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Research has estimated that by 2019, companies like Airbnb, which offer shared residential space and WeWork which offer shared corporate space will be worth $ 6.1 billion while shared transportation companies like Uber and Lyft will be about $ 5.8 billion.
Pricing of these organizations
This seems a bit strange on the face of it since companies like Uber are far more ubiquitous than the Airbnb’s of the world. The explanation is quite simple. It lies in the pricing of these organizations. Transportation companies are used by humongous numbers of people across the world. But these journeys are of short distances and the rates are pretty low. So the total outlay of money is not all that high.
In contrast those using shared residential spaces spend a few days at these places and end up paying a fair bit of money. Similarly shared corporate spaces are also taken for longer durations of time and that pushes up the amounts spent on it. A ride is obviously going to be less expensive than a stay in somebody’s house.
Airbnb now spans the globe and covers as many as 190 countries while Uber is present in 67 as of now. Japan has been extremely responsive to Airbnb and was the quickest growth market for the company last year. The company has been expanding its footprint in the less developed countries too.
Shared spaces for offices
Shared spaces for offices, a relatively newer concept, is slowly becoming popular. It is replacing the earlier system where organizations offered space and facilities for meetings, workshops and seminars. Shared office paces have made significant inroads in China and West Europe. However companies like Uber have not been able to make a mark in China. Not much research has been done so far to identify the reasons for this.
Diversifying into related and non-related areas
But given the need to bolster company finances, these companies have started diversifying into related and non-related areas of business. Uber has entered the food delivery market and the field of logistics with UberEats & UberRush respectively. Currently these services are available in select cities in the USA and Canada but there are plans to expand the market into more cities and countries.
Similarly Airbnb is planning to move into the business traveler segment along with its current offering for holiday travelers, students etc who look for safe, comfortable stays at reasonable prices. Given the reputation that this company has built for itself in the few years of its existence, its new offering is likely to capture a large segment of the business traveler market.
The growth of these new types of businesses is making things easier and less expensive for consumers and as they battle it out to see who emerges the victor in terms of turnover, consumers benefit from the new, improved, diversified services they offer.