1. transaction in exchange of the small
1. IntroductionRecently, the sharing economy has intricatea great association of the underutilized resources for sharing and consuming.The unilateral market accelerates the sharing economy and indicate where tofacilitate exchange between the buyer (consumer) and the seller through technologysuch as ridesharing service application Uber and Ola (Ramirez et al, 2016).The sharing economy will be a foremostpart of the world economy (Yaraghi and Ravi, 2017).
As described by SanFrancisco Planning and Urban Research as “fundamentally capitalist at the sametime socially and environmentally cognizant,” an opportunity to enhance currenteconomy with additional benefits e.g. saving fuel (cited in Panda et al, 2015).
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Thus,shared economy helps to cut down costs, conserving resources and preserve theenvironment (Panda et al,2015).According to BCG, 2017 trends of the shared economyis B2C (Business-to-Consumer), which includes shared workshops, storage,delivery and logistics. In case of B2B (Business-to-business), new startupventures are coming up. Therefore shared economy decreases the transaction cost and helps to increase thesharing economy business model (BCG, 2017).BCG (2017) has divided sharing economyinto three models, Decentralized platform: Airbnb model- facilities thetransaction in exchange of the small share of the fee and owner offers directlyto the user. Centralized platform: Owns the assets, sets the price and collectsa large share of transaction value as the cost is higher e.g.zipcar.
Hybridplatform: Ownership and risk decentralization along with standardization. Servicesare centralized where owners provide service with price and have set standardse.g.
Uber (BCG, 2017).Drivers ofSharing Economyare economical?such as collaborative consumption makes monetising additionalcapacity and reducing the cost of ownership which in turn gives customers thefinancial flexibility for renting/sharing resources instead of owning them;environmental such as rapid mobility of individuals from rural to urban areas isincreasing the population of cities which has resulted in carpooling, ridesharing concepts; technological such as ?mobile devices, applications, socialnetworks, and payment systems have facilitated in identifying demand for goodsand services and transactions between businesses and customers (Vroom, 2017).2. Background India is an emerging market adapting tointernational trends in technological advances. Views on ownership are increasing the popularity of `sharing’ acrossall aspects of Indian work and life (Liveinstyle, 2017). The sharingeconomy is comparatively a new concept (Doley,2015).The sharing economy is asocio-economic system between human and physical assets which includesservices, properties, distribution (EY, 2015). The sharing economy provides short-termservices for rent and peer to peer services for the exchange of goods andservices.
It also brings people together through an online platform (EY, 2015).In India, the zest of sharing economy in 2013 with Uber mobile application fortransportation since then the industry is expanding .Ola is the leading mobileapplication for transportation in India and second aggregator off 200 milliondollars in equity and cash deal as compared to Uber (Doley, 2015).
The sharing economy was first prominentwith on-demand transportation followed by hospitality and food and beverages inIndia (EY, 2015). According to Vroom(2017) variousindustries in India have been interrupted by the sharing economy model, affectinglogistics (Uber, Ola and Vroom), hospitality (Airbnb, OYO rooms) and food andbeverages (Swiggy, Zomato) the most. The sharing economy concept in India isgrowing from its emerging stage to maturity. There are several risks in thismodel like Business model risk?such as trust and reliability amongst customers,owners and aggregators and biased rental applies in the Airbnb model andpassenger (especially women) security in the Ola and Uber models; Regulatoryrisk,? such as ?businesses have been unfavourably impacted by local laws andregulations, like the Karnataka government banned uberPOOL and Ola Sharementioning their services as illegal; supply risk ?like ?reducing motivationsand share of profits on the supplier’s asset security e.g. Uber and Ola lureand switch model by offering their driver’s high incentives to them and oncethe stage surmounted up they decreased their pay (Vroom,2017).3. Indian culture and consumer behaviourand On-demand housingCulture is the want and behavior of aparticular people and society.
Each culture consists of social stratificationcreating social classes and subcultures providing identification with theirmembers (Kotler and Keller, 2016).According to Schiffman and Kanuk (2010), the cultureand sub-culture are significant and the Social aspect is an additional factor tothe cultural factors consist of statuses, blood relations and individual in asociety influencing the consumer buying behavior (Appendix1). Culture describes importance involvedto services and product and the failure and success of it (Solomon et al,2013).Collectivist people are often motivatedby norms and duties executed by the in-group, give priority to the goals andemphasize their connectedness in the in-group (Kacen and Lee, 2002).
The term ‘Sharing Economy’ is a recent perceptionworldwide, it has been a part of Indian urban culture over a long period oftime like Kolkata, Chennai and Mumbai, where migrants moved from various placesin 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 betweencities (Liveinstyle, 2017). The mobile revolution joined the fact thatnew generation of India doesn’t give too much importance to ‘ownership’, hasheaded to the `Sharing Economy’ increases connectivity with people to sharefrom workspaces, the homes, to kitchen appliances, furniture and even clothes (Liveinstyle,2017).
