The word sharing economy is not new. Back in 1978, Marcus Nelson, a professor of sociology at Texas State University in the United States, and Joan Spence, a professor of sociology at the University of Illinois, proposed the concept of a collaborative economy, referring to sharing unused resources to society and making a return, which is in line with today's concept of a shared economy. However, limited by the technical conditions of the time, shared information cannot be effectively transmitted, so the sharing economy is not popular.
Until after 2010, with the proliferation of the mobile internet, information could spread at an unprecedented pace and breadth, and the sharing economy began to have a technological base. At one point, the shared economy once appeared as a traditional economic disrupter. Uber and Airbnb were once considered the end of the traditional taxi and hotel industry. Before and after 2015, the sharing economy went through an explosion, and at one point in the CB Insights unicorn list, the sharing economy occupied half of the mountain. Compared with foreign sharing economy, domestic sharing economy develops more rapidly. Nearly a year after the battle between DiDi and Uber China, the successful acquisition of the latter has established the leading position of DiDi in the field of shared travel at home. Since then, shared bikes, represented by ofo and mobikes, have been widely known as \"one of the four new inventions \".
By 2019, however, the myth of a shared economy seems to be beginning to unravel. After the rapid development of domestic shared bicycle, it slipped rapidly. The two giants of the past, mobike, were bought by Meituan, ofo suffered a financial crisis and its stake was frozen. International giants have also continued to underperform, with Daimler AG's share car Car2go exiting the Chinese market. After the Uber listing, the market value was lower than the premarket valuation, and WeWork ended the listing.
Nowadays, in addition to sharing idle resources strictly in the form of peerscopeer (point-to-point), information technology is generally used to implement time-sharing in the sharing economy. However, according to this view, the sharing economy is merely the use of Internet technology by the leasing industry in the past to achieve greater coverage or efficiency in leasing. In this view, the sharing economy is suitable for goods with higher unit price, such as cars, office buildings, jewelry and so on.
But in practice, the sharing economy, represented by time-sharing leasing, has not been well developed, such as Car2go, a car rental for the main Mercedes-Benz Smart model, WeWork, office rental, and the luxury luggage and jewelry leasing that have appeared in China, almost all of them have encountered business difficulties in varying degrees, some of which have even disappeared. Sharing-economy companies that also rely solely on the PtoP model, such as Snap Goods, which specialises in renting unused household supplies, have also shut down their sites early.
Before the concept of transaction cost was put forward, economics agreed that the transaction was cost-free or extremely low, so the division of labor theory argued that the social division of labor would promote specialized production, thereby increasing productivity and promoting the overall improvement of social welfare. therefore, the social division of labor evolved from a in figure 1 all the way to c, reaching the final stable state.
If from this point of view, the sharing economy can promote a more detailed social division of labor, so that some of the idle resources to be more fully utilized, the sharing economy as a new tuyere, this view can stand.
Oliver Williamson, the 2009 Nobel laureate in economics, divided transaction costs into pre-transaction costs and post-transaction costs. Pre-transaction expenses refer to the need to specify the rights, responsibilities and obligations of the parties to the transaction in advance because of uncertain future circumstances, and the costs and costs in the process of defining these rights, responsibilities and obligations. The cost after the transaction refers to the cost after the transaction occurs. The main performance is the costs and costs of the parties to the transaction in order to maintain a long-term trading relationship; the costs incurred by the parties to the transaction and the costs and opportunities incurred by the parties to the transaction as a result of the cancellation of the transaction agreement.
therefore, after adding the transaction costs, the division of labor in figure 1 can be explained as a self-contained state, where each person produces the product he or she needs without the transaction costs. b Bureau part-work status, each person produces part of the goods, the market is still segregated, transactions occur in part of the population, the transaction begins to incur costs. c Complete division of labour, with each producing only one commodity, transactions occurring between any two, and transaction costs significantly higher than b.
In addition to transaction costs, whether the social division of labor from b to c, depends on the c specialized production efficiency brought by the increase in efficiency, whether higher than the transaction costs. A more detailed division of labour would be more effective if the benefits were greater than the costs, whereas a simpler trading relationship would be more conducive to participants.
