Is sharing economy a new trend? Not really. It is as old as car pooling and time-sharing. However, changing lifestyles and modern technology have pushed the concept of sharing economy to an ultra new social boulevard. It is an old doll with a new dress, and gaining traction worldwide as society looks to break cultural and financial barriers via sharing economy. This peer-to-peer business module is fast becoming popular as it pools both ends of demand and supply from consumers in general.
Let’s take a look at Stella (not her real name), an avid traveller, who has always relied on her bookmarked list of online hotel booking websites when it comes to researching for accommodation for her vacations. Then, along came Airbnb – the site which offers alternative accommodations for travellers seeking unconventional places to stay, such as private homes, a seaside villa, or even something as simple as a sofa bed in the corner of the host’s living room.
So, instead of booking accommodations, in the ‘business-as-usual’ mode, travellers can experience a new destination in a different way by choosing where to stay at and “enjoy a host’s home as if it were a friend’s”.
Welcome to the world of ‘sharing economy’ which Christopher T Lutz in a Bloomberg BNA Tax Management Weekly State Tax Report, points out as involving matching up owners of latent high value assets with customers in need of those assets.
To put it simply, apart from room or home-sharing, these peer-to-peer business arrangements could involve a car ride, a neighbour’s lawn mower, or even someone’s time.
It can even stretch to the sharing of toilets which is the concept behind Airpnp – a mobile optimised web app that “gives residences and businesses the opportunity to rent out their bathrooms to people in their immediate location who need to use it.”
Lutz noted that part of what makes the sharing economy so unique is the relative levels of convenience and cost-effectiveness it facilitates.
“That convenience, however, is not without its critics,” he said. Examples of sharing-based companies which have received flak from industry players and regulatory authorities include the popular Airbnb and Uber, both of which are available in Malaysia.
Airbnb is a trusted community marketplace that allows people to list, discover and book unique accommodations around the world, all of which can be done via online or from a mobile phone.
With its user-base constantly increasing, Airbnb noted that this is the easiest way for people to monetise their extra space and showcase it to an audience of millions.
On its website, it claims: “Whether an apartment for a night, a castle for a week, or a villa for a month, Airbnb connects people to unique travel experiences, at any price point, in more than 34,000 cities and 190 countries.”
However, this seeks to disrupt the traditional lines of hotels, inns and many others as they attempt to compete with online booking websites similar to Airbnb.
In fact, in end-October 2014, Accor stated that it will invest a significant 225 million euros between 2014 and 2018 to beef up its digital business which Reuters noted was in response to competition from online booking rivals such as Expedia and Booking.com.
Reuters further noted that other multiple challenges it faces online range from online travel agents to the growing popularity of home-sharing website Airbnb.
Accor chief executive officer Sebastien Bazin had not mentioned at that time how he planned to counter the rise of Airbnb.
That said, he acknowledged that the success of the customer-to-customer site should be a “wake-up call” for the hotel industry.
On the other hand, it is not only the conventional hotel businesses in the industry facing challenges as the sharing companies are also facing a few themselves.
On Airbnb, Bloomberg had last year noted that it is obviously questionable as a lot of people who are renting their places on the site are not legally allowed to do so and then also, are not claiming income after that.
On the legality of this business, Arun Sundarajan, a New York University Stern School of Business professor, said that if we look forward a few years, that new model of repurposing, creating new mixed-use real estate and that being the foundation of a lot of short term accommodations, is going to be pretty mainstream and the laws would have caught up with the technology.
“I think the world will probably segment into apartment buildings that will advertise themselves as being Airbnb free and there will be other apartment buildings where people will encourage Airbnb.
“And so, you will have a natural segmentation based on what kind of living experience you want and what kind of supplemental income generating potential you want your real estate to have,” he said.
As for Uber, it is an online ride-sharing application (app) which connects riders to drivers, thus making cities more accessible and opens up more possibilities for riders and more business for drivers.
However, Uber has faced much regulatory scrutiny and court injunctions, with Reuters noting that the company has also come under fire for its aggressive response to rivals and critics, as well as questions over whether the company has enough safeguards in place to ensure the physical safety and privacy of passengers using its services.
