Recently, the sharing economy has intricate
a great association of the underutilized resources for sharing and consuming.
The unilateral market accelerates the sharing economy and indicate where to
facilitate exchange between the buyer (consumer) and the seller through technology
such as ridesharing service application Uber and Ola (Ramirez et al, 2016).
The sharing economy will be a foremost
part of the world economy (Yaraghi and Ravi, 2017). As described by San
Francisco Planning and Urban Research as “fundamentally capitalist at the same
time socially and environmentally cognizant,” an opportunity to enhance current
economy with additional benefits e.g. saving fuel (cited in Panda et al, 2015).Thus,
shared economy helps to cut down costs, conserving resources and preserve the
environment (Panda et al,2015).
According to BCG, 2017 trends of the shared economy
is B2C (Business-to-Consumer), which includes shared workshops, storage,
delivery and logistics. In case of B2B (Business-to-business), new startup
ventures are coming up. Therefore shared economy decreases the transaction cost and helps to increase the
sharing economy business model (BCG, 2017).
BCG (2017) has divided sharing economy
into three models, Decentralized platform: Airbnb model- facilities the
transaction in exchange of the small share of the fee and owner offers directly
to the user. Centralized platform: Owns the assets, sets the price and collects
a large share of transaction value as the cost is higher e.g.zipcar. Hybrid
platform: Ownership and risk decentralization along with standardization. Services
are centralized where owners provide service with price and have set standards
e.g.Uber (BCG, 2017).
are economical?such as collaborative consumption makes monetising additional
capacity and reducing the cost of ownership which in turn gives customers the
financial flexibility for renting/sharing resources instead of owning them;
environmental such as rapid mobility of individuals from rural to urban areas is
increasing the population of cities which has resulted in carpooling, ride
sharing concepts; technological such as ?mobile devices, applications, social
networks, and payment systems have facilitated in identifying demand for goods
and services and transactions between businesses and customers (Vroom, 2017).
India is an emerging market adapting to
international trends in technological advances. Views on ownership are increasing the popularity of `sharing’ across
all aspects of Indian work and life (Liveinstyle, 2017). The sharing
economy is comparatively a new concept (Doley,2015).The sharing economy is a
socio-economic system between human and physical assets which includes
services, properties, distribution (EY, 2015).
The sharing economy provides short-term
services for rent and peer to peer services for the exchange of goods and
services. It also brings people together through an online platform (EY, 2015).
In India, the zest of sharing economy in 2013 with Uber mobile application for
transportation since then the industry is expanding .Ola is the leading mobile
application for transportation in India and second aggregator off 200 million
dollars in equity and cash deal as compared to Uber (Doley, 2015).
The sharing economy was first prominent
with on-demand transportation followed by hospitality and food and beverages in
India (EY, 2015).
According to Vroom
industries in India have been interrupted by the sharing economy model, affecting
logistics (Uber, Ola and Vroom), hospitality (Airbnb, OYO rooms) and food and
beverages (Swiggy, Zomato) the most.
The sharing economy concept in India is
growing from its emerging stage to maturity. There are several risks in this
model like Business model risk?such as trust and reliability amongst customers,
owners and aggregators and biased rental applies in the Airbnb model and
passenger (especially women) security in the Ola and Uber models; Regulatory
risk,? such as ?businesses have been unfavourably impacted by local laws and
regulations, like the Karnataka government banned uberPOOL and Ola Share
mentioning their services as illegal; supply risk ?like ?reducing motivations
and share of profits on the supplier’s asset security e.g. Uber and Ola lure
and switch model by offering their driver’s high incentives to them and once
the stage surmounted up they decreased their pay (Vroom,2017).
Indian culture and consumer behaviour
and On-demand housing
Culture is the want and behavior of a
particular people and society. Each culture consists of social stratification
creating social classes and subcultures providing identification with their
members (Kotler and Keller, 2016).
According to Schiffman and Kanuk (2010), the culture
and sub-culture are significant and the Social aspect is an additional factor to
the cultural factors consist of statuses, blood relations and individual in a
society influencing the consumer buying behavior (Appendix1).
Culture describes importance involved
to services and product and the failure and success of it (Solomon et al,
Collectivist people are often motivated
by norms and duties executed by the in-group, give priority to the goals and
emphasize their connectedness in the in-group (Kacen and Lee, 2002).
The term ‘Sharing Economy’ is a recent perception
worldwide, it has been a part of Indian urban culture over a long period of
time like Kolkata, Chennai and Mumbai, where migrants moved from various places
in the search of a job and shared accommodations and common kitchens (Liveinstyle,
2017). One more example is the shared taxi services in the cities like Mumbai,
where people shared cabs for train stations, offices and to travel between
cities (Liveinstyle, 2017).
