2015-pwc-cis-sharing-economy

The SharingEconomypwc.com/CISsharingConsumer Intelligence Series

Contents:Consumer Intelligence Series“The Sharing Economy”I.Research MethodologyII.A Snapshot of the Sharing Economy• By the Numbers• Perspective from Industry SpecialistsIII.Assessing the Sharing EconomyIV.The Business of Sharing• Automotive• Retail and Consumer Goods• Hospitality• Entertainment, Media and CommunicationsV.What the Sharing Economy Meansfor Your Business

ResearchMethodologyI.3

What we did and whowe talked toAround the world, a new wave of peer-to-peer, access-drivenbusinesses is shaking up established categories. Whetherborrowing goods, renting homes, or serving up micro-skillsin exchange for access or money, consumers are showing arobust appetite for the sharing-based economy.Consumers are showing arobust appetite for thesharing-based economyWe set out to explore how the sharing ethos will makeits mark on the wider market—and to understand whatincumbents and challengers must do to position themselvesahead of disruption and capitalize on new sources of revenue.By unlocking the sharing economy today, can companiestransform today’s threat into tomorrow’s opportunity?Can companies transformtoday’s threat intotomorrow’s opportunity?To do this, we worked with BAV Consulting, a global leader inresearch and insights that is home to the largest and leadingquantitative empirical study of brands and consumers,capturing decades of consumer perceptions.Over the past four months, we’ve embarked on extensiveresearch to comprehend consumer attitudes toward thesharing economy—surveying the general population, talkingcandidly with influencers, interviewing business executivesand keeping a close ear tuned to the sharing economy chatteron social media. Collectively, this data gave us a holistic view ofwhat’s unfolding across both business and consumer landscapes.I. Research Methodology4

Conversations with industry specialists:In a space as new and as ambiguously defined as the sharing economy, we wanted to hear from the people closest to it, thoseat the leading edge of technology and business who could offer nuanced views of what’s happening and why it matters. To dothis, we held salons in two cities—New York and San Francisco—where we invited industry specialists to weigh in on the stateof the sharing economy and the future it holds. Our panelists included:Shelby ClarkCEO of Peers.org, founderof RelayRides and formerDirector of Kiva.orgChelsea RustrumCo-author of It’s a SharableLife and Sharing EconomyConsultantPadden Guy MurphyHead of BusinessPartnerships, Getaround,a peer-to-peer car-sharingplatformBarbara PantusoIndependent Consultant,Entrepreneur and founderof Hey Neighbor!, a localsharing siteJim (Griff) GriffithDean of eBay Education,Host of eBay Radio, Authorof The Official eBay BibleAllison MooneyHead of Trends and Insights,Google Marketing; Editor-in-Chief, Think with GoogleBrooke MorelandFounder, Fashism.com andFormer Head of Marketing,Gett (GetTaxi USA)Evan FrankCo-founder and President,Americas, onefinestayKathryn DuryeaMarketing Consultant,Former VP Marketing,Rocksbox, a premiumjewelry subscription serviceElisabeth MouchyCo-founder at Daylighted,turn-key gallery that usesa digital canvas to bring arteverywhereArun SundararajanProfessor, New YorkUniversity Stern School ofBusinessSocial ListeningChatter on social media can often reveal changes in consumer attitudes and perceptions. To capture this, PwCconducted software searches across “the social web”—including blogs, Twitter, Facebook, forums and online newsoutlets with comment boards—by creating a search of relevant key words, fine-tuning and optimizing this list basedon results, and then analyzing the data against situational context.I. Research Methodology6

Trust, convenience and a sense of community are allfactors in pushing adoption of the sharing economyforward. Thanks to consumer willingness to try mobileapps, there are lower barriers to entry when it comes tobuilding brands and scaling up quickly—the innovationclock is now set to fast-pace, and will get even faster asconsumers become more trusting of relationships tied tosocial sentiment and communities of users.44 % of US consumers arefamiliar with thesharing economy19 % of the total US adult population hasengaged in a sharing economy transactionPercentage of US adults whohave engaged in a sharingeconomy transactionOf those consumers who havetried the sharing economy57 %72 %agree “I am intrigued by companiesin the sharing economy but havesome concerns about them”agree “I could see myself beinga consumer in the sharingeconomy in the next two years”Who is most excited aboutthe sharing economy once theyhave tried it?9 % 8 % 6 % 2 %18 to 24 year oldsHouseholds with incomebetween $50k and $75kEntertainmentand MediaAutomotive andTransportationHospitalityand DiningRetailThose with kids in thehouse under age 18II. A Snapshot of the Sharing Economy 8

Among US adults familiar with the sharing economy,they perceive many benefits to it86 %agree it makes lifemore affordableagree it makes lifemore convenient and efficientagree it’s better forthe environment78 %agree it builds astronger communityagree it is lessexpensive to sharegoods than to own themindividually63 %agree it is more 89 %agree it isfun than engaging withbased on trust betweentraditional companiesproviders and users43 % agree owning 57 %agree access istoday feels like a burdenthe new ownershipThey are re-thinking the value of ownership81 % 72 % 69 %But they have some concernsagree they feel that thesharing economy experience isnot consistentagree they will not trust sharingeconomy companies until they arerecommended by someone they trustII. A Snapshot of the Sharing Economy83 % 76 % 9

Who’s providing in this new economy?7 %of the US population are providers in the sharing economy;they cut across age and household incomeages 65 and older 14 % 24 %ages 55 to 648 % 16 %ages 18 to 24ages 25 to 34ages 45 to 5414 %24 %ages 35 to 44$150,000 - $199,999$100,000 - $149,999$200,000+11 % 3 % 11 %Less than $25,00019 % 24 %$75,000 - $99,99916 %$25,000 - $49,99916 %$50,000 - $74,999II. A Snapshot of the Sharing Economy10

