A Comparison of Business Models of Sharing Economies (Group 1, TotW)
An online development of growing popularity is the formation of so-called sharing economies. Companies such a Peerby and 3D Hubs are among the many new businesses that have picked up on the trend of linking consumer demand to consumer supply. Though the basic idea of these online platforms is the same, they have created very different business models and pose great examples of the possibilities of sharing economies for modern businesses.
Aiming at the mass market, this company’s free online platform matches its users’ borrowing requests for any product, e.g. drills etc., with users that live nearby and are willing to lend the product in case they own it. This offers the consumer a way to avoid large product purchases. This is especially useful for expensive products that are used only few times throughout their life, e.g. high-pressure cleaners.
This company’s online platform connects consumers that own 3D printers with those that require the service of a 3D printer. As opposed to Peerby’s customers, 3D Hubs operates in a niche market. Though the matching process is similar to Peerby’s, the company further facilitates the exchange of ideas and questions.
A wide-spread problem of web-based companies is the creation of profit streams. As can be seen from well-known examples such an Instagram, growth and popularity do not guarantee profitability. Peerby is facing this exact problem, as it is offering a free service. Without fees, the company has no income besides the financial support received from investors and partners. In contrast, 3D Hubs charges a fee for the printer-usage with an additional 15% commission (Forbes, 2013). Peerby plans to eliminate its weakness in the near future through a novel revenue model, in which income will be created through the issuance of insurance to the lending users. With no quite comparable service available until today, the success of this innovative business model is yet to be determined.
Current Market Situation
Though currently relatively alone in their respective markets, new entrants with more profitable business models are especially threatening to Peerby. By offering advice for its users 3D Hubs is offering additional value while Peerby merely matches its members without being further involved in the actual lending process. The companies will have to ensure that they create strong enough two-sided network effects for themselves and build up a goodwill among their users in order to survive these threats.
We can see that although both businesses are built around the idea of a sharing economy and are facing similar threats, underlying business models are completely different especially with regard to their revenue models. Whether or not their offering will be enough for their survival is yet to be seen. However, with the speed of developments in the web industry it is advisable for both companies to act quickly on their weaknesses if they want to ensure their success and future profitability.
MF Akkurt, R Van ‘T Hooft, B Narozniak, MT Groenestege & M Wagenaar
This comparison was produced in light of the ‘Technology of the Week’ assignment for the course of Information Strategy.
Dervojeda et al., 2013: The Sharing Economy Accessibility Based Business Models for Peer-to-Peer Markets. Business Innovation Observatory Contract No 190/PP/ENT/CIP/12/C/N03C01. European Union: European Commission.
Forbes, 2013: 3D Hubs Crowdsources 3D Printing. Available at: http://www.forbes.com/sites/jenniferhicks/2013/08/27/3d-hubs-crowdsources-3d-printing/
These 8 Internet Companies Are Worth Over $1 Billion – But They Haven’t Made a Dime. Available at: