Ch. 9 The Sharing Economy Flashcards
Give examples of firms in the sharing economy that focus on the following categories: goods, transportation, and capital provision. List markets challenged (i.e. disrupted) in each of these areas.
Firms providing physical goods include: Zilok (disrupting firms that sell tools and other products Zilok offers for rent), RentTheRunway (disrupting any firm that sells fashions), and Chegg (disrupting textbook sales). Transportation services are provided by Uber and Lyft (disrupting taxi firms), and car rental is provided by ZipCar and RelayRides (which may make it less necessary to own a car).
Why are sharing economy marketplaces so attractive to consumers?
Lower search costs. Lots of suppliers in a traditional market mean customer search costs are high. But ratings in marketplaces help you quickly size up high-quality providers and make a lower-risk choice.
Less perceived risk. Ratings systems provide metrics for comparing supplier performance not available through conventional mechanisms of searching for suppliers, like the yellow pages or where ratings are unknown (think taxicab drivers vs. Uber drivers).
Apps also provide convenience of scheduling and payment superior to many conventional ways of engaging the old-economy alternatives that sharing economy firms compete with.
And prices are often lower, as well, with examples including Uber and Airbnb offering services at more competitive rates than conventional taxis or hotels.
Rent the Runway and Chegg have chosen to purchase their own inventory for rental to customers, rather than relying on inventory provided by participating citizen suppliers. This incurs an additional cost on these firms. Why would they opt to use this model if startup costs are going to be more expensive?
Companies like Rent the Runway and Chegg choose to own their own inventory for the purposes of having control of their customer experience and ensure quality. Both companies carefully monitors the packaging, product condition, operations, and delivery time to meet customer demands. They also both offer a long tail selection of their products, giving several varieties and brands for almost all occassions (Runway) and subjects (Chegg).
In what ways is Uber superior to conventional cab service, both for drivers and for customers?
Uber ensures safety to its riders by mandating a background check for its driver.
Payment transactions are easier for both rider and driver. Customers can pay through the app without hassle. App ensures payment and also shows estimated fare costs prior to pickup.
Summoning a ride is hassle free and on demand and convenient. Smartphone app with GPS function allows real time sharing of location of nearby drivers for pick up and estimated time arrival.
Uber creates job opportunities for drivers looking to make money driving their own vehicles. Uber empowers driver to “be their own boss” by allowing drivers to decide their own schedule at any time based on their availabilty.
Drivers and riders can rate each other. This ensures safety and trust.
Describe how Uber is a “big data” firm and how data gives the firm advantages over traditional and new rivals.
According to the textbook, Uber gathers large data to perfect the formula of instantly finding the customer a ride in the touch of a button. It creates a special algorithm that determines how many drivers are needed, when and how to alert drivers of a customer in need, and pinpoint locations while determining dynamic pricing depending on location, weather and traffic. The formula to best meet customer demand relies heavily on mathematics and data-crunching. Data also helps the company expand into new locations and grow their business.
Firms classified as being part of the sharing economy and collaborative consumption are still considered too risky to attract substantial venture capital investment.
True or False?
False
If eBay and Craigslist are included, some 40 percent of the US and Canadian population have participated in the sharing economy.
True or False?
True
What is the difference between collaborative consumption firms Zilok and Chegg.
A. Zilok has gone public, Chegg hasn’t.
B. Zilok is a service where a person comes to your home to complete a task, Chegg is a rental firm.
C. Zilok provides inventory provided by participating ‘citizen suppliers,’ Chegg owns its own inventory.
D. Zilok is the European equivalent of Chegg.
E. Zilok was purchased by Chegg underscoring the ‘winner take all’ dynamics of these markets.
C. Zilok provides inventory provided by participating ‘citizen suppliers,’ Chegg owns its own inventory.
Firms in the so-called “sharing economy” fuel more efficient matching of ___________, lower costs, enable more efficient resource use, and provide a level of reach and services heretofore unavailable.
supply and demand
Payment continues to represent a barrier to widespread adoption of the sharing economy, since many consumers feel uncomfortable exchanging cash or financial information with strangers.
True or False?
False
Uber prices services according to demand. This allows the company to increase rates during peak periods in order to attract more potential suppliers into the market to meet demand.
True or False?
True
Social media profiles can also be used to fight online fraud.
True or False?
True
Which of the following is not true regarding the competitive dynamics of most sharing economy marketplaces?
A. Ratings represent a switching cost built over time by early participants in sharing economy marketplaces.
B. Late-movers have a substantial advantage in this market since inventory should be cheaper to acquire for those firms that have entered markets more recently.
C. Network effects should grow over time, favoring firms that got a successful, early start over rivals who arrived late doing the same thing.
D. These are two-sided markets.
E. None of the above - all statements are true.
B. Late-movers have a substantial advantage in this market since inventory should be cheaper to acquire for those firms that have entered markets more recently.
Highly _______ markets are especially ripe for rollup in electronic marketplaces
fragmented
Citizen suppliers in the sharing economy may find their _______ costs increase due to increased product use and an increase in perceived risk over time.
insurance