Richard Steinberg,CEO of DriveNow at BMWOn rethinking marketplacepositioning in the sharingeconomy:We used to be the provider ofpremium cars and now we’re theprovider of premium mobilityservices as well as premium cars.Mobility services was recognizedby our board as something that weneeded to be engaged in—that’s where DriveNow wasborn from. Millennials are not so much interested inspending their hard-earned money on buying a car. They’renot interested in parking, insurance, vehicle acquisition.But they still have mobility needs. Public transit, Uber, allthe various sharing tools are at their disposal—but there’snot personal mobility. So that’s where we fit in.On sharing and cannibalizing sales:I think there’s some inevitability to the equation. In manyways, the market BMW Group competes in is a premiummarket for our new car sales. And the younger generationthat’s using car share and using our service is notnecessarily in the market for a premium automobile. Theymight be interested in a base or a non-premium car or aused car, but not so much in the premium category. So, arewe cannibalizing ourselves? No. Are we eating into someother automakers’ businesses? Perhaps.On challenges to sharing:The biggest challenge all of us have in the shared economyis insurance. And insurance—whether it’s your house,your car, your driver—is really a fragmented market. Theydon’t know how to deal with people occasionally usingtheir asset. There are major issues around people who don’tunderstand the risks they’re taking on. So this is a real areafor attention by the insurers—making sure that peopleknow what they’re doing in terms of the risks they’re takingif they list their asset or use someone else’s asset in thesharing economy.Daryl Weber, GlobalDirector of CreativeStrategy at the Coca-Cola CompanyOn new forms of checks andbalances in the sharing economy:It’s a matter of trust and familiarity.That takes a lot of getting used to.Usually big corporations are soconservative and careful, as they should be. For example,Wonolo is a company that tapped into the sharing economyby creating a means for on-demand staffing. It’s thesharing economy mentality where you don’t have to hirea permanent worker, but you can hire people quickly andpart time. But you have to be careful with the people whoare representing your company, you want them to have theright professionalism, and you background check to makesure you can trust that person.The old way of doing it was background checks andinterviews, but now the sharing economy has shown thatpeople can build trust in other ways. With Airbnb, I thinkpeople thought it was crazy at first to let strangers into yourhouse. But this ecosystem of having reviews and peoplereally caring about their reviews and online reputation hasshown that most of the time people are very careful andalmost generous with their stuff. It’s been proving itselfout that you can really trust that online review system tobe a checks and balances. I think as that becomes morecommonplace, big companies will be more familiar with it,but it is a big transition.On reducing waste:Anywhere where there is a lot of waste going on, like thekitchen space not being used or the car not being used,it feels like that’s an opportunity for sharing to come inand help reduce the waste. It’s an interesting mindset ofmillennials and new consumers, of not necessarily needingto own their own thing—everyone on the block doesn’t’have to have their own snow blower or lawn mower,so why don’t we pool together and share it and reduceover-consumption in the world? There’s a really differentmentality there—less consumerism, less materialism andmore of a community building approach.Amanda Havey, VPof On-Air and BrandCreative for anInternationalMedia CompanyOn how sharing is changingconsumer attitudes towardentertainment and media:We’ve definitely seen a shift inconsumption habits, specifically as it pertains to music.People are feeling less of a need to own a track of music,which is where Spotify comes into play. Spotify has reallygained strength as a driver to exposing listeners to newmusic. By seeing the public feed, music lovers are able tosee what their friends are listening to—which just feels likea more authentic way to “sell” music. It’s the opposite ofiTunes saying “if you purchased this, then you’ll like this…”Consumers just don’t want to feel sold to or hustled.The softer sell, the under-sell, or the NO-sell as seen inSpotify feels like a movement that consumers can reallyrally around. nII. A Snapshot of the Sharing Economy12

Assessing theSharing EconomyIII.

The name may be debatable—but the impact is hugeFor the purposes of consistency in our reporting andresearch, we used the label “the sharing economy” tobroadly define the emergent ecosystem that is upendingmature business models across the globe.As we spoke with industry specialists, it was clear thatno single label can neatly encapsulate this movement.For some, the word “sharing” was a misnomer, a savvybut-disingenuousspin on an industry they felt was moreabout monetary opportunism than altruism. For others,more apt titles included the Trust Economy, CollaborativeConsumption, the On-Demand or Peer-to-Peer Economy.Yet in between the haggling over the most-accurate moniker,there was uniform agreement that the so-called sharingeconomy is getting very big, very fast—and is something thatbusiness executives very much need to tune into.Airbnb averages 425,000 guestsper night, nearly 22% more thanHilton WorldwideTo grasp the scale of disruption posed by the sharingeconomy, consider that Airbnb averages 425,000 guestsper night 1 , totaling more than 155 million guest staysannually—nearly 22% more than Hilton Worldwide, whichserved 127 million guests in 2014 2 . Five-year-old Uberoperates in more than 250 cities worldwide and asof February 2015 was valued at $41.2 billion 3 —a figurethat exceeds the market capitalization of companies suchas Delta Air Lines, American Airlines and UnitedContinental. PwC’s projections show that five key sharingsectors—travel, car sharing, finance, staffing, and musicand video streaming—have the potential to increase globalrevenues from roughly $15 billion today to around $335billion by 2025.Investors are increasingly intrigued by the potential ofthese sharing economy companies to radically upend bothhow we consume goods and how we work to affordthem—whether it’s monetizing underutilized assetsor forgoing purchase of those assets altogether. Forcomparison, look back to the rise of the mass marketautomobile, says Arun Sundararajan, a professor at NewYork University’s Stern School of Business.“The way we lived, the way we consumed, this wholeownership economy much of it emerged out of drivingour cars”, Sundararajan says. “We built a big house in thesuburbs, we moved there, we acquired stuff. The directionof change here is probably different, but it’s comparable inhow profound it was and the societal implications.”Nearly half of US adults are familiar with thesharing economyOur survey showed that 44% of US adults are familiarwith the sharing economy. 18% of US adults say they haveparticipated in the sharing economy as a consumer, and 7%say they have participated as a provider. The more familiarthey are with these services, the more excited they feel.Collectively, these business models are changing the wayconsumers think about value—assessing the impact of goodsand services on their wallet, their time and the planet.44 %of US adults are familiarwith the sharing economyAt the heart of this change is, of course, the Internet—and with it, the rise of social, mobile, analytics and cloudcomputing. Our access to information has never beengreater or more tailored to specific needs. Transactionsare shifting more and more to real time by way of mobileand the cloud, and social is playing a huge role in drivingincreased trust in commerce. Tech pioneers like Amazon,eBay, Google, Apple and PayPal laid the foundation. Forsellers with goods to unload, Amazon and eBay conjureup buyers. GPS-enabled smartphones point us toward thenearest provider, and online payment systems like PayPalcement the transaction.As these companies softened the risks of peer-to-peertransactions, the economic downturn left many consumersrethinking the necessity of possessions. A 2011 survey byBAV Consulting showed that 66% of consumers (and 77%of millennials) preferred a pared down lifestyle with fewerpossessions. And while the economy has rebounded, manyrecession-fueled values have stuck.Today, only one in two consumers agree with thestatement that “owning things is a good way to showmy status in society.” Four in five consumers agree thatthere are sometimes real advantages to renting overowning, and adults ages 18 to 24 are nearly twice as likelyas those ages 25 and older to say that access is the newownership. Happiness studies show that experiencesincrease contentment far more than purchases do, andyoung people’s intrinsic understanding of this is fueling anexperience economy.III. Assessing the Sharing Economy 14

Pillars of theSharing EconomySharing has, of course, been around forever—and many industries offer alternatives to ownership.But as a model, the sharing economy is distinguished by these core pillars:Digital platforms that connect spare capacity and demandSharing economy business models are hosted throughdigital platforms that enable a more precise, realtimemeasurement of spare capacity and the ability todynamically connect that capacity with those who need it.• Airbnb matches spare rooms and apartments withtravelers in need of lodging• Zipcar matches spare cars with local demandPeople have always bartered and traded services, but theusability of this process is unprecedented thanks to thegrowing number of digital devices that make matchingdemand and supply easier than ever.Transactions that offer access over ownershipAccess can come in a number of forms, but all are rooted inthe ability to realize more choice while mitigating the costsassociated with ownership:• Renting• Lending• Subscribing• Reselling• Swapping• DonatingMore collaborative forms of consumptionConsumers who use sharing economy business models areoften more comfortable with transactions that involve deepersocial interactions than traditional methods of exchange:• Airbnb and CouchSurfing provide travelers with theability to connect with local hosts and receive travel tipsin a personalized fashion• Ride sharing services such as RelayRides and Lyftdepend on users being comfortable trusting strangersto complete their journey safelyBranded experiences that drive emotional connectionToday, the value of a brand is often linked to the socialconnections it fosters. Managing these connections isfundamental to successful marketing. In the case ofsharing, experience design is critical to engenderingemotional connections. By providing consumers with easeof use and confidence in decision-making, a companymoves beyond a purely transaction-based relationship tobecome a platform for an experience—one that feelsmore like friendship.III. Assessing the Sharing Economy15

