GRUNDLAGEN DES

INFORMATIONSMANAGEMENTS
Vorlesung 7: The Sharing Economy, Collaborative Consumption, and Efficient
Markets through Tech

0
THE SHARE ECONOMY AS A DISRUPTIVE INNOVATION?
Idea:
How many percent of purchased
products do we use less than Using free capacity through
once a month? sharing on online platforms
80 percent

How much money an average

household has spent annually for
products that are never used?
about € 1.000,--

Quelle: Botsman and Rogers (2013)

The sharing economy as a potentially disruptive

innovation
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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 1

 SHARING ECONOMY
Basics
▪ Sharing Economy: “The peer-to-peer-based activity of obtaining, giving, or sharing the access
to goods and services, coordinated through community-based online services.” (Hamari et al.,
2015)

▪ The sharing economy is allowing firms to pool resources, products, and services in ways that
creates new markets and market opportunities

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 2

CONSUMPTION BY CATEGORY
▪ Money and Finance:
▪ Money Lending: LendingClub, Kiva, Prosper (peer-to-peer loans).
▪ CrowdFunding: KickStarter, GoFundMe, Indiegogo (peer-to-peer capital).

▪ Goods:
▪ eBay, Craigslist (peer-to-peer supplied); thredUp (firm-owned inventory).

▪ Office Space and Hospitality:

▪ Office Space: LiquidSpace, ShareDesk (peer-to-peer supplied inventory).
▪ Places to Stay: Airbnb, HomeAway, Couchsurfing (peer-to-peer supplied inventory).

▪ Services:
▪ Professional services: Upwork, CrowdSpring, Angie’s List, MyHammer, TaskRabbit.

▪ Transportation:
▪ Transportation Services: Uber, Lyft, Didi (cars supplied
3 by drivers).
Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 3
 EU28

Italien

Spanien
• Anteil der Befragten,
Rumänien die schon einmal
Estland
Sharing-Economy-
Angebote genutzt
Deutschland haben
• Nach Ländern in der
Kroatien
EU-28 im Jahr 2016
Lettland

Irland

Frankreich

0 5 10 15 20 25 30 35 40
Prozent
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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 4

BUCHEMPFEHLUNG

Platform Revolution: How Networked Markets are

Transforming the Economy – and How to Make them
Work for You (2016)
By:
Geoffrey Parker
Marshall W. van Alstyne
Sangeet Paul Choudary:

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 5

SHARING ECONOMY VS. „NORMAL ECONOMY“
Largest Lodging Companies by Rooms/Listings

Airbnb

Marriott International

Hilton Worldwide

Intercontinental Hotels Group

Wyndham Worldwide

AccorHotels

Choice Hotels International

Best Western Hotels & Resorts

Carlson Hospitality Group

Hyatt Hotels Corporation

0 500 1000 1500 2000 2500 3000 3500

Angabe in Tausend

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 6

SHARING ECONOMY VS. „NORMAL ECONOMY“
Company value

Volkswagen
$81,10 Mrd.

Uber
$75,00 Mrd.

Daimler
$59,19 Mrd.
BMW
$41,40 Mrd.
General Motors
$45,99 Mrd.
0 10 20 30 40 50 60 70 80 90
Marktkapitalisierung

Stand: 15.10.2019
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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 7

TYPICAL CONSUMERS IN THE SHARING ECONOMY

Young
(under 40 years old)

Educated
(Abitur or higher education)

Postmodern

Loves varied lifestyle

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WINNING IN ELECTRONIC MARKETS

▪ Early players gain scale, brand, and financial resources.

▪ Technology allows for peer-to-peer supply without need for inventory.
▪ Some services do oversee inventory to gain more control and offer higher quality.
▪ In fragmented markets, marketplaces extend the value chain by connecting suppliers and
customers with search and discovery, scheduling, payment, reputation management and more.

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 9

C2C SHARING

Lending fee
Consumers as Consumers as
lender borrower

Purchase price
Online
Sharing
Platform

Flow of goods
Producer Flow of information
Cash flow

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 10

ANALYSIS OF CONSUMER BEHAVIOR
When does a consumer act as a lender or as a borrower to maximize her benefits?
Consumers differ in the need to use a product.

Utilization
needs Indifferent
utilization needs

Indifferent
Consumer

Consumer
I--------------- Borrower-------------I------------- Lender-------------I

Results in the model:

 Consumer with higher utilisation needs buy and lend
 Number of lender ↑ respectively Number of borrower ↓
 Lending fee, platform fee for borrower ↑
 Purchase price, platform fee for lender ↓
Quelle: Zimmermann et al. (2015)
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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 11

PLATFORMS VS. PIPELINES (I)
Traditional industry as pipeline vs. platform as „matcher“
Pipeline

Producer Distribution Customer

Konsument
Konsument

Platform

Producer
Produzent Platform Customer
Konsument
Produzent Konsument

12 Parker et al. 2016

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 12

PLATFORMS VS. PIPELINES (II)

4 advantages of platforms compared to pipelines

1. Platforms „beat“ Pipelines, because pipelines are based on inefficient „gatekeeper.“

▪ Pipelines, for example: Publishing house: Publisher need to choose a limited number of writers, to screen
and publish their books. Further, the publishing house needs to decide whether the style of writing fits the
market and the preferences of the customers.

▪ Platforms, Example: Amazon: On platforms like Amazon, everyone can publish their work via Kindle
eBooks and customers can choose whether they want to read books from well known und previously
unknown writer. Gatekeeper (publishing houses) are substituted by market signals (customer
reactin/customer reviews).

