Sharing Models are one of Circular Business Models (CBMs).
Circular Business Models (CBMs) are designed to turn all that waste that businesses and consumers generate into useful and valuable resources that can be used again in a sustainable way.
There are five commonly Circular Business Models (CBMs) as defined by Organization for Economic Cooperation and Development (OECD) including:
- Circular Supply
- Resource Recovery
- Product Life Extension
- Sharing
- Product Service System
Let’s take a look at how businesses operate under these five categories.
What are Sharing Models?
Sharing Models rely on offering services where customers share products rather than owning such items for themselves. Sharing Models are business models that focus on sharing resources or assets between consumers.
These models rely on the sharing of products that would otherwise have a low ownership and usage rate. This can be done through a variety of methods, such as:
- Peer-to-Peer (P2P) sharing. This involves individuals sharing goods and services directly with each other, often through online platforms.
- Collaborative consumption. This involves people sharing access to goods and services. Such as cars, boats, and vacation homes, to reduce costs and increase utilization.
- Access-based consumption. This involves people paying for access to goods and services, such as streaming music and video, instead of owning them outright.
The continual advances in Internet and mobile technologies as well as the development of customer referral and online review systems have enabled far more products to be shared than ever before.
This trend is only likely to continue into the future as sustainability gains prominence in all business sectors across the world.
Examples of Sharing Models
Example 1: Airbnb, the world’s largest provider of short-term rental accommodation, does not own any real estate. Instead, the online company relies on existing properties being shared rather than new hotels and accommodation needing to be built.
Example 2: Uber, the world’s largest TAXI service provider, does not own any motor vehicles. Instead, Uber drivers use their own existing vehicles to provide TAXI services.’
Example 3: Lyft is an online platform that allows people to request rides from other people.
Example 4: WeWork is a company that provides shared office space to startups and small businesses.
These are just a few examples of the many companies that are using sharing models to disrupt traditional industries and create new opportunities. As sharing models become more widely adopted, we can expect to see even more innovative and disruptive solutions emerge.
Example 5: ZipCar is the car-sharing services where members pay a monthly fee in addition to car reservations charges without the inconveniences associated with private car ownership.
Example 6: Service providers that allow their members to receive a set of re-used and age-appropriate toys, books, board games and puzzles. Each month, the service provider swaps these for another set of items that have been thoroughly cleaned and hand-picked for another subscriber. This type of sharing model enables parents (as customers) to reduce clutter and litter, as well as save money.
Benefits of Sharing Models
Sharing Models facilitate the sharing of under-used products so that such products are used more fully. For example, many car owners only use their private vehicles for 1 or 2 hours a day at most. Businesses can generate revenue from sharing platforms by charging transaction fees, taking a percentage of each transaction, or selling advertising.
As they reduce the demand for new products and therefore the resources and raw materials needed to produce these, it helps to conserve the planet’s finite resources. The sharing of already existing products also reduces environmental burdens, such as excess garbage and packaging waste.
Businesses can reduce costs by sharing resources and assets, such as office space, storage space, and transportation.
Ultimately, Sharing Models help to create a more sustainable future as well as greener and cleaner world.
Challenges of Sharing Models
Sharing Models may be subject to new regulations or limitations.
Trust and safety are an issue. Businesses need to ensure that sharing platforms are safe and secure for users.
Consumers may not be willing to share their goods and services or to pay for access to shared goods and services.
In summary, Circular Business Models (CBMs) focus on multiple-use resources and products which are reused and remain in the economy for as long as possible. They are decision-making tools that focus on the environmental impacts of business activities through circularity – reducing, reusing, repairing and recycling raw materials, products and waste.