Understanding an economy built on trustAs nearly one-fifth of American consumers partake insome sharing economy activity, be it renting a drivewayon JustPark, buying a dress from Poshmark or hitching aride through Lyft, what is the attraction? Yes, convenienceand cost-savings are beacons, but what ultimately keepsthis economy spinning—and growing—is trust. It’s theelixir that enables us to feel reassured about staying in astranger’s home or hitching a ride from someone we’venever met.And yet our fundamental trust in peers has not changedmarkedly over the years. In fact, only 29% of consumers wesurveyed said they trust people more today than they didin the past. Nor is trust in brands any higher—62% of thoseconsumers surveyed said they trust brands less today thanthey did in the past.64 %of consumers say that in thesharing economy, peer regulation is moreimportant than government regulation69 %say they will not trust sharingeconomy companies until they arerecommended by someone they trustBut if trust in individuals and institutions is waning orat best holding steady, faith in the aggregate is growing.More and more, peer-review systems are becomingarbiters of quality. According to Nielsen’s 2012 GlobalTrust in Advertising Survey, 92% of consumers in 56different countries said they trusted word-of-mouth orrecommendations from their friends and family aboveall other forms of advertising. In the US today, 64% ofconsumers we surveyed say that in the sharing economy,peer regulation is more important than governmentregulation. 69% say they will not trust sharing economycompanies until they are recommended by someonethey trust.There’s one big potential sticking point: for the sharingeconomy to continue to expand, the players within itwill need to find ways to authenticate the identity ofconsumers. Some companies have already added identityverification to their platforms, but doing so is not alwaysstraightforward. In a peer-to-peer model, not everyone hasgovernment verified documents or social media profiles thatcan sometimes suffice instead. Identifying, and upholding,quality and trust metrics will be critical to success in thisevolving model.The importance of trust—and the hesitations aroundit—add fuel to the debate around how appropriate thesharing economy label is. Data shows that consumers aremore interested in affordability and convenience thanthey are in building social relationships with providers orother consumers. So while the intimacy of peer-to-peerinteraction can be a benefit—for example, getting thelocal scoop from an Airbnb host, or having an engagingconversation with a RelayRides driver—there arelimitations and boundaries that need to be discerned.Companies that understand this are poised to have acompetitive advantage.For instance, Airbnb’s success is less because of the ‘people,places, love and community’ it espouses, and more becauseconsumers want a better deal for their travel dollars. Themajority of Airbnb consumers choose to rent the entireplace, rather than sharing quarters or a meal with theowner. Here, as with other sharing economy platforms,trust prevails based on peer reviews, not on one-to-onepeer interactions.“I don’t want to know who ownedthe clothes before me or where theywore them. I want to know thatthey’ve been properly cleaned andcared for.”— Kathryn Duryea, Marketing Consultant,Former VP Marketing, RocksboxAnd yet, when brands provoke social sentiment andleverage it in their marketing, the conversion is often muchhigher. The same trend is driving growth in shared economyplayers. Rapid growth in mobile apps not only reflectsgreater trust, but also greater use of social sentiment toreinforce that trust.IV. Understanding an Economy Built on Trust16

Rethinking value exchangeThe ability to monetize underutilized assets, or to forgobuying those assets altogether, has dramatically upendedconsumer purchase behavior, particularly when it comes tobig ticket items.According to our survey (among those familiar with thesharing economy), 51% say they could see themselves beingproviders in the sharing economy in the next two years—upfrom the 23% of those familiar with the sharing economywho identify as providers today. 72% say they could seethemselves being consumers in the sharing economy in thenext two years. On both sides of the coin, this impacts howconsumers consider purchases.A potential Uber or Lyft driver weighing the costs of anew car may choose to spend more for a higher quality,more luxurious vehicle, knowing that it can yield returnon investment rather than simply being a depreciatingasset. A prospective homebuyer may look into purchasinga 3-bedroom home rather than a 2-bedroom, mindful thatrental income from a spare room can cover the additionalmortgage payment.On the flip side, an urban dweller with less dependence onvehicle transportation may opt-out of car-buying, preferringinstead to use a car-sharing or on-demand taxi service. Ashopper may decide against buying a new designer dress,potentially finding more choice and value in the offerings atPoshmark, Rent the Runway or Le Tote.If market forces play out as expected, quality becomes lessheavily juxtaposed against price—in fact, the durabilityand resale value of higher quality goods may make them amore economical investment in the long run. That shift, inturn, could put the squeeze on “cheap chic” and other massmarket goods made to appeal on price point above all else.In the sharing economy, quality matters. Hardware will beas much about enduring function as it is about form. As thesaying goes, “I don’t need a drill. I need a hole in my wall.”“I don’t need a drill.I need a hole in my wall.”Moreover, this shifting value paradigm has the ability toexpand the category. On one hand, there’s the impact oflosing volume due to lower consumption. But on the other,perhaps more significantly, there is a trade-up whereinexisting users may be more willing to pay given their abilityto recoup some value through sharing as providers—plusthose who would not otherwise buy are now enteringthe category as sharers through a lower price point, be itcollective “shared” bargaining or the ability to monetizethe investment.The push for less friction43 %of consumers agree that“owning today feels like a burden”The phrase “frictionless” may be one of the most shopwornof 2015, but the buzzword should carry weight in theboardrooms across all industries. 43% of consumersagree that “owning today feels like a burden.” And themost compelling promise of the sharing economy is that italleviates burden—the burden of cost, of maintenance, ofchoice (or lack thereof) and countless other variables.Price will likely always be a factor, but as the sharingeconomy progresses and expands, creating a seamlessexperience will be imperative for success. Already,discerning consumers are factoring friction into the valueequation. After all, time spent is time lost, and they’relooking to capitalize on both dollars and minutes. As aresult, flawless digital tools, elegantly simple search andseamless transactions are not merely a nice-to-have forcompanies today—they are a requirement. n“That time you spent drivingpreviously, now it’s downtime. Youhave an extra hour and a half inyour day where you can be doingwhatever you want.”— Kathryn Duryea, Marketing Consultant,Former VP Marketing, RocksboxIV. Understanding an Economy Built on Trust17