Since the giants of the shared economy, Uber and Aribnb, created huge valuation myths, a large number of shared-economy businesses have sprung up. These companies are also flooding in on a variety of tracks, with clothing, luggage, jewelry, basketball and even umbrellas to share. However, in addition to the domestic sharing economy companies are still robust, sharing portable battery, shared bicycle after the bubble burst, there are a small number of enterprises to survive, but the era of high valuation has long passed. But other kinds of sharing economy form, even \"tuyere\" did not form to fall quickly.
Whether the transaction cost can be reduced effectively is the basis of sharing economy. But for the enterprises with the sharing economy as the business model, it is not enough to maintain the operation of the enterprise by reducing the transaction cost alone, but also need to have a high frequency of transactions to create enough cash flow to support the development of the enterprise.
Therefore, we can use the matrix diagram of Figure 2 to analyze why some of the shared economy's track will fail. In the first quadrant, enterprises with high transaction costs and consumption frequency, and which can significantly reduce transaction costs through the sharing economy, cannot only obtain sufficient market size, but also have enough transaction frequency to create cash flow, which is most likely to succeed in the sharing economy. In the fourth quadrant, the reduction of transaction costs is small, but the higher frequency of trading enterprises can also produce some enterprises.
First of all, from the dimension of transaction costs, car travel and lodging are the two most expensive tracks. Such as the individual to buy a car before paying a lot of car model, performance, price and other information collection costs. Secondly, it is also a cost to judge the condition of the car and whether it needs maintenance. DiDi, Uber's way of sharing travel, so that users do not have to pay the cost of searching for the above information, just focus on the travel itself.
Secondly, from the point of view of transaction frequency, urban taxi is undoubtedly a high frequency of travel demand, especially in the peak period of large cities, taxis are often in short supply, and shared travel will bring a large number of idle private cars to the market to meet the demand of consumption frequency. In the third quarter of 2019, the number of online orders Uber processed reached 100 million, also proving the size of the market.
This is because companies such as Car2go, operating business is still the rental of their own cars, just the rental process of the car, from the past manual operation, to the user to use App online self-help operation. This model does not significantly reduce transaction costs compared to Uber. Users use App first need to upload a driver's license, after the audit passed before using App to rent a car. Although such car rental companies can have more outlets than manual car rental companies, they are still limited to fixed locations and cannot be accessed anywhere and anytime. In addition, due to the small number of staff, car rental, the condition of the car cannot be well protected, the user in the car, the amount of fuel, electricity is not kept in full state, it is likely to require users to fuel or charge halfway. This compares with the manual car rental, the internet car rental does not significantly reduce transaction costs, or perhaps even higher. Therefore, the withdrawal of Internet car rental is not surprising.
The same is true for Airbnb, which, according to statistics from some scholars on the U.S. Airbnb, is more distributed in the suburbs and has a slightly longer stay than the hotel, so Airbnb is more into the short-term rental market than the business travel market. From this point of view, Airbnb can significantly reduce the cost of searching for a home compared to a local estate agent looking for a short lease somewhere. In addition, the consumption frequency of short-term leasing is high enough to support the operation of the enterprise.
Shared portable battery and shared bike in the fourth quadrant are fun. These two industries strictly do not belong to the sharing economy, but the Internet of traditional leasing. This is manifested in portable battery and bicycle holdings rather than personally idle items. In this way, there is a huge fixed asset expenditure, depreciation and wear and tear for the enterprise. And, portable battery, bicycle is highly standardized products, users in the choice, not too much information collection costs. This kind of sharing does not significantly reduce the user's transaction costs, but instead increases the enterprise's own transaction costs, such a market itself is much smaller than the high transaction costs of the market. But if the market is small, but the frequency of consumption is high, it can also support the survival of enterprises. Due to the current weak battery life, there is a certain market for shared portable battery, but its players have long been far away from unicorns.