The mobile revolution joined the fact that
new generation of India doesn’t give too much importance to ‘ownership’, has
headed to the `Sharing Economy’ increases connectivity with people to share
from workspaces, the homes, to kitchen appliances, furniture and even clothes (Liveinstyle,
The fast-growing economy is the application
based shared taxi rides like Ola and Uber in cities. According to a report
by The Mint, shared rides account by Uber and Ola is made in major cities is 25%
to 30% as the number of people choosing the pooled rides has increased more
than five times from the last two years as these cab companies cutting rates to
attract more customers, the growth rate will be faster in the future (Liveinstyle,
Hospitality is one more industry that is
growing, as homestays have existed in India the arrival of Airbnb. Airbnb
is online access to book house of the host which can be rented and growing at a
fast rate. Airbnb effect the economic aspects as it strengths the city’s or
country’s economy and tourism building the idea of sharing of the economy (airbnbhell.com,
Panda et al, 2015). From the Himalayas to Goa to Kanyakumari India, property
owners are offering their flats, beach bungalows, etc. on Airbnb. Brian Chesky,
CEO of the American company cited about India as one of the main revenue
generators and it will be one of the world’s biggest markets for Airbnb in the
future (Liveinstyle, 2017).
Peer to Peer such as Airbnb, OYO rooms.
Indian government is inclining towards the growth of on-demand housing and
Airbnb and Oyo has taken advantage of this. Hosts form the core for home
sharing. India’s cultural hospitality concept of ‘Atithi Devo Bhava’ means ‘The
Guest is next to God Himself.’ This concept is an integral concept in homes of
the country in which hosts exhibit to best serve their guests. This is the
value that Airbnb adopts to enable people to feel belongingness anywhere in the
world. This differentiates India’s hosting culture, hosts opening their hearts
and homes to the world (Srivastav, 2017).
OYO is alike Airbnb but with a twist to
lure the customers. Kavikrut, the chief growth officer at OYO stated that “We
have realised that an enormous number of second and holiday homes are locked in
India due to low rents, owners living in other cities, and the lack of a
trusted partner who would take responsibility for the maintenance and the
home”. “The owner makes 50% to 70% revenue from the property monthly”, Kavikrut
stated. In popular holiday destinations like Goa, Manali, Shimla, Nainital, and
Pondicherry have the service called OYO home. OYO offers home owners to appoint
a housekeeper who would manage guests (Quartz, 2017).
According to Levy (1978), five primary
sources of behaviour are Human biology, Individual aims and emotions, Group
learning, Cultural values and Cosmological beliefs (cited in Rook, D.W., 1985).
“Sharing is a part of Indian culture, as we
have experienced sharing at some point in time from offering food to strangers
or beggars on train platforms or invitation to relatives. We all also share car
rides informally all the time,” says Raghav Gupta, India country manager,
BlaBlaCar and feels the concept makes sense. India also has the large
population where people travel often and there is an increase in the usage of
mobile phone and social media (Doley, 2015).
There is an underline value attached to
the properties owned by the owners, Uber services provide customization of
language as India is a multi-linguistic and multi-language nation.
Consumption-specific values for convenient and prompt services (Soloman et
Thus, Culture is the ultimate touch
point for Indian consumers for consumption or acceptance of a business model.
motivation and Ride Share economy
Motivation is aroused to the need for the
functional benefit and the state to drive. The need is the indication of
personal and culture want (Soloman et al, 2013). The expectancy-value model
states that the consumers form attitudes about various brands by the procedure
of evaluating the characteristics (Green and Wind,1973).
The theories of Sigmund Freud, Frederick
Herzberg to an analysis of the consumers state the psychological factors of
creating an individual’s behaviour are an extensive unconscious that an
individual is not able to understand his or her motivation completely (cited in
Reynolds and Olson, 2001). Herzberg (1966) state a theory which differentiated
the dissatisfiers from the satisfiers and relies on the presence of
According to model by Fishbein (1967)
that consumers evaluate products by their judgments of the brand which consist
of their positives and negatives in accordance with what is perceived as
significant by the consumer.
On-demand Transportation such as Ola and
Uber with verified driver connected to the user to drive them to the
destination set through the app offering convenience and flexibility to the
consumer and driver have predictable earring (EY, 2017). In Uber, anyone can
sign up and get the ride anywhere. Uber was growing market until the case of
rape in Delhi. 75% of Ola driver have the commercial-taxi license and called
“independent entrepreneurs” (Fok, 2015).
dissonance is behaviour conflict with one another, when to choose two
alternative riding sharing by choosing one the person gets a bad quality and
loses the good quality of the other (Soloman et al, 2013).
share cab rides with others heading to the same destination which gives
customers chance to socialize and meet new people this way. The Ola Share is a
social ride-sharing method more than UberPool. In this service, customers can choose
to share their rides with riders from their own social groups. To make the ride
easier and riders can also create groups in the Ola app with their social
group. The share ride request is placed on the app and then matched with other
user taking the same route in your groups. For UberPool one places a request for an
UberPool ride with your destination and matched with another rider going in the
same direction. The price is split between the two users. (Kashyap, 2015)
Maslow’s theory is a hierarchy driven by
needs of safety need is a major concern in ride-sharing especially women in
India and social need of socialisation and belongingness through sharing
economy as the assets have values attached to it (Kotler and Keller, 2016)
(Appendix 2). The need of affiliation in the company of other people approach
used by the ridesharing and rational involvement is the need, value and
interest which increases a consumer attention more towards service-related
information (Soloman et al, 2013).