The Businessof SharingIV.18

The Sharing Economy:AutomotiveZipcar. RelayRides. Car2Go. Lyft. Uber. The sharingeconomy is quickly paving new roads in the automotiveindustry, establishing a web of transportation options.Hitchhiking, it seems, is back—in one form or another.According to our data, 8% of all adults have participatedin some form of automotive sharing. 1% have served asproviders under this new model, chauffeuring passengersaround or loaning out their car by the hour, day or week.Of all the categories we examined, this is the one inwhich consumers would most like to see the sharingeconomy succeed.All of this has made sharing systems—be they car-sharing,ride-sharing or bike-sharing—far more appealing. Andwhile the price of gas may be going down, the trend awayfrom ownership isn’t likely to change considerably.This is a big culture shift. And for those who figure outhow to shift gears and get in the fast lane, it can be bigbusiness. What’s next? No one can say precisely—therules are being rewritten every day. But here are a fewconsiderations to keep in mind.8% of all adults have participated in some form of automotivesharing. 1% have served as providers under this new model.Consumer preference is not surprising given the trend in carownership over the past decade. One-third of consumerswe surveyed indicated that the automotive industry yieldstoo much waste. Chief among them are millennials, whonotably don’t drive as much as previous generations did at acomparable age. They are less likely to get drivers licenses,and their view of cars is more perfunctory than emotional—they largely see cars as transportation, not as status symbols.Smartphones have also pushed up the relative costs ofdriving. A passenger can read email in transit and be“productive”—but a driver behind the wheel can’t, orshouldn’t. (Same goes for drinking: according to Uber, sincethe launch of UberX in California, drunk-driving crashesdecreased by 60 per month for drivers under the age of 30.)The automotive industry is just a slice of the pie—today, it’s all about the mobility industry. More andmore automotive companies today are rethinking theirpositioning—reframing themselves as providers ofmobility, not merely manufacturers of vehicles. Butas automotive expands into mobility, new players aresurfacing as competitors: for instance, Apple, one of themobility leaders, enters the category. In this context,legacy manufacturers must find ways to add unique valueto consumers’ mobility day in and day out—perhapsbecoming a purveyor of mobility at large, from selling carsfor purchase to facilitating ride-sharing, or even partneringwith public transportation in cities where systems arepoorly run or underused.IV. The Business of Sharing 19

“I think the biggest change thatwe’re seeing here is that people arechoosing to buy mobility as opposedto just buying a car.”— Shelby Clark, CEO of Peers.orgRe-examine the consumer value equation. The targetaudience you’ve identified today may quickly shift underthe sharing economy as consumers’ price/value equationsget disrupted. Today, the economies of owning a car aremore favorable if you can profit from use of it. This meansdifferent buyers are ponying up to purchase vehicles thatotherwise might not have been in their consideration set,and they are entering new variables into the purchaseequation. In the sharing economy, quality is taking on anew premium—consumers are thinking about resale anddurability to a greater degree.Examine your underutilized assets. Many largecorporations have car fleets that sit unused for much of thetime and garage spaces that sit empty. Under the sharingeconomy model, potential options abound. Could youmimic a car-sharing platform and replicate it for internaluse so frequent business travelers can swap as they comeand go? As for idle fleets and empty parking garages,consider time-sharing these assets with other companies,with employees—or even with everyday consumers. Doneright, making better use of underutilized resources cangenerate new revenue streams and create goodwill withboth employees and the local community.Why consumers like automotivesharing economy models:56 %32 %28 %Better pricingMore choice in the marketplaceMore convenient accessRethink your employment model. All of these businessmodels are changing the nature of how we work. It’scontentious, raising big questions about the boundaries ofcontracting and freelancing and what the responsibilitiesof the employer and governments should be. Yet for allthe buzz in the press about exploitation of workers, thiswas barely on the radar of those we surveyed—only 11%of consumers we surveyed felt this was happening. Thereare issues to be ironed out with this model, particularlyaround agency and the ability for contractors to set theirown prices, but it’s clear that more and more workers areattracted to the flexibility that this approach offers. Amongthe sharing economy providers we spoke with, “flexibility”was a top two appeal of providing, close behind “a way toearn more money.” Savvy employers should consider theseshifts in employee attitudes and values, and how they canmake the business stronger.Recognize that disruption is inevitable—and ongoing.The narrative of disruption that sharing has caused in thetransportation marketplace is applicable to every business:anyone and everyone can be disrupted in this age of fastflowingtechnology and the internet of things. Self-drivingcars could be a significant setback to the current set of bothcar manufacturing companies and car-sharing companies.But more likely, companies will find ways to smartly adaptand reduce friction, embrace new models of operationalefficiency—and design experiences that work for business,employees and consumers. The question is: who will dothis best?“If you can make money off carsyou’re going to buy, it means intheory, you can buy higher quality,cleaner and hybrid electric vehicles.So if you become a brand leader inthat space, that’s really powerful.”— Padden Guy Murphy, Head of Business Partnerships,GetaroundIV. The Business of Sharing20

The Sharing Economy:Retail andConsumer GoodsThe recession may be over in the United States, but thevalues that emerged during it appear to be staying put—andthe sharing economy is giving new weight to the axiom “lessis more.” 78% of consumers we surveyed agreed that thesharing economy reduces clutter and waste—millennialsand households with kids most strongly agreed. Theseattitudes are a growing threat to a retail industry that isstruggling to buoy its numbers—in December 2014, waningholiday sales led consumer purchases to decline 0.9%,What’s the appeal? Besides a growing appetite for a moreminimalist lifestyle, consumers say these sharing-basedservices offer better pricing, more convenient access, andmore choice in the marketplace. There are some concerns,chiefly around uncertain quality (48% of consumers wesurveyed listed this as a concern), and consumers saythey are more likely to trust a leading department storethan Poshmark, the emergent fashion darling of thisnew economy.78% of consumers agree that the sharing economy reduces wastedespite economic growth and lower gasoline prices 4 .As a result of these shifts in cultural mores, a “new retail”is emerging under the umbrella of the sharing economy.Consider Yerdle, an app designed to enable people to giveaway their stuff in exchange for credits they can use to “buy”other people’s castoffs. The company has an ambitious goalin mind—reducing the things we buy by 25%. Or Poshmark,a fashion marketplace that lets people shop for items soldfrom others’ closets. There’s also Spinlister, a peer-topeermarketplace for renting bikes, skis, surfboards andother sporting equipment; Kidizen, a mobile, peer-to-peermarketplace allowing parents to buy and sell their children’sclothing, toys, shoes; and Rocksbox, a subscription rentalservice for high-end jewelry. In every niche of retail, itseems a sharing alternative is popping up.And yet, a threat to retail can just as easily be flipped intoa tremendous opportunity. After all, while ecommerceis hollowing out the physical space, many retailers haveadeptly adapted and now help curate a more engagingomnichannel experience for their shoppers. Similarly, therise of borrowing doesn’t mean retail will be decimated—it’s simply a heads up for companies to take a fresh lookat their brand, their product and their operations in thisnew ecosystem and weave sharing into the omnichannelexperiences they are creating.IV. The Business of Sharing21