Reuters further reported that Uber faces mounting complaints about its use of “surge pricing” to attract drivers at peak demand periods. “Some critics go further, arguing that Uber’s system may drive down the prices drivers can charge for their services in the long-run,” it added.
The growing criticism did not stop there. In Malaysia, the safety of passengers came into question when some Uber drivers and vehicles were found to be not appropriately licensed.
According to the Land Public Transport Commission (SPAD) in a press release in August 2014, its findings revealed that there had been several violations committed by Uber including the use of private vehicles to carry fare-paying passengers which is an offence under the Land Public Transport Act 2010.
SPAD’s findings on Uber also disclosed that some of the company’s drivers did not have a Public Service Vehicle driving license which is an offence under the Road Transport Act 1987.
SPAD noted that while services provided by Uber presented a challenging issue to many public transport regulators around the world, the commission was taking a more pragmatic approach and is open to allowing this service, as long as the services are provided by appropriately licensed vehicles and drivers.
Despite the many obstacles and protests among the industry players, Uber is still defying the odds as it has continued to expand rapidly into more than 250 cities worldwide.
In fact, just last week at the DLD15 Conference in Munich, chief executive officer (CEO) Travis Kalanick revealed that Uber is committed to establishing new partnerships with Europe’s cities to ensure innovation, harness powerful economic benefits and promote core city functions.
According to Kalanick, Uber is working with governments on new rules to ensure public safety is protected, choice and competition thrive and economic growth and tax revenue rise.
“Uber wants to partner closely with tax authorities to increase transportation providers’ compliance and overall tax revenue for cities and countries across Europe,” he added.
All in, this collaborative or sharing economy, as it is more popularly known, is quickly gaining traction worldwide as many startups with similar business models to Airbnb and Uber are popping up everywhere, even in Malaysia.
The sharing economy has now spread to the Asia Pacific region, where countries such as Singapore, Thailand, Vietnam and South Korea, to name a few, follow in the footsteps of established sharing companies in other regions.
According to Nielsen, consumers in Asia Pacific are flocking to join the ‘share economy’ juggernaut, with Thais, Filipinos and Indonesians especially partial to earning dollars for renting out their personal assets.
Nielsen said that Asia Pacific consumers are among the most-receptive globally to the share economy proposition, particularly those in Southeast Asia; four of the top five markets prepared to share or rent their personal assets for financial gain hail from Southeast Asia.
“Just 22 per cent of consumers in Asia Pacific are unwilling to share or rent their personal assets, compared to 32 per cent globally,” it added.
Nielsen’s managing director of Consumer Insights in Southeast Asia, North Asia and Pacific, Vishal Bali, noted that although awareness of the share economy as a collective economy remained fairly low in Asia Pacific, there is a notable upswing in the volume of activity taking place, particularly in Southeast Asia.
“While income levels across the region are increasing overall, many consumers are constantly seeking out opportunities to supplement their income through alternative means, and sharing or renting items they possess for a price achieves that,” Bali said.
With these encouraging numbers and observations, and many anticipating 2015 to be a financially tough year for Malaysia, the sharing economy activity here just might see a sharp rise this year as people search for alternative sources of income.
BizHive Weekly takes a look at a few sharing companies on their opinion whether the sharing economy actually works in Malaysia.
Goget
Francesca Chia, co-founder and chief community officer of GoGet noted that it is interesting to see that many do doubt Malaysia is open to the shared economy. She said that this doubt speaks volume to the perception of what is necessary for a sharing economy to exist and how Malaysia is positioned for it.
She cited traditional examples of sharing economies such as car-pooling, asking your neighbour to buy your extra vegetable when he/she heads out to the market, sharing information on where the cheapest rice cooker can be bought.
These are the traditional systems of sharing rides, shopping and information that is fundamentally valuable to any community.
According to Chia, what technology has done today has basically allowed the traditional systems to happen at such an incredible scale whereby for example, a single person’s review of a restaurant can be seen by hundreds of thousands of people by just a click of a button.
“It has amplified the ability to truly enhance the ‘sharing’ aspect and this is what has disrupted traditional economies. As long as the system can build trust and give credibility, it will turn that piece of shared information into something valuable,” she said.
And GoGet does exactly that, whereby it creates opportunities like never before because of information sharing that takes place on its platform.