The fast-growing economy is the applicationbased shared taxi rides like Ola and Uber in cities. According to a reportby 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 morethan five times from the last two years as these cab companies cutting rates toattract more customers, the growth rate will be faster in the future (Liveinstyle,2017).Hospitality is one more industry that isgrowing, as homestays have existed in India the arrival of Airbnb. Airbnbis online access to book house of the host which can be rented and growing at afast rate. Airbnb effect the economic aspects as it strengths the city’s orcountry’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, propertyowners are offering their flats, beach bungalows, etc.
on Airbnb. Brian Chesky,CEO of the American company cited about India as one of the main revenuegenerators and it will be one of the world’s biggest markets for Airbnb in thefuture (Liveinstyle, 2017).Peer to Peer such as Airbnb, OYO rooms.Indian government is inclining towards the growth of on-demand housing andAirbnb and Oyo has taken advantage of this. Hosts form the core for homesharing. India’s cultural hospitality concept of ‘Atithi Devo Bhava’ means ‘TheGuest is next to God Himself.’ This concept is an integral concept in homes ofthe country in which hosts exhibit to best serve their guests.
This is thevalue that Airbnb adopts to enable people to feel belongingness anywhere in theworld. This differentiates India’s hosting culture, hosts opening their heartsand homes to the world (Srivastav, 2017).OYO is alike Airbnb but with a twist tolure the customers. Kavikrut, the chief growth officer at OYO stated that “Wehave realised that an enormous number of second and holiday homes are locked inIndia due to low rents, owners living in other cities, and the lack of atrusted partner who would take responsibility for the maintenance and thehome”.
“The owner makes 50% to 70% revenue from the property monthly”, Kavikrutstated. In popular holiday destinations like Goa, Manali, Shimla, Nainital, andPondicherry have the service called OYO home. OYO offers home owners to appointa housekeeper who would manage guests (Quartz, 2017).
According to Levy (1978), five primarysources of behaviour are Human biology, Individual aims and emotions, Grouplearning, Cultural values and Cosmological beliefs (cited in Rook, D.W., 1985). “Sharing is a part of Indian culture, as wehave experienced sharing at some point in time from offering food to strangersor beggars on train platforms or invitation to relatives.
We all also share carrides informally all the time,” says Raghav Gupta, India country manager,BlaBlaCar and feels the concept makes sense. India also has the largepopulation where people travel often and there is an increase in the usage ofmobile phone and social media (Doley, 2015). There is an underline value attached tothe properties owned by the owners, Uber services provide customization oflanguage as India is a multi-linguistic and multi-language nation.Consumption-specific values for convenient and prompt services (Soloman etal,2013).Thus, Culture is the ultimate touchpoint for Indian consumers for consumption or acceptance of a business model.4. Indian’smotivation and Ride Share economy Motivation is aroused to the need for thefunctional benefit and the state to drive. The need is the indication ofpersonal and culture want (Soloman et al, 2013).
The expectancy-value modelstates that the consumers form attitudes about various brands by the procedureof evaluating the characteristics (Green and Wind,1973).The theories of Sigmund Freud, FrederickHerzberg to an analysis of the consumers state the psychological factors ofcreating an individual’s behaviour are an extensive unconscious that anindividual is not able to understand his or her motivation completely (cited inReynolds and Olson, 2001). Herzberg (1966) state a theory which differentiatedthe dissatisfiers from the satisfiers and relies on the presence ofsatisfiers. According to model by Fishbein (1967)that consumers evaluate products by their judgments of the brand which consistof their positives and negatives in accordance with what is perceived assignificant by the consumer. On-demand Transportation such as Ola andUber with verified driver connected to the user to drive them to thedestination set through the app offering convenience and flexibility to theconsumer and driver have predictable earring (EY, 2017). In Uber, anyone cansign up and get the ride anywhere. Uber was growing market until the case ofrape in Delhi. 75% of Ola driver have the commercial-taxi license and called”independent entrepreneurs” (Fok, 2015).
Cognitivedissonance is behaviour conflict with one another, when to choose twoalternative riding sharing by choosing one the person gets a bad quality andloses the good quality of the other (Soloman et al, 2013). Customers canshare cab rides with others heading to the same destination which givescustomers chance to socialize and meet new people this way. The Ola Share is asocial ride-sharing method more than UberPool.
In this service, customers can chooseto share their rides with riders from their own social groups. To make the rideeasier and riders can also create groups in the Ola app with their socialgroup. The share ride request is placed on the app and then matched with otheruser taking the same route in your groups. For UberPool one places a request for anUberPool ride with your destination and matched with another rider going in thesame direction.