For those in the retail and consumer space—new entrants and incumbents alike—here are afew things to keep in mind:Re-examine your business model and consider alternateavenues: Most retailers are in the business of selling,whether it’s out of a physical storefront or an online shop.But as the data shows, renting and sharing are becomingincreasingly popular alternatives. Executives will be wise toassess the role of their product and brand in this model—are you squarely a purveyor of goods, or are you an enabler?Firms can carve out new revenue streams that are adjacentto their core capabilities by facilitating peer-to-peer or otherlikeminded marketplaces.There are several advantages to this approach. By steppingin as a facilitator, a company can better manage the qualitycontrol aspects of its “shared” goods, ensuring consistencyof the brand experience. A sharing marketplace can be agreat opportunity to drive engagement and trial, allowingless active and prospective customers to experiencethe product firsthand. In this case, a retailer may alsoconsider building a network of providers as a competitiveadvantage—a way to keep them loyal and sell through apipeline of products.Quality is the purchase consideration to beat: The sharingeconomy has opened up new avenues for monetizinginvestments in material goods—be it through rentalincome or resale revenue. As a result, quality becomesan even bigger factor in the purchase decision process,particularly on bigger ticket items. Durability of hardwarematters—so too does brand name as those looking to rentor buy used goods will seek the reassurance that comeswith brand recognition and corresponding caliber of goods.For marketers, it will be important to reassess core brandmessaging and the role that a quality seal plays within it.Similarly, as goods get passed around the market, brandswill need to figure out their role in upholding qualitymaintenance to protect the brand.Boost brand goodwill through sustainability: 76% ofconsumers we surveyed say the sharing economy is betterfor the environment, and 79% say it’s good for societyoverall. For brands, there’s an opportunity to use thesharing economy to promote sustainability messaging andraise esteem in the minds of consumers who are growingmore environmentally aware. Patagonia and Levi’s,for instance, have partnered with Yerdle to distributeunsold merchandise, thereby reducing waste by finding amarketplace for these goods instead of disposing of themin a landfill.Patagonia has encouraged sharing on Yerdle with a freeitem from Patagonia’s pre-used Worn Wear collectionin exchange for material donations to Yerdle, andby contributing excess Worn Wear products from itswarehouses. Currently, Yerdle hosts nearly 1,000 Patagoniaproducts, which are among the 10 most popularlyexchanged goods on the site. This collaboration providesboth Yerdle and Patagonia with significant marketIV. The Business of Sharingadvantages. For Yerdle, Patagonia products add credibilityand cache to Yerdle’s set of offerings, and they may bemore likely to inspire consumers to list their own unusedPatagonia products. For Patagonia, the collaboration allowsthe brand to highlight its commitment to high-qualityproducts with a long life cycle. Yerdle and Patagonia aretapping the sharing economy in other ways, too, such asworking with iFixit, a community in which people help fixused items in need of repairs.Understand the shift from conspicuous consumption toexperience consumption: Today’s consumers are findingmore satisfaction and status in experiences, rather thanstatic material possessions. For retailers, this meansbecoming purveyors of experience as an extension ofproduct. Many brands already have an established presenceon social media, which can be leveraged to facilitate sharingexperiences and drive trial and engagement. Physicalstorefronts are another opportunity to build experientialcache, whether it’s lending the space to another vendor ina partnership effort or embracing the pop-up movement.Consider Warby Parker, whose retail presence runs thegamut from online shopping to “food truck” style mobilestores to brick-and-mortar shops, synching online and realworldcommerce.Re-assess retail space: Thanks largely to the shiftingemphasis on experience, big and small brands alike arelooking for flexibility in how they reach consumers. Thatmeans rethinking the channels they use—in particular, theirphysical footprint. Enter Storefront, a startup that enablesretailers to set up pop-up shops or sell items in boutiques.The platform connects those who have shops or empty realestate in highly trafficked areas with merchants seeking topeddle their wares—in short, it’s an Airbnb for merchants,offering the benefits of both temporariness and uniqueness.Listings include full retail stores that can be used as popupshops as well as shelf space in boutiques, and locationsrange from neighborhood shops to subway stops to hotels.The flexibility that Storefront offers can be a boon tobrands looking to dial up their experience or pitch newproducts. So far, more than 1,000 merchants have used theplatform to open up shop in New York and San Francisco.And for those providing the space, it’s an ancillary revenuestream—on average, most retail spaces are closed for 15hours per week, time that could be otherwise monetizedthrough new platforms.“Gyms, event spaces, evenrestaurants that aren’t used duringcertain hours—all these have thepotential to be opened up in thesharing economy.”— Chelsea Rustrum, Curator at Collaborative Consumption22

The Sharing Economy:Hospitality“Airbnb is the worst idea that ever worked,” said BrianChesky, CEO of Airbnb, at a recent PwC CorporateLeadership event. When Chesky hatched the hospitalitystartup, enabling everyday homeowners and renters to rentout a spare room, it was so new that to assess the potentialmarket size, he figured out the number of airbeds sold eachyear and used that as an estimate.Today, Airbnb is reportedly valued at $13 billion, more thanmature players such as Hyatt or Wyndham Worldwide.The company booked stays for 20 million travelers in2014, operating with about 1,500 employees in 20 citiesworldwide 5 . It has helped pioneer a market that is radicallychanging consumer hospitality preferences and behaviors.marketplace. Proprly is a cleaning and key delivery servicefor Airbnb hosts. Guesthop provides support services forhome sharers—from check-ins, key management andcleanings to full time, short-term rental management.Pillow handles all the details of hosting, includingmarketing, guest communications, booking and pricingoptimization, cleaning, repairs and any troubleshooting.These ancillary services are designed to capitalize on thegrowing popularity of hospitality sharing sites. Airbnb,for instance, now has 10 million bookings and is usedby more than 50,000 renters per night. But they are alsohelping to close critical gaps in the sharing hospitalityindustry—namely, the issues of friction and trust. With6% of the US population has participated as a consumer in thehospitality sharing economy; 1.4% has served as a provider.Our data shows that 6% of the US population hasparticipated as a consumer in the hospitality sharingeconomy; 1.4% has served as a provider. The platformsare plentiful: on the lodging side, Airbnb, CouchSurfingand HomeAway are big contenders, and the food anddining industry is rapidly catching on, too. Feastly connectsdiners with chefs offering unique food experiences outsideof restaurants; similarly, EatWith links diners and hosts,creating a social experience where guests get to know oneanother over a locally authentic, home-cooked meal.Other likeminded models are popping up across theglobe, as are businesses pegged to the hospitality sharingmanagement companies as intermediaries, there’s lesshassle for the renter and rentee in sorting out the logisticsof the arrangement, and, presumably, greater trust that theexperience will be of consistent quality.Mitigating the potential unreliability of strangers is still achallenge. The hospitality sharing economy is appealingbecause it offers better pricing, more unique experiencesand more choice, but security, hygiene, and uncertainquality still loom as big concerns. For these reasons, oursurvey showed that consumers familiar with the sharingeconomy are 34% more likely to trust a leading hotel brandthan Airbnb.IV. The Business of Sharing23

