As the sharing economy market matures, incumbent companies such as Uber and Airbnb face a new wave of disruption from smaller players. These new entrants are harnessing technologies such as artificial intelligence (AI) to gain a foothold in the market, forcing legacy companies to invest in disruptive technologies to maintain their competitive advantage, says GlobalData, a leading data and analytics company.
GlobalData’s latest thematic report, “Sharing Economy,” reveals that technologies like generative AI are helping sharing economy platforms enhance their services. Companies such as Airbnb and Lemonade have integrated AI into their offerings to provide more personalized recommendations or more efficient services. As AI develops, sharing economy platforms will use it to understand their consumers better and provide more personalized offerings.
Aisha U-K Umaru, Thematic Intelligence Analyst at GlobalData, comments: “We are seeing how technology can enhance products and services across all industries. However, as sharing economy platforms are predominantly app or website-based, the need to invest in technology is indisputable.
“Consumers are becoming used to hyper-personalization and are increasingly familiar with chatbots and other AI services. Sharing economy platforms can invest in these areas to satisfy consumer demand and stay ahead of their competitors.”
According to an aggregate of sources, the sharing economy market will reach over $1 trillion in revenue by 2031. Three key factors have contributed to the massive growth of the sharing economy: rapid advances in digital platforms and devices, globalization and urbanization, and more efficient use of scarce resources.
U-K Umaru continues: “The sharing economy market looks poised for healthy growth over the next five years. Much of this growth may be driven by large players expanding their dominance. However, the fast growth of smaller players such as peer-to-peer (P2P) insurance company Lemonade or clothes-sharing platform Hurr will also have an impact. These more recent entrants are disrupting old models and gaining traction with consumers.”
Participation in the sharing economy typically requires users to provide personal information, including their location, consumption habits, photos of personal items, credit card information, and travel habits. Consumer and data protection laws mostly cover the deceptive use of personal information. The speed at which the sharing economy is evolving will require agile responses from data privacy and cybersecurity perspectives.
U-K Umaru concludes: “We have seen data or cybersecurity breaches and, subsequently, large fines or legal action against players such as Uber and Chegg. These highlight the tough position in which sharing economy platforms are placed as they hold large amounts of sensitive data. As sharing economy platforms invest in new technologies, they must also adopt robust cybersecurity and data privacy protocols to comply with ever-more stringent regulations around the globe.”
