Sharing economy businesses: Understanding business models

Abstract

A sharing economy business essentially operates on the principles of “collaborative consumption” whereby an idle/underutilized resource is shared by a variety of users, often for monetary purposes. Some of the societal objectives fulfilled by this model are lower costs for services, resource conservation, and environmental conservation. While AirBnB and Uber are marquee global success stories, the concept is still new in India. An attempt has been made in this study to comprehensively study the business models of successful sharing economy companies and understand their value propositions, economics (revenue models, cost structures, and pricing), and their approaches to tackle risks. The study also evaluates the possible reasons for large valuations of these companies and concludes with a discussion of whether such business models can be truly disruptive or not. The findings of this study can be utilized by upcoming sharing economy businesses in India to learn about global best practices.