“You can actually make moremoney from your home, self listingon sites like Airbnb, but youwould place very little value onyour time for that equation toactually make sense. And thefriction there is not just time, it’salso social—you now have to dealwith a potential stranger.”— Evan Frank, Co-founder and President, Americas,onefinestayFor their part, the hospitality sharing economy players aretrying to change this. Airbnb recently underwent extensiverebranding, moving away from the more pragmatic roomrentalpositioning toward one that emphasizes community:the company’s new credo is “We believe in a world where allseven billion of us can belong anywhere.” As Chesky said ina video on the Airbnb website, “At a time when we’ve beentold to look at each other with suspicion and fear, you’retelling the world it’s O.K. to trust again.”So what does all this mean for entrenched hospitalityplayers? “The sharing economy effect is accelerating withinternet and technology and is something that is impactingour business,” Christopher Nassetta, President and CEO ofHilton Worldwide, said in a recent interview with PwC’sCEO Survey. But, notably, he views it as additive to thebusiness by making travel more accessible. “We’ve done agreat job at our scale…to democratize travel, but I think thistakes it to the next level…making travel more available topeople that it may not have been available to and in ways itmay not have been available. In a simplistic way, it’s makingthe pie bigger.”As you consider what the sharing economy means for thefuture of hospitality and your business, here are a fewthings to keep in mind:Customization and local flavor are at a premium: Interms of appeals of the sharing economy in hospitality, a“more unique experience” is second only to better pricing.More and more consumers are looking for local authenticityin their travels, and sites like Airbnb and EatWith aredelivering it. “They’re introducing really incrediblecustomization and local flavor. You get all these reallymicro experiences, all these different hosts,” says ShelbyClark, CEO of Peers.org. “Having that local flavor issomething that is very difficult for any major brand tomatch, so I think that’s going to be a big challenge for theincumbents to deal with.”At the same time, there’s a bifurcation of consumer types—those who are more prone to look for a unique experience,IV. The Business of Sharingand those who seek the reassurance of consistency. Theleisure traveler may become even more markedly differentfrom the business traveler, meaning hotels have theopportunity to drive home even more amenities to appeal tospecific segments.Identify underutilized assets—and find ways to leverageand optimize them: As more and more workers becomemobile, hospitality players are taking note. Today, theburgeoning startup LiquidSpace, which facilitates ondemandwork space rentals at major hotel chains andindividual boutique hotels, has a client roster that includesMarriott, Ritz-Carlton, Renaissance, Hilton and more.These types of partnerships and product extensions notonly open new revenue streams, they also drive trial. Asconsumers traffic through hotels for meeting spaces, theygain exposure to and build affinity for those hotels. In fact,Marriott offers some work spaces free of charge, outfittinglobby areas with free Wi-Fi and desks with electric outlets.Solidify reputation management: “A huge space thathas yet to be addressed adequately is the idea of onlinereputation,” says Jim Griffith, Dean of eBay Education, Hostof eBay Radio and Author of The Official eBay Bible. To anextent, this is addressed by peer reviews, rating systems andsites like TripAdvisor and Yelp. Airbnb introduced a VerifiedID program, designed to “build trust in our community,”according to the website—though it has been met withresistance from consumers wary of uploading sensitiveinformation to the internet. For established hotels andrestaurants, there is potential to drive key consumer-covetedattributes like “unique” and “authentic” by partnering withflavorful sharing economy providers, while simultaneouslyimbuing those providers with the credibility needed to befully embraced by consumers.Embrace your own disruption: “You’re not going to stopAirbnb—it’s its own rocketship,” says Shelby Clark, CEOof Peers.org. Instead, “figure out how you can benefit fromthis changing landscape.” Disruption, after all, typicallydoesn’t have an end in sight. Airbnb may eventuallyaddress all elements of the travel experience, from travelreservations to ticketing for local attractions and bookingsat restaurants. For players who want to survive and thrive,this means sticking to core competencies—but also stayingagile, nimble and open to new partnerships and new waysof thinking.As Hilton’s Christopher Nassetta said of his strategy, “Weare a hospitality company, and we should stick to what wedo best. I view us as technology strategists that are tryingto figure out how to connect what’s going on in the worldof technology to the hospitality business... It is a humanbusiness that involves a lot of human interaction, and wedon’t want to take that out. What we want to do is takethe elements that are simpler and where we can be moreefficient, and make those very easy and comfortable and funfor people to allow for the people in our hotels to really interactin a way that is more driving a customized experience.”24

The Sharing Economy:Entertainment, Mediaand Communications“There’s no business that has beenmore disrupted than entertainmentand media. It’s a perfect case studyof people digging their heels inand winning battles but notwinning the war.”— Jim Griffith, Dean of eBay Education, Host of eBay Radioand Author of The Official eBay BibleWithout hesitation, the industry specialists we spoke withthroughout our research said that the media, entertainmentand communications industries have been the mostimpacted by the sharing movement—and view their actionsas a cautionary tale of what not to do.The ambiguity of the sharing economy is particularlyevident in entertainment and media, where consumersare open to “sharing” products, but it’s less about theunderutilization of assets and more about the intangibilityof them. To that end, legal and contractual impedimentsmay make it difficult to ramp up a formalized sharingmodel at the same speed as industries like automotive andhospitality have. Wavelength, a startup designed to letusers freely stream the movies their friends own, endedjust two weeks after it launched. In his closing statement,Wavelength’s founder wrote that “One of our goals inlaunching the wavelength.io beta was bringing to marketlegal movie sharing, wrapped around a great UltraVioletexperience… Not surprisingly, what we have built hasbeen controversial 6 .”And yet there are areas in which sharing, however looselydefined, is coming to life. Two decades ago, an aspiringartist needed a bundle of money to make a film; todaythere are alternate—and very viable—ways of making andmonetizing music. Consider the artist Amanda Palmer, whoin 2012 announced a Kickstarter campaign to raise fundsfor a new recording and pulled in nearly $1.2 million fromher fans in exchange for pre-orders of the album. And justas artists are finding alternative ways to create, consumersare discovering alternative ways to consume. Accordingto a survey conducted in December 2014 by the ConsumerReports National Research Center, 46% of American adultswith streaming media accounts admitted to sharing log-incredentials with people living outside of their homes.In our survey, this is the highest category for consumerparticipation—consumers are more engaged withentertainment and media sharing than they are withautomotive, hospitality or retail. The most compellingbenefits of sharing in this sector are better pricing, morechoices, greater access, and more unique experiences.And businesses are ultimately catching on. Spotify haspopularized the act of listening to customized musicwithout physically owning an asset. Sprint has tried tocapitalize on consumer sharing preferences, most recentlywith its Sprint Family Share Pack.IV. The Business of Sharing25

