The current surge in the on-demand economy, spearheaded by San Francisco, is prompting us to rethink the whole idea of actually owning stuff.
The on-demand economy is a phenomenon which is on everybody’s lips nowadays, including those of President Obama, who made a speech on the subject during the White House’s ‘Summit on Worker Voice’ last October.
And if we were all asked to name the city that best embodies the booming business model also known as the collaborative economy, there is little doubt that San Francisco would come out top of the list. It was in fact in Silicon Valley, the cradle of modern information and communication technology, that Netflix and Uber, two key players in the collaborative economy movement, were founded.
The on-demand economy heralds the age of ‘what I want, when I want, where I want’. In other words, it epitomises a new era we have just entered upon, where customers and the customer experience occupy centre stage and where technology is able to challenge time, space…and traditional business models. As a result of the breadth and scope of the on-demand economy and a real turnaround on the part of consumers, the very notion of ownership is now being called into question. ‟Why own anything anymore?” asked Tien Tzuo, CEO of Zuora, a California-based enterprise software company specialising in subscription platforms, during a conference hosted by Zuora in London last October.
For instance, why own a car when the cost of getting to work with Lyft (an Uber competitor in the United States) is becoming increasing competitive if you take into account all the costs associated with having your own vehicle. The increase in automobile leasing – which accounted for a quarter of all vehicles sold in the US in 2014 – also bears witness to this change in consumer habits.
Historically, it was Uber that championed the idea of use-based consumption, but Amazon has not been slow to apply the model to the mass retail sector. The Dash Button, the current version of Amazon Dash, today enables you to order washing powder or any other generic product from a button fixed on to the domestic appliance of your choice. This approach is not only changing consumer practice; whole industries are being disrupted as a result. Incumbent firms that offer all kinds of goods and services are now being pushed to switch to a subscription-based model, subscription-as-a-service, including finance and insurance providers, who have little choice but to adapt their existing offerings. The success of a startup like Zuora, which manages subscription-based services on behalf of companies, hardly comes as a surprise any more.
So are the ‘millennials’ the quintessential on-demand generation? There is no doubt that on-demand could only have emerged among ‘digital natives’ – the ‘instant’ generation. Nevertheless, the benefits of these new consumption models are very likely to appeal to older age groups as well, senior citizens for instance, because of the high convenience factor they offer. Moreover, we need to put into context general claims that Generation Y-ers are spearheading the trend towards eschewing ownership. Some sectors, such as real estate, have not yet been seriously affected. So in fact it is most probably ease of use and convenience that will keep driving widespread adoption of the on-demand model, at all levels of society and among all age groups.
Edited by Pauline Canteneur