“Now a person at home can share to the community that they need someone to pick up condiments for the curry that the person is cooking, and someone who is free and standing near the grocery store gets that piece of information and can make a decision on whether they would like to help out,” she said.
GoGet simply connects reliable people by providing better information, sharing excess capacity of people and thus ultimately create an opportunity to earn money and get help at the same time.
People are open to things if it brings value to them, and GoGet is a direct help to the busy businessmen or small and medium enterprises (SMEs) who are looking for help to deliver or do errands for them.
On the flip side, Chia noted that GoGet’s true value is in redefining opportunities to earn on demand.
“This is why Malaysians are open to a sharing culture, because it is something they have been doing all along and it brings value to them,” she said.
Asked what led to the creation of GoGet, Chia said that they began toying with the idea to set up a platform similar to Yelp, a database of crowdsourced reviews about local businesses in the US, last year as a means to help Malaysians find the best eateries in town.
“But soon enough, it dawned upon us that being avid food lovers, Malaysians, already know where to get their staple fixes,” she said.
Actually, Malaysians did not have an issue with where to find the good food but they did have pains getting to their favourite food places.
It was the pain of losing one’s parking in the office, going through traffic, taking time to find parking and queuing up under the hot sun which prevented most people from obtaining their desired food fix.
With GoGet, now all you have to do is to post up a job and state the tip you are willing to offer for a packet of your favourite nasi lemak.
“The tip comes down to the same as paying parking and petrol and time —probably even more. And we thought, majority of people in the same office building go to the same places to eat.
“So why not crowdsource it. Tell someone that you need a drop off and see if someone is willing to pick it up,” Chia said.
That was when they realised that it is even beyond food, it could be groceries, it could be an errand … it could be just about anything.
In fact, the most popular type of jobs requested of the GoGetters (those who are willing to help out for tips) by Posters (those who require assistance with an errand) come from businesses who require deliveries for their products or transportation of their supplies/inventory.
Another large portion of GoGet’s market is food deliveries, groceries shopping, document transfers and electronics shopping.
“We also get a lot interesting jobs like requests to help out with a marriage proposal, surveying people, ironing shirts, car washers, taking pets to the vet and moving furniture,” she added.
On maintaining the quality of its services, each GoGetter is put through a screening and training process to ensure that they are fit for the job before undertaking the opportunities provided by GoGet’s network of Posters.
All jobs are also monitored for quality, ensuring that both Posters and GoGetters are satisfied with the results. After every job, both Posters and GoGetters are asked to rate and review each other.
While there are similar sharing services, such as Airbnb, Supahands, and Uber, Francesca insists that these entities do not satisfy the on-demand and flexible needs that GoGet can for delivery of goods and basic errands.
While essentially a marketplace for errands, GoGet considers iteslf as more than just a service for food delivery or transporting goods. In fact, with its services, the group also aims to help Malaysians be efficient with their time and be more enterprising.
“We truly differentiate through the community and the type of GoGetters and Posters that come onto our Platform. It is the intangible GoGet moments that come on that makes us so different.
“Our GoGetters are friendly, resourceful, helpful and most of all, they take the initiative to make sure the Posters are satisfied,” she said.
GoGet has students, stay-at-home mothers, retirees, average working Malaysians and freelancers as GoGetters.
Due to the mix of GoGetters that it obtains, this actually takes its service and interactions to a unique position where GoGetters and Posters become friends and connect beyond the GoGet job.
Since launching in June 2014, GoGet has found that the response from the community has been wonderful. It has been growing continuously and the team is always pleasantly surprised by the type of GoGetters that come on and the type of jobs that are being posted.
“It is wonderful to see how GoGetters want to help beyond just the tip and Posters are very generous and understanding on the job details,” Chia said.
Currently, GoGet does not have users from Sarawak as it is still based only in Klang Valley. GoGet’s community is now in the thousands for Klang Valley. On a side note, GoGet does have GoGetters in Johor Bahru and Ipoh.
GoGet’s website explained that as it is currently at its beta phase, GoGetter availability will be limited during this time. That said, GoGet is looking forward to expanding and connecting GoGetters and Posters all over Malaysia.
“We are aiming to grow GoGet into something that you turn to automatically when you are in need.