The sharing space in entertainment, media andcommunications is, as Griffith put it, “a Wild Westfrontier,” and it will continue to be disrupted. Yet with thisdisruption comes great opportunities to differentiate andprovide meaningful (and potentially profitable) services toconsumers. For new entrants and incumbents alike, here aresome things to keep in mind:Use sharing opportunities to drive engagement withinthe category: Smart partnerships are smart business—especially in a sharing culture. There are potentiallylarge untapped opportunities to create content sharingpartnerships across categories. Media sites, after all, arehubs for like-minded people—and thus are well-poised toact as facilitators for peer-to-peer sharing. For instance,if HGTV is the go-to source for consumers with interestsin home and gardening, it might establish a peer-to-peernetwork and partnership with a retailer in this category todrive those goods.Increased sharing engagement can drive trial. For instance,HBO allows sharing of passwords, knowing that heavierusers will want their own after they’ve had the experiencefirsthand. UltraViolet is a “digital locker” that givesconsumers digital copies of movies they’ve purchasedelsewhere, enabling sharing across channels—and with it,potentially, across friends. News media like the New YorkTimes have created “freemium” models that allows readersto share some stories before hitting a paywall.More viral and effective promotional models are anotherway in which sharing can boost engagement. Businesseswant to expand their access—and if that access can beshared among several users, it could lower the cost of trialand raise consumers’ willingness to pay. In entertainment,media and communications, there can often be largevariances in marketing costs based on the scalability ofthe model and ease of discovery. And yet socially-orientedexperiences can help keep marketing costs to the lowerend of the range—for instance, both Uber and Airbnbsoared in popularity without relying on big and costlymarketing campaigns.Find the intersection of a physical-digital offering: In part,the demise of “ownership” in the entertainment, media andcommunications a and communications space is due to theintangible nature of goods provided. Digital assets inherentlyfeel less like a possession than physical ones. As a result,companies need to figure out how to shift from offering anitem to offering a relationship—and then optimize thatrelationship accordingly.Done right, relationships can create more perceived value,and command more money as a result. Subscriptionsare one way to drive the relationship value exchange.Consumers can get greater access to content in exchange fora subscription commitmen—and with sharing, the accessis increased even further. For instance, a content providingservice may enable two users to share endlessly, so long asboth are committed subscribers.Understanding the appeal of on-demand: It’s no surprisethat the sharing economy is also dubbed the “accesseconomy” or the “on-demand economy.” We are operatingin a society that wants what it wants, at the exact momentit wants it. And often, they are willing to pony up for it.So, if consumers are willing to pay more to see somethingearlier, but these costs can be mitigated by sharing it withothers—for instance, watching a new release in a hometheatre setting with 10 other people—then there are newopportunities for a collective bargaining model to benefitboth consumers and providers.Understand the appeal of sharing, and ways to makeit work for your business: One way or another, contentsharing appears here to stay. Faced with that reality, mediaproviders can either continue to fight the threat or explorethe potential opportunity behind it. That is, sharing createsnew platforms with greater reach and more highly engagedaudiences—and with it, opportunities to move beyondone-to-one ownership models and explore new distributionmodels. Likewise, content creators will need to adoptmetrics beyond linear sales and figure out how to monetizeaccordingly through new platforms, rather than blockingthem altogether. nIV. The Business of Sharing26

What the SharingEconomy Means forYour Business V.

Whatever your organization looks like today, the sharingeconomy is too big an opportunity to miss—or too big a risknot to mitigate.For incumbent players in mature industries, the immediatechallenge is to avoid being disrupted. For a cautionarytale, look no further than traditional media, which oncerested on the assumption that that ownership and rentalmodels were the only ways to consume music or films.That is, until streaming came along to disrupt everythingmedia executives thought they knew to be true. Theyunderestimated the importance of connecting throughsocial and shared playlists—and they failed to recognizethat ownership and rentals would quickly becomeantiquated in digital media, trumped first by downloads andthen by streaming.By contrast, the automotive industry recognized the sharingeconomy as an early threat and adopted the model whereit was applicable. Today, many car manufacturers now runtheir own car-sharing operations and others have madestrategic investments in new entrants—such as Avis inZipcar and BMW in JustPark.Where a consumption model has prevailed in a sector formany years, it is often most at risk of disruption. At PwC, weoften run a workshop with our clients called “How to designa company to beat yours”—an exercise that’s particularlyrelevant and effective in a sharing economy world. It maysound grim, but if your business can’t figure out how todisrupt itself, someone else out there will do it for you.Here are some key disruptive levers thatbusinesses should considerCreate marketplaces: Organizations need to assess thepotential for consumers to band together in a peer networkthat can undermine their value proposition. These networksare most likely to emerge in categories where products andservices are widely distributed, involve high fixed costsbut low marginal costs and are often underutilized. Theautomotive and hospitality sectors were among the first tosee peer networks, but this network effect is equally viablein industries that hold similar characteristics. High-endretail and utilities are susceptible to this model—in thecommunications sector, Fon already enables WiFi customersto share their connection with others in return for freeaccess to other Fon hotspots around the world.If this potential for a network effect exists—and for thosein the automotive, hospitality, retail, entertainment andtech industries, it very likely does—then companies needto decide whether to be a player or an enabler. Will yourbusiness create and facilitate the marketplace? Or will yoube a provider that feeds into a system that’s mediated byanother entity?Develop a mitigation strategy: Whether acquiring a newentrant, partnering or investing in them, companies canmitigate the risk of a sharing economy insurgency andeven capitalize on sharing economy revenue to bolstertheir business. For instance, a manufacturer of high-endhardware goods could partner with a sharing economynetwork to circulate its wares, capitalizing on the growingappetite for higher quality, more durable goods that offergreater resale or longevity to buyers. This builds on currentpractice of providing a network of contractors, extending itto include shared economy providers who can ably supplytheir tools or labor.Organizations can also develop their own sharing economyconcepts—after all, innovation often starts with imitation.For instance, using a tried-and-tested approach in oneindustry and adapting it to your own (such as developing“access” options alongside traditional sales channels)—orreworking a consumer-to-consumer model to fit a businessto-consumeror business-to-business market.Engage in sharing your own asset base: The sharingeconomy demands a sharing organization, one thatmonetizes spare capacity and improves business outcomesthrough sharing intangible assets. For many organizations,this is the low-hanging fruit in the imitation game—inding instances within your own organization whereunderutilized assets can be more effectively shared acrossentities, both inside and outside the organization.Begin with tangible assets. On average, today’smanufacturing facilities operate at 20% below capacity 7 .Half of all desks in the average office go unused 8 . A quarterof all trucks traveling in the US are empty 9 . All of these areinstances where sharing platforms could move companiesmuch closer to maximum efficiency. Marriott, for instance,has partnered with the online platform LiquidSpace toconvert empty conference rooms into rentable work spaces.The result is not just a new revenue stream, but also a wayto increase exposure to Marriott properties. Pharmaceuticalgiant Merck recently signed an agreement to shareMedimmune’s manufacturing facility, providing long-termutilization of excess capacity for Medimmune while givingMerck flexible access to manufacturing facilities as needed.Another opportunity is to facilitate the sharing of intangibleassets. That means intellectual property, brainpower andbrand—which collectively make up around 80% of a globalcorporation’s value. In the US, the top five patent filers—IBM, Samsung, Canon, Sony, and Microsoft—collectivelyfiled more than 21,000 in 2013 alone, but because ofhigh investment costs, only a fraction of these resulted inproducts brought to market. By contrast, General Electricspearheaded a partnership with Quirky, an online inventorcommunity. The $30 million deal gave Quirky’s inventorsopen access to GE’s patents and technology, resulting injoint-venture products such as a smartphone-controlledV. What the Sharing Economy Means for Your Business28