Sharing bikes is even more difficult, with early ofo and mobikes aggressively expanding to cover cities, and ofo even storming overseas markets. However, unlike Uber and Didi's sharing mode, the maintenance of Uber and Didi's sharing mode vehicles is borne by the individuals on the platform, while the shared bicycle companies are all borne by the company. In the absence of the company's operating capacity, the rapid expansion of the cost makes the company difficult to digest, resulting in the failure of the shared bicycle.
And companies in the second and third quadrants, there is no broad market, consumption frequency is also unsustainable, these areas of start-ups are more of a gimmick to share the economy, it is not surprising that the rapid decline. For example, share jewelry, luggage and other areas. Sharing through digital technology does reduce the cost of matchmaking. However, jewelry, luggage and other goods, the quality of its identification has a very high threshold, how to ensure that the goods provided by the lessor before sharing is true goods, how to ensure that the sharing process will not occur in the case of missing bags, which requires extremely high monitoring and identification costs. Obviously, such markets do not meet the two requirements for a shared economy.
Sharing economy is based on the use of Internet technology to use idle resources more effectively. This determines that the sharing economy operates almost entirely in a platform-based model based on bilateral markets. Bilateral markets have two salient features. One is that the cross-network externality, that is, the number of users and the volume of transactions of one party in the market, will affect the number of users and the volume of transactions of the other party. The second is the asymmetry of prices. Any change in the price of either party will result in a change in the transaction behavior of the other party.
Therefore, platform enterprises need to price the supply and demand separately to realize the maximization of platform income. In the early stage, in order to realize the increase of the number of users of the platform, the platform often needs to adopt the form of subsidy to the supplier or the demand side to attract one party to join, thus realizing the other party to join in order to expand the scale of the platform.
If there is only one enterprise in the market, or a single large enterprise, the subsidy model is feasible. After accumulating enough users, the platform can rely on economies of scale to make a profit. Or after the enterprise monopolizes the market, because the user lacks the demand price elasticity, the enterprise can obtain the profit through the way of raising the price.
But if it is a fully competitive market, the situation is not optimistic. In order to seize the user, there will be more than subsidized prisoners between enterprises (Fig.3). At this time, the financing capacity of the enterprise is crucial, before the enterprise realizes the profit, without the support of financing, the enterprise is likely to face failure. The financing ofo and mobike are shown in tables 1 and 2 respectively. mobike was acquired less than a year after the last financing. The more aggressive expansion ofo was frozen on april 04,2019, just under a year after the last financing, according to qixinbao.
Finally, in the discussion of the sharing economy, there is a view that the sharing economy will be scattered in the society of idle assets reuse, so the sharing economy belongs to the light asset model, enterprises do not need to own a lot of assets, the operation model is more flexible, so in theory, enterprises can get more profits.
But in practice, even the shared economy of platform operation is difficult to realize the operation of light assets. As shown in Figure 4, after looking at moving averages, Uber's quarterly total asset growth of more than 10% is not slow. Of these, in the third quarter of 2019, the company's non-current assets were $17.1 billion, or 53% of total assets, which seemed to contradict the view of light assets.
The reason for this is that platform-based sharing economies need to build large data centers to support the growing number of users with a large amount of information processing capacity. At the same time, in order to achieve profit, platform-based enterprises need to improve operational efficiency, through more efficient supply and demand ratio to achieve profit. However, the improvement of efficiency must be achieved through the continuous optimization of algorithms and the improvement of computational power.
Therefore, to maintain the competitive advantage of shared economic enterprises, its capital investment is essential. The light asset operation model may only exist in theory.
Looking back at the failure of the shared economy, it is not difficult to find that no matter how innovative the business model is, we should always follow the basic economic laws. Over-packaging the new concept, in the short-term capital boom after the defeat will come.
Relying on the strong resource advantages of the China-EU Institute of Business and Industry, the China-EU Business Review recommends effective management cases to Chinese enterprises and helps to enhance the thinking, decision-making and leadership of the Chinese business elite.
Because the secondary market and the primary market valuation logic is different, the rapid growth of unicorn IPO after the frequent unexpected. How unicorns reshape growth will be a new challenge for companies after they go public.