Tag Archives: sharing economy

The Insurance Industry Is Taking Advantage of the Sharing Economy


The so-called ‘sharing economy’ has benefited numerous consumers through the value it has added to their lives. Companies such as Uber, Airbnb and Lyft, to name just a few, have taken advantage of the digital technologies humans have developed over the years. However, consumers are not the only benefactors of the sharing economy, the insurance industry has developed products and services specifically catered to its unique characteristics, most notably in the ride-sharing sector, where insurance providers have taken advantage of liability concerns occurring in such ‘sharing’ activities (Traum, Vol. 14:511).

One of the first products developed, the “Metronome”, came from a collaboration between Uber and MetroMile. The device tracks the vehicle of a Transport Network Company (TNC) driver, and is embedded in the Uber application (Traum, Vol. 14:511). It only turns on and activates the required insurance plan when drivers are engaged in TNC services. When the driver is not carrying a passenger, or hasn’t accepted a ride, any liabilities arising from an accident are covered by his own insurance. This product considers both the professional and personal roles of Uber drivers. In a similar fashion, a new plan from Farmers Insurance, on offer since May 2015, supplements a TNC driver’s personal plan with a premium of eight percent (Traum, Vol. 14:511). Many insurances providers have begun to offer similar services to the ride-sharing industry.

Furthermore, the use of such digital technologies has expanded to mainstream customers’ insurance plans. Some companies have developed a chip to be installed on the vehicle during production. Similarly to the Metronome, this device tracks if a vehicle is in use and offers full coverage, to the extent of the customer’s plan, in the case of an incident. However, when the vehicle is parked and the engine is off, the insurance company provides a more limited plan. This enables insurance firms to offer their customer with a more suited, and personalised service.

In the case of Airbnb and other home-sharing services, the lack of legislative development with regards to the coverages of issues common to such activities (Traum, Vol. 14:511). However, insurance providers are aware of the risks that may arise but have yet to adapt and respond to liability issues specific to the home-sharing industry. Together with national governments and sharing economy companies, insurance providers have to strive towards addressing consumer needs; such as protection issues. Furthermore, innovations in this industry can be translated to insurance plans for the mainstream customer, taking the advantage of newly available digital technologies.

Traum, Vol. 14:511. Sharing Risk in the Sharing Economy: Insurance Regulation in the Age of Uber. Cardozo Pub. Law, Policy & Ethics J.

Airbnb Trips – The Next Move Towards Conquering the World


“The stuff that matters in life is no longer stuff. It’s other people. It’s relationships. It’s experience.” – Brian Chesky, Co-Founder and CEO of Airbnb

What is your purpose of travel? Is it food? Is it fun? Is it meeting new, inspiring people? Is it getting to know new cultures? Travel is about meaningful moments, experiences you make that you will never forget. But how do you find those places for magical experiences? On TripAdvisor? Go to TripAdvisor and search for “Things to Do” in your home town: Hop-on-Hop-off buses, overpriced boat tours, Madame Tussaud’s… Have you as a local, ever done one of those activities? Most likely you will say: “That’s just something tourists do.”

To prevent travelers from stepping into tourist traps, Airbnb recently presented its’ new offering – the world of trips:

Airbnb knows what travelers want – the ultimate local experience. The previous, successful years resulted in a platform offering millions of homes around the entire world to tourists that no longer want to stay in anonymous hotels. But CEO Brian Chesky realized that homes are just one single part of a great journey. A great journey lets you immerse in and join the local community. With the new product Airbnb Trips, also experiences and places will all be available in the app. So, what are those new features?

  • Experiences: The offered activities are not just organized by city, but also by passion, for example Sports, Nature, Social Impact, or Food. The available experiences can take from a couple of hours up to multiple days. Every offered experience is presented in a short video. About half of the trips are offered at a price below $200 (Airbnb: Experiences, 2017).
  • Places: Within this function, local legends list their top things to do in an “insider guidebook”. Additionally, also audio walks and meet-ups are featured.