“Our goal isn’t to just provide errand help, but to make life more efficient and redefine part time opportunities for Malaysians.
“We want to help Malaysians be efficient with their time and to help them be more enterprising. We want to see people change their schedules around because GoGet exists today,” Chia said.
PlateCulture
Reda Stare, co-founder and chief executive officer (CEO) of PlateCulture, views the sharing economy as still a relatively new concept in Malaysia.
However, she believes its popularity will increase rapidly as what can be seen in the US market and the reason for that is all the advantages the sharing economy rewards its users and how it empowers the communities.
For example, at PlateCulture, they inspire people to pursue their dream of running the restaurant. As one of our hosts says: “It is like my dream of running the restaurant except that I do not need to own one”.
“We are reinventing the old concept of running the restaurant by letting people start this life style easily,” she said.
With much talk about how the sharing economy can be unsafe for users, she concurs and instead believes that this issue could be resolved by the community itself.
According to Reda, the beauty of the sharing economy is that it is a self regulating mechanism. This means that all members at the community should seek for the best reviews and recommendations and then trust those members with the best reviews.
“At PlateCulture we help our host by sending them the ambassadors from PlateCulture who not only help them with taking photos of their home restaurant but also reward them with the first review of their profile.
“This is the way we keep the quality of home restaurants at PlateCulture, too,” she said.
The inspiration behind PlateCulture started with Reda’s own personal experience which she gained while travelling through Southeast Asia (SEA).
“I was always into cultures and cuisines but I realized that it is not so easy to experience them to their fullest unless you get to spend some time with local people,” she said.
Reda’s first PlateCulture experience (the name PlateCulture came much later) was in Kerala (South India) when she was invited to a local house for traditional South Indian dinner which she really enjoyed.
“I wanted to have more experiences like the one in India and I managed to get some when she was traveling through SEA,” she said.
As expected, she had a hard time finding people who would be happy to invite her to their home to share food and that was how PlateCulture was established.
With PlateCulture, Reda’s aim was to create an online tool which would allow tourists to find and book such dinners easily. There are a large number of hosts who have joined PlateCulture, with Reda noting that their events are beginning to be visited not only by tourists but by locals as well.
“What started as a tourist attraction is now a community of foodies where tourists can enjoy authentic homemade food while spending some time with local people and where local people experience the tastes of foreign countries simply by visiting hosts who, for example, cook authentic Italian dinner in the center of Singapore,” she said.
In differentiating ‘home restaurants’ at PlateCulture from that of regular restaurants, Reda explains this in terms of the chef, food and place factors.
At PlateCulture, the chef is “a person who is a cook, a waiter and the owner of the restaurant”. Reda noted that those are people who are very passionate about cooking but do not necessary have professional trainings.
“They are chefs who will cook for you, serve you and join you around the table for the conversation,” she added.
In terms of the food differentiating factor, Reda said that instead of having menus they like to surprise their guests and thus let the chefs improvise.
Every dish comes with a story and the recipes can be shared with the guests if they are interested in obtaining them.
Guests can have their pick of the litter with these home-cooked meals given the wide variety of cuisines available at PlateCulture. This can range from authentic Indian to something more rare such as the Lithuanian cuisine.
Lastly, as the restaurants at PlateCulture are based at home and unlike public restaurants, reservations are a must.
“Instead of going to public place you have the dinner or lunch or breakfast at a private place. You can not get there without reserving the seat through PlateCulture.
“You have to know the date, place and to be welcomed too,” Reda said.
So far, most of PlateCulture’s feedback from guests has been very positive, with Reda noting that the reviews are not solely focusing on food and hospitality.
Guests’ dining experiences with PlateCulture is something that is more than just about the food itself in that both parties are able to share personal stories, enjoy the local culture or lifestyle, meet new people and generally have lots of fun.
“The reception from hosts has been great as well, who because of PlateCulture opportunity, are finding that hosting dinners is becoming their new hobby or they had a chance to fulfil their dream to run their own restaurant,” she said.
With over 50 hosts in Malaysia, mainly in Kuala Lumpur, Reda said they also get inquiries from people about PlateCulture restaurants in Sarawak.
As such, she encourages those who are great at cooking and live in Sarawak to check out PlateCulture if they want to start up their own home restaurant and share their love of food with new friends.