window air conditioner, a propane tank gauge with fuelsensors, and a home monitor that can be set to track motion,sound and light.Effectively tap talent: One of the more controversialaspects of the sharing economy is the impact it has on thelabor force, and the perceived shift toward contract-basedemployment that trumpets agency over regulation. Forsome, this is regarded as a benefit, enabling workers to earnwages on their own time and their own terms. For others, itheralds an era of depressed earnings and greater reliance onwelfare and other government subsidies. 78% of adults saidthey expected that in 30 years, working multiple jobs wouldbe the new normal for wage earners.Companies need to be mindful of this tension and adapttheir employment strategy accordingly. For starters, thatmeans offering wages and benefits that attract good,reliable talent and project the values that today’s consumersseek. In many industries, flexibility can be as compelling asa higher salary—likewise, some employees prioritize varietyof work and autonomy. At the same time, employers canassess the impact of “sharing” a larger portion of their talentbase, be it with entrepreneurial activity, leisure or evenanother company. Google’s “20% time” initiative enablesemployees to pursue innovative ideas for an approvedperiod of time, even if those ideas are outside theircurrent job focus.Speak up in shaping regulatory and policy frameworks:Regulatory flash-points are everywhere, and they arethe most immediate impediment to sharing economygrowth—a situation that’s relevant to both disruptors andto more mature players. In our survey, 59% of respondentssaid they will not trust sharing economy businesses untilthey are properly regulated. When regulation is solidified,these business models will be fully legitimized—not justby law, but also in the minds and hearts of consumers. Thisshould motivate companies across all sectors to get ahead incarving out a place in the conversation with policymakers.In this setting, companies can credibly measure theeconomic, fiscal, social and environmental impact ofthe sharing model in the communities in which theyoperate. There are tools available to do that—includingPwC’s market-leading Total Impact Measurement andManagement (TIMM) approach.There is no question that the regulatory, legal and taxframework needs to be fit for a new age. The right balanceof solutions need to be built from the bottom-up, wherelocal authorities can quickly trial and experiment with newmodels. Not surprisingly, this is more easily done whenboth sides work together. For instance, Airbnb workedwith Amsterdam’s local council to pass an “Airbnb-friendlylaw” in February of 2014 which permits residents to rentout their homes for up to 60 days a year, provided that theowner pays the relevant taxes.Expand the brand through shared economy experiences:By design, the sharing economy disrupts the balance of themarketing mix for nearly every industry it touches. Pricepoints are upended. Product has a new set of metrics—ofwhich quality gets a new premium, and standardizationand consistency can matter more or less, depending onthe market. Place is reconsidered as new points of accessemerge. And the very nature of promotion has shifted, with“sharing” engendering new means of trial and exposure.Brand is still very relevant today—but companies needto reassess their brand pillars in light of these newmarketplaces, new business models and new consumervalues. Today’s fast-paced lifestyles leave little time tomaintain expensive assets. One in two consumers agreesthat owning things is a good way to reflect status in society.Social networks have also accentuated a shift in how weattain social status, raising the bar for experiences overmaterial possessions.As a result, forward-looking companies must re-examinewhat creates brand value and position themselvesaccordingly in the marketplace. For instance, manyautomotive companies now identify as “mobility providers”rather than automotive manufacturers, a reflection ofshifting consumer preferences. Savvy brands are designing76 %of consumers agree thatthe sharing economy is better for theenvironmentexperiences that are mobile and social first—empoweringusers to share with each other and tap into greater trustfueled by a combination of content, social sentiment andimproved functionality.And for any company still toeing the line on corporatesocial responsibility, let the sharing economy be a wake-upcall. Today, with new ways to effectively address resourcescarcity, doing the right thing and doing the profitable thingare not incompatible.“If the economics of car sharing canenable folks to afford a new hybridor electric car, then sales objectivesand sustainability objectives arenow actually aligned. So CSR canactually be driven by profit motive,which is an incredibly powerfulbenefit of the sharing economy.”— Padden Guy Murphy, Head of Business Partnerships,GetaroundV. What the Sharing Economy Means for Your Business29

Never settle for stable: If the sharing economy has provenanything, it’s that business models cannot be taken forgranted in a highly connected, fast-changing world.Today’s disruptors can easily be disrupted tomorrow. Theride-sharing model could be obsolete when self-drivingcars materialize—or these companies could adapt bypurchasing their own fleet of self-driving cars, removingthe cost-center of today’s drivers.To stay nimble, companies need to continuously examineways to bundle and unbundle the value exchange formaximum consumer benefit and maximum competitiveadvantage. They will need to capitalize on opportunitiesfor expansion, assessing ways in which new models can beleveraged to reach untapped consumers. They will needto explore gaps in revenue management, finding costefficienciesand opportunities to free up capital that canbe more effectively applied in other capacities.The opportunities ahead are not without challenges.Effectively competing in the sharing economy requiressharp insight into the consumer mindset and competitivemarketplace, as well as clarity into internal operations.Liability and security are concerns to be mitigated. Butcompanies that willingly tackle these challenges willbe the ones poised to survive—and the potential aheadwill be constrained only by the imagination of decisionmakers. Whether the model is consumer-to-consumer,business-to-consumer or business-to-business, ascompanies create and utilize these exchanges efficientlyand creatively, they will find more ways to profit and helptheir businesses—and the community at large—grow andsustain success. nHow PwC and Strategy& Can HelpTo have a deeper discussion about the sharing economy, please contact:Deborah BothunEntertainment, Media andCommunications, PwC(213) 217-3302deborah.k.bothun@us.pwc.comMatthew LiebermanConsumer Intelligence Series, PwC(213) 217-3326matthew.lieberman@us.pwc.comMatthew EgolDigital, Strategy&(732) 208-5828matthew.egol@strategyand.pwc.comDavid ClarkeDigital, PwC(786) 552-3211clarke@us.pwc.comJoe AtkinsonEntertainment and Media, PwC(267) 330-2494joseph.atkinson@us.pwc.comJennie BlumenthalHospitality, PwC(703) 918-4564jennie.blumenthal@us.pwc.comBrian DeckerAutomotive, PwC(313) 394-6263brian.d.decker@us.pwc.comMatt HobbsTechnology, PwC(206) 398-3326matthew.d.hobbs@us.pwc.comSameer ShirsekarRetail and Consumer, PwC(408) 817-5991sameer.shirsekar@us.pwc.comExplore other issues of this series online at: http://www.pwc.com/cis© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimesrefer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details. PricewaterhouseCoopershas exercised reasonable care in the collecting, processing, and reporting of this information but has not independently verified, validated, or audited thedata to verify the accuracy or completeness of the information. This content is for general information purposes only, and should not be used as a substitutefor consultation with professional advisors. PricewaterhouseCoopers gives no express or implied warranties, including but not limited to any warranties ofmerchantability or fitness for a particular purpose or use and shall not be liable to any entity or person using this document, or have any liability with respect tothis document. This report is intended for internal use only by the recipient and should not be provided in writing or otherwise to any other third party withoutPricewaterhouseCoopers express written consent.V. What the Sharing Economy Means for Your Business30