Business Model Evaluation

What is the value added for the three main parties involved in Airbnb’s business model?

Consumers (travelers) – For travelers, the extension of Airbnb’s offerings provides a great value added, because the platform becomes a One-Stop-Shop for your entire travel. This will reduce the time necessary to prepare trips and give you new local insights during your holidays. Of course, this comes at high costs: 55€ for a sunset bike ride in Tokyo or 98€ for a 3h-cocktail workshop in San Francisco can not be afforded by budget travelers.

Providers (guides) – From now on, you can also become a host for activities. When deciding to become a host, you have to apply and Airbnb checks the experience for certain quality standards. The best experiences offer guests access participation, and perspective (see Figure 1). Next to monetary profit, the benefits are also non-financial: get more exposure for what you love, promote your brand, and meet locals like you (Airbnb: Become A Host, 2017).

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Figure 1. Assessed Quality Standards for Experiences (Airbnb: Quality Standards for Experiences, 2017)

Platform (Airbnb) – With this business model extension, Airbnb wants to become the platform for your entire trip. By embedding new features like restaurant recommendations and an integrated reservation system, Airbnb seems to aim at replacing existing platforms like TripAdvisor and Yelp. Motivation of this move clearly is Airbnb’s transition from a website for booking accommodation to a full-service travel company, which comes along with increasing its user-base and revenue. For Experiences, Airbnb brokers the payment from the user to the guide and takes a commission, similar to how its home-booking service works. For Places, the company has some revenue-sharing deals in place, like a partnership with Resy to book restaurant reservations. Also, the market for travel activities is still underserved and promises large potential. So far, only small vendors like Klook, I Like LocalPeek and Viator offer a comparable service. However, their offerings are very “touristy” and generic. Additionally, Airbnb can leverage its popularity to quickly establish its offering.

Feasibility of Required Reallocations

Internal ArrangementsAirbnb Trips is more or less an extension from providing accommodation to additionally providing activities and tours. However, this requires further administrative effort, especially related to the quality standards assessment. This assessment is necessary to assure a local and personalized experience, so that Airbnb can clearly differentiate from competitors. Also, videos for every experience have to be created.

External Environment – Airbnb already radically disrupted the global hotel industry by applying the principle of the sharing economy (Zervas, Prosperito & Byers, 2014). With its business, the platform did not only antagonize hotels, but also governments that try to proceed against housing shortage (Jefferson-Jones, 2014; Lee, 2016), coming along with several law-suits in major cities like Berlin, New York and San Francisco. The extension of its offering will most certainly not reduce Airbnb’s number of critics. For example, the ‘ownership of an experience’ is very difficult to assess. Who should get the money, when a guide shows you around a market? Don’t the market traders also deserve a proportion for being essential for the experience? Next to legal conflicts, a discussion about the social impact can be initiated. The commercialization of local experiences may destroy the original selling point of unique, original travel impressions.

All in all, Airbnb Trips moves the platform beyond its’ couch-surfing origins. The offering is clearly targeting the “emotionalization” of travel experiences, a next step in the service economy. This is a great possibility for travelers (who have the budget) to make unique memories. However, it comes at the cost of commercializing the local charm for the sake of profits. Airbnb should be careful and hold up high quality standards (e.g. small groups, special experiences) so that it does not destroy it’s newly designed value proposition.


References

Airbnb: Become A Host. Retrieved March 7, 2017 from https://www.airbnb.com/host/experiences?locale=en

Airbnb: Experiences. Retrieved March 7, 2017 from https://www.airbnb.de/experiences/

Airbnb: New. Retrieved March 7, 2017 from https://de.airbnb.com/new

Airbnb: Quality Standards for Experiences. Retrieved March 7, 2017 from https://www.airbnb.com/help/article/1451/what-are-the-quality-standards-for-experiences?locale=en

Jefferson-Jones, J. (2014). Airbnb and the housing segment of the modern sharing economy: Are short-term rental restrictions an unconstitutional taking. Hastings Const. LQ, 42, 557.

