JAKARTA (TheInsiderStories) – The growth of the internet and other technology has stimulated the evolution of a sharing business model, most apparently in transportation and tourism sectors. The ‘sharing economy’, also known as a ‘collaborative economy’, has and will continue to drastically modify the business landscape going forward.
Globally, the sharing economy has become a massive business phenomenon, transforming small companies into huge, rich ones and forcing traditional business models to go through extreme contortions to adapt, adopting an alien business model in order to survive. Such a global phenomenon is now taking hold in Indonesia.
A sharing economy is defined as an economic practice in which unused assets or services are accessed to private individuals, either free or for a fee, typically by means of an internet protocol.
The shared economy has created prosperity for certain well-placed individuals. When someone has property which is idle, such as housing, space or transport: unanticipated income is sitting just before their eyes. Why? Because a sharing economy facilitates an environment where enterprising people access existing physical assets to consumers, adding value.
In Indonesia, many technology companies have embraced this business model, initially in the transportation sector. Go-Jek, Uber and Airbnb are among these, now popular household names. As reported by Price Waterhouse Coopers (PWC), people are eager to use these services because they are affordable and efficient. Compared to the unpleasant crowding on a Kopaja bus or angkot, the extra expense of taking a motorcycle taxi – from door-to-door – is worth it. A motorbike will get through a traffic jam that a bus might take hours to navigate.
Airbnb is an example: the host (owner of an unused property) is responsible for creating a comfortable, reasonably-priced living space, on a daily basis. Airbnb is thus posing a serious challenge to hotels for travelers, either those on a business trip or tourists. Airbnb began to offer their service in Indonesia in 2012, and has presented a serious alternative to hotels here.
The Chairman of the Association of Indonesian Hotels and Restaurants, Hariyadi Sukamdani, spoke to local media, admitting that Airbnb has the advantage of offering lower cost accommodation to travelers than hotels, particularly for budget visitors. Airbnb does not simply rely on customers, but on the host as well. Why? Because they are the most critical element, as they are the ones who provide the house or room to stay.
In 2017, Airbnb in Indonesia posted 69 per cent growth over the previous year, hosting more than 900,000 travelers, from around the world. Bali, unsurprisingly, had the highest numbers of customers, with Bandung and Jogyakarta next on the list.
As anyone could be a provider of accommodation, companies like Airbnb have created hundreds of thousands, or even millions of entrepreneurs. The shared economy does not follow the customer > corporate > product model, but rather a customer > product > entrepreneur one. This new business model is applied by home-grown Go-Jek and its international competitors Uber and Grab, whose drivers have become the backbone, with applications or software as the medium.
The presence of Go-Jek, Uber and Grab has altered the transport business landscape in Indonesia forever. Traditional taxi operators must scramble to adapt to a new business model; they will otherwise soon go out of business. In the eyes of customers, such ride-hailing services provide a more affordable and convenient transportation alternative.
These ride-hailing services have also created millions of new small-scale entrepreneurs. Today, as many as 250,000 drivers roam the capital city, Jakarta, in a single day – and that’s only Go-Jek. With more than 15 million downloads since it started in 2013, we can observe how Indonesians are already ‘addicted’ to this online ‘motorcycle taxi’ and other services, such as ‘Go-car’. With a huge number of drivers on call, Go-Jek can serve up to 15 million travelers each week.
Such a business model can obviously be replicated in other business sectors, with appropriate modifications for laws and customs. This presents challenges as well as opportunities to business players.
What is certain is that the sharing economy in Indonesia has a bright future. People like the competitive price, speed and convenience. They also love any Apps they can summon up from their smartphones. Regulators are frantically attempting to figure just how to tax and exert control over this new phenomenon. It’s time to take this business model more seriously, in 2018.
Written by Staff Writer, edited by Roffie Kurniawan, email: email@example.com