The price is split between the two users. (Kashyap, 2015)Maslow’s theory is a hierarchy driven byneeds of safety need is a major concern in ride-sharing especially women inIndia and social need of socialisation and belongingness through sharingeconomy as the assets have values attached to it (Kotler and Keller, 2016)(Appendix 2). The need of affiliation in the company of other people approachused by the ridesharing and rational involvement is the need, value andinterest which increases a consumer attention more towards service-relatedinformation (Soloman et al, 2013).Thus, motivation is a driver of sharingeconomy in India for forming an attitude and arousing the functional benefitsdrawn from it. The motivation towards cost-effective and convenience e.g.
people can carpool for a certain distance with people who are anyway driving tothe same place or people who have extra car can lend it to ola, who providedrivers and anyone can use giving employment, affordability and profitability.The consumers, as well as the owner, have a motive, need and want.5. Indian’sperception and On-Demand food The interpretation,selection and organization of information are called perception (Kotler andKeller, 2016).
Perception has three processes involving exposure, attention andinterpretation (Soloman et al, 2013). Attention is when peopleare more likely to relate to the current need, to notice stimuli theyanticipate and deviations are large in relations to normal. They interpretinformation to fit our notion also known as selective distortion. The exposureof information also known as retention is to support our attitudes and beliefsgives 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,2015). The foodpanda group is a global appheadquartered in Berlin, Germany, and in 24 countries and territories. The servicepermits customers to choose from local restaurants and place orders via themobile app or website (IndiaSpark, 2016). Zomato is founded in 2008 by DeepinderGoyal and Pankaj Bhardwaj. It operates in 23 countries. It features scanned menusand photos with user reviews and ratings. The company provides card payment, onlineordering, table reservation (IndiaSpark, 2016).
Swiggy is a Food Delivery in Bengaluru,India which is inspired to provide a complete food ordering and delivery fromthe best restaurants and small ventures to urban areas. For ordering from anextensive range of restaurants, and offer flexibility to the customers (IndiaSpark,2016).There are manyconsumers in the Indian economy who likes to try new restaurants, cuisines etcmajority of this population incorporate the young adults who have the curiosityto try something new that is trending, as they use technology as a big part andrefer to applications.
They like to infer their decisions based on ratings,reviews, comments, pictures and description available on these sites. Due tothe contribution and inputs available on these applications the buyingbehaviour and perception is influenced. Accordingto Belk (2014) as the rise of internet resulting in societal, economic andtechnology facilitates mobile-based app. After demonetization and introductionof digitalization by the Government have a significant push towards expansionand scope of digital business and sharing economy in India (Yaraghi and Ravi,2017).With internet dissemination in India by19.2% significance for the growth of sharing economy, mobile proliferation isthe key of the shared economy around the world including India as sharingeconomy rely on mobile to connect with the customers for rapid growth .
Thesharing economy is convenient and cost-effective as sharing personal product,particularly in urban areas. The sharing economy has grown the jobopportunities in India along with rising entrepreneurship spirit and innovativebusiness idea quicker platform for suppliers. The prospect for the citizen to makeincome by renting and utilizing the resources (Ghosh, 2015). The sharing has moved further thanon-demand rides, foods and rooms. Mahindra created Trringo sharing serviceswhere farmers can rent tractors and farming equipment through theirsmartphones.
Trringo operates in India only approach to encourage and buildscales and improve the livelihood of the farmers (BCG, 2017).Thus, sharing economy in India isinclination towards new application for convenience and cost-effectiveness.Moving from traditional businesses and entering a new age of digitalisation indifferent areas for the functional benefit and experience for the citizen ofIndia. 6. Demerits of sharing economyin India:There are twosides of the same coin. There are numerous benefits of sharing economy as itenhanced entrepreneurship spirit and room for innovation, utilization ofresources, job opportunities, and skills development, positive impact on theenvironment, digital literacy and convenience and flexibility for the customers(EY, 2015).
The challengesof the sharing economy like winning the trust of the consumer and safety as inthe case of Uber the incident of rape in Delhi led to shifting the trust andquestion the safety factor, quality and consistency of products and services.Delhi authorities ban on Uber (later withdrawn) following a well-exposed rapecase in the capital of India (McKinsey, 2015). From thebusiness side, the regulation and taxation, dealing with the regulatoryhurdles, go with the technology as the services are app based and acceptance ofdynamic prices (EY, 2017). 7.
Conclusion:The rise of sharing economy is theattributes of motivation, perception and culture in India. According to the businessmodel of sharing economy is well-priced, convenient, and flexible especially ina country like India which is growing at 6.7% GDP and where 30% of the countryis unorganised share economy plays a key drive for the nation to grow at verysteady rate. The era of transformation from capitalism to digitalisation leadsto profitability, affordability and employability as a core value.
With theentry of ride-sharing have opened gates for the business model was a huge blow inthe Indian market, where people rent cars and houses make economic sense. Thesuccess of UberPool and Olashare, Indian society is adapting itself to thatsharing economy. The three industries trying to extract from sharing economyare ride-sharing, on-housing and on-food and the industries are moving towards sharingeconomy. It also brings other benefits to the ecology and society. The sharinglike 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 thedemerits, the benefit to India are set not only by the consumers or suppliersbut also by the government with the introduction of digital India in thecountry. However, the new experiential generationis more inclined to experiences and not open to creating fixed resources. Thesecharacteristics will give a blow to the future of the sharing economy in India.