Lee, D. (2016). How Airbnb Short-Term Rentals Exacerbate Los Angeles’s Affordable Housing Crisis: Analysis and Policy Recommendations. Harv. L. & Pol’y Rev., 10, 229.

Zervas, G., Proserpio, D., & Byers, J. W. (2014). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research.

Hey neighbour, can I rent your drone?


Drones are becoming increasingly popular, cities are filmed from above with drones, drones can send packages and drones are even used in the army (drones.nl, 2017). More and more companies and individuals are interested in using drones, but what to do when you do not own a drone or in contrary, when you have a drone, but you do not use it that often? The sharing economy is already present in various aspects of society and this is exactly where the new peer-to-peer drone rental marketplace Up Sonder responds to.

Up Sonder
Just like renting a room through AirBnB, it is now possible to rent a drone. Up Sonder is a free platform and takes only a 5% provider service fee as revenue and on top of that, a small portion of the revenue is donated to help deliver access to clean drinking water to Africa (zdnet.com, 2017).

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Everyone who owns a drone can create a free profile and list their drone at their own price to become a provider and certified FAA remote drone pilots can also list themselves by adding their service. On the other hand, companies and individuals are able to filter and rent different kinds of drones and/or services in their direct area. The platform is easy to use and providers can manage and accept bookings from within the platform. Also, they are able to access payments, scheduling, inventory management, customer messaging and sales through the online portal. The renters on the other hand can schedule and make their payments quickly. Up Sonder collaborates with UberRUSH that picks up and drops of the drones when the rent is scheduled (upsonder.com, 2017).

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Efficiency Criteria
The utility for the consumers of the platform, the renters, is the fact that the platform is simple and fast and can be used anywhere at anytime. It is free to sign up and create a profile. Renters will switch to Up Sonder, because they do not have to buy a drone themselves, so they save money, and providers will switch to Up Sonder, because they can still make money of (unused) drones at their own price in an easy way. Besides that, the renters and providers become part of a larger community, which is fun and in which they do not have to exchange the money and drone themselves. It saves them money and time and maximizes the joint profitability.

On the other hand Up Sonder is feasible, because the platform takes care of several institutional arrangements. Firstly, to make the platform more reliable, etiquettes are present. The renters and providers can see photos of each other on their profiles and afterwards, both parties are able to write a review. At the same time, providers are protected by the platform from damage with insurance up to 2,500 dollars and renters are offered a refund policy with three different cancellation policies. Additionally, Up Sonder has a non-discrimination policy to make sure that people from all backgrounds are treated equally. The platform takes also care of the institutional environment. When providers earn more than 600 dollars in a tax year they have to fill in a tax form and payments are made by means of established methods.

Up Sonder meets several efficiency criteria and is rapidly growing. Having a drone and using its services is made available for everyone!

References
http://www.zdnet.com/article/drone-rental-marketplace-up-sonder-goes-national/
https://www.upsonder.com
https://www.drones.nl/nieuws/2014/08/drones-wat-kun-je-er-mee

I want your spot! I’ll give you 50 dollars!


The term “sharing economy” is one of the biggest buzzwords out there. The sharing economy, also known as the peer-to-peer economy, is a socio-economic ecosystem that evolves around the sharing of resources (Matofska, 2015).. The sharing economy has developed very strongly over the past years due to the development and wide-spread availability of information technology. It has produced many interesting new business models, of which some have disrupted many traditional industries. Examples are of course UBER and AIRBNB. Another very interesting example of the sharing economy is Shout; a marketplace for “spots” in the form of a mobile application (Medium, 2016)!

Continue reading I want your spot! I’ll give you 50 dollars!