But it also represents the possibility of a virtually unlimited expansion of capacity and growth. Signs of this are everywhere:
- Marriott International CEO Arne Sorenson recently told Wall Street that his company would add 50,000 rooms a year. Airbnb CEO Brian Chesky responded that his fast-growing firm would add that many rooms in just two weeks.
- There are about 13,000 medallion cabs in New York City, according to CNBC, yet Uber already has 14,000 cars operating there.
- The car rental industry has experienced flat growth recently, yet car-sharing services like Zipcar and Car2Go have doubled in size in the past five years.
These newcomers are not only providing alternatives to traditional purchases, they also are changing reference price points in a disruptive way. For example, the price for an Uber black car from JFK to Manhattan is $85, compared to $189 for a Carey Car. And an Airbnb studio apartment in New York’s Times Square can be had for $205 per night, while a room at the Marriott Marquis is $499.
So what can companies do to counter the disruption? For starters, they need to leverage big data, predictive analytics and customer insights to stay ahead in today’s hyper-informed sharing, transparent economy.
Companies need to see what the customer sees, when they see it and predict tradeoffs consumers will make. They should embrace the granularity that mobile technology enables and be agile so they can respond quickly to market change. To do this, they need to combine forecasting and pricing analytics to make real-time, targeted offers to their customers. At the same time, it is essential to enhance their brand power which can trump the newcomers to the sharing, transparent marketplace and support a price differential.,
Implementing these strategies will give market incumbents a means to withstand the disruption and ultimately share in the profits of the sharing economy.