Thus, motivation is a driver of sharing
economy in India for forming an attitude and arousing the functional benefits
drawn from it. The motivation towards cost-effective and convenience e.g.
people can carpool for a certain distance with people who are anyway driving to
the same place or people who have extra car can lend it to ola, who provide
drivers and anyone can use giving employment, affordability and profitability.
The consumers, as well as the owner, have a motive, need and want.
perception and On-Demand food
selection and organization of information are called perception (Kotler and
Keller, 2016). Perception has three processes involving exposure, attention and
interpretation (Soloman et al, 2013).
Attention is when people
are more likely to relate to the current need, to notice stimuli they
anticipate and deviations are large in relations to normal. They interpret
information to fit our notion also known as selective distortion. The exposure
of information also known as retention is to support our attitudes and beliefs
gives an advantage to the brand (Kotler and Keller,2013).
F&B such as Zomato,
Food Panda and Swiggy making food delivery and payment more efficient (Ey,
The foodpanda group is a global app
headquartered in Berlin, Germany, and in 24 countries and territories. The service
permits customers to choose from local restaurants and place orders via the
mobile app or website (IndiaSpark, 2016).
Zomato is founded in 2008 by Deepinder
Goyal and Pankaj Bhardwaj. It operates in 23 countries. It features scanned menus
and photos with user reviews and ratings. The company provides card payment, online
ordering, table reservation (IndiaSpark, 2016).
Swiggy is a Food Delivery in Bengaluru,
India which is inspired to provide a complete food ordering and delivery from
the best restaurants and small ventures to urban areas. For ordering from an
extensive range of restaurants, and offer flexibility to the customers (IndiaSpark,
There are many
consumers in the Indian economy who likes to try new restaurants, cuisines etc
majority of this population incorporate the young adults who have the curiosity
to try something new that is trending, as they use technology as a big part and
refer to applications. They like to infer their decisions based on ratings,
reviews, comments, pictures and description available on these sites. Due to
the contribution and inputs available on these applications the buying
behaviour and perception is influenced.
to Belk (2014) as the rise of internet resulting in societal, economic and
technology facilitates mobile-based app. After demonetization and introduction
of digitalization by the Government have a significant push towards expansion
and scope of digital business and sharing economy in India (Yaraghi and Ravi,
With internet dissemination in India by
19.2% significance for the growth of sharing economy, mobile proliferation is
the key of the shared economy around the world including India as sharing
economy rely on mobile to connect with the customers for rapid growth .The
sharing economy is convenient and cost-effective as sharing personal product,
particularly in urban areas. The sharing economy has grown the job
opportunities in India along with rising entrepreneurship spirit and innovative
business idea quicker platform for suppliers. The prospect for the citizen to make
income by renting and utilizing the resources (Ghosh, 2015).
The sharing has moved further than
on-demand rides, foods and rooms. Mahindra created Trringo sharing services
where farmers can rent tractors and farming equipment through their
smartphones. Trringo operates in India only approach to encourage and build
scales and improve the livelihood of the farmers (BCG, 2017).
Thus, sharing economy in India is
inclination towards new application for convenience and cost-effectiveness.
Moving from traditional businesses and entering a new age of digitalisation in
different areas for the functional benefit and experience for the citizen of
Demerits of sharing economy
There are two
sides of the same coin. There are numerous benefits of sharing economy as it
enhanced entrepreneurship spirit and room for innovation, utilization of
resources, job opportunities, and skills development, positive impact on the
environment, digital literacy and convenience and flexibility for the customers
of the sharing economy like winning the trust of the consumer and safety as in
the case of Uber the incident of rape in Delhi led to shifting the trust and
question the safety factor, quality and consistency of products and services.
Delhi authorities ban on Uber (later withdrawn) following a well-exposed rape
case in the capital of India (McKinsey, 2015). From the
business side, the regulation and taxation, dealing with the regulatory
hurdles, go with the technology as the services are app based and acceptance of
dynamic prices (EY, 2017).
The rise of sharing economy is the
attributes of motivation, perception and culture in India. According to the business
model of sharing economy is well-priced, convenient, and flexible especially in
a country like India which is growing at 6.7% GDP and where 30% of the country
is unorganised share economy plays a key drive for the nation to grow at very
steady rate. The era of transformation from capitalism to digitalisation leads
to profitability, affordability and employability as a core value. With the
entry of ride-sharing have opened gates for the business model was a huge blow in
the Indian market, where people rent cars and houses make economic sense. The
success of UberPool and Olashare, Indian society is adapting itself to that
sharing economy. The three industries trying to extract from sharing economy
are ride-sharing, on-housing and on-food and the industries are moving towards sharing
economy. It also brings other benefits to the ecology and society. The sharing
like any other concept comes with its own demerits and limitations like trust,
consistency and security from the consumers perspective and regulations,
taxation, dynamic pricing from the businesses perspective. Despite the
demerits, the benefit to India are set not only by the consumers or suppliers
but also by the government with the introduction of digital India in the
However, the new experiential generation
is more inclined to experiences and not open to creating fixed resources. These
characteristics will give a blow to the future of the sharing economy in India.