13 Parker et al. 2016

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PLATFORMS VS. PIPELINES (III)

4 advantages of platforms compared to pipelines

2. Platforms „beat“ Pipelines, because they enable new sources of value and therefore could grow
faster.

▪ Pipelines, Hotels: The value chain in the hotel industry, from finding the right building lot to finishing and
start operations is very time-consuming and cost-intensive.

▪ Platforms, for example Airbnb: Without owning own accomodations, Airbnb can merge supply and demand
in a very efficient way. Based on two-sided network effects growth accelerates while simultaneously it´s
easier to react on higher demand because of much lower marginal costs.

14 Parker et al. 2016

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 14

PLATFORMS VS. PIPELINES (IV)
4 advantages of platforms compared to pipelines

3. Platforms „beat“ Pipelines, because platforms can integrate community feedback more effectively

▪ Pipelines, for example: Publishing house: publishing houses mainly have to rely on their gut feeling which
books their customers like and ex post only analyze their sales data.

▪ Platforms, for example: Amazon: Amazon can use their online product ratings to reduce quality uncertainty
of future customers. Following, a more efficient matching of producer and customer is possible.

15 Parker et al. 2016

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 15

PLATFORMS VS. PIPELINES (V)
4 advantages of platforms compared to pipelines

4. Platforms „beat“ Pipelines, because they invert traditional pipelines, which means that they
externalize former internal ressources
Example: Platforms „only“ need to manage external ressources instead of owning these ressources.

UBER FACEBOOK
world's largest taxi world's most popular
company media owner
owns no vehicles creates no content

AIRBNB
ALIBABA world's largest
accommodation
most valuable retailer provider
has no inventory owns no real estate
16 Parker et al. 2016

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 SHARING ECONOMY
Typical product characteristics

▪ Relative expensive products (otherwise even with low transaction costs, everyone would by
them on their own)

▪ Not regulary and often used (for example: no one would rent a coffee machine if she drinks a
coffee every day)

▪ Usage of goods should be (at least to a certain degree) projectable (not like the use of a fire-
extinguisher when the house is burning)

17 Parker et al. 2016

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 17

 SHARING ECONOMY
Central challenges

▪ Matching of transaction partner (producer and consumer)

▪ Consumers are heterogeneous preferences regarding the offered goods

▪ Information asymmetry between producer and consumer

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 18

 SHARING ECONOMY
Factors Fueling the Rise of Collaborative Consumption
▪ Two-sided markets and network effects are at work

▪ A critical mass of buyers will attract a critial mass of sellers and vice versa

▪ Both sides of the market should grow propotionally

▪ An Uber driver can serve an average of three Uber riders per hour. It would not make sense
to have one rider and 1.000 drivers or one driver and 1.000 riders

▪ Highly fragmented markets are especially ripe for rollup in electronic marketsplaces

▪ Lots of suppliers in a traditional market means customer search costs are high

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 19

 SHARING ECONOMY
Platforms win because…

▪ …they eliminate inefficient gatekeepers and thus can scale more efficiently

▪ …minimize barriers to usage for their users and thus can scale more efficiently

▪ …use data based tools to control quality through community-driven curation

▪ …re-intermediate companies/markets and focus on external partner

20 Parker et al. 2016

Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 20

NETWORK EFFECT AND AIRBNB
How did Airbnb achieve ist network effects?

Mode/product Growth Network

Critical mass
value tactics effects

Airbnb capitalized on an
existing problem/need
– very limited or
expensive hotel space
Turning homes to
lodging provided
immediate value to
users: 30%-80%
cheaper than hotels and
highly differentiated type
of inventory
Airbnb targeted cities
with sold-out events and
constrainted hotel supply
with traditional
marketing and other
methods to advertise ist
alternative
Launched photography As more guests stayed
services to make in more places, more
offerings more hosts got more
appealing to guests business and more
hosts offend their places
Also added ability for which in turn created
mutual social more supply for guests
connections to see who
else had stayed to help As measured by number
build trust in the of room nights
marketplace
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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 21

 SHARING ECONOMY
Matching of transaction partner and reduction of information asymetry

▪ How do you know whether the room/flat on Airbnb fits your requirements?
▪ How do you know if the tenant of your room/flat won‘t wreck your room/apartement?

▪ How do you know whether the driver of an Uber car drives carefully?
▪ How do the Uber driver knows whether the passenger pays the price for the ride or whether
she won´t riot during the ride?

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 22

 SHARING ECONOMY
Matching of transaction partner and reduction of information asymetry

▪ Based on given preferences, consumer can choose the

„product“ with the best fit

▪ Example: Room on Airbnb with specific characteristics such as

„number of beds“, „location“, „free internet access“,
„breakfast included“ …

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 23

 SHARING ECONOMY
Matching of transaction partner and reduction of information asymetry

▪ Map shows where the uber drivers currently are

▪ Informs passenger about the price and

when uber driver arrives

▪ Payment handled through the app

▪ Drivers use their own app to screen and accept

fares

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 24

 SHARING ECONOMY
Reducing information asymetry

▪ Passengers rate drivers and vice versa

(mechanism to avoid „black sheep“ on
both sides of the market)

▪ Uber pricing operates on a supply

and demand scale

▪ Keeping both sides of the market satisfied

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 25

 SHARING ECONOMY
Potential biases in online ratings
▪ Crowdsourced ratings can also reflect the crowd‘s bias and reinforce discrimination
▪ Example: Airbnb
▪ Nearly 95% of Airbnb properties boast an average user-generated rating of either 4.5 or 5 stars (the
maximum); virtually none have less than a 3.5 star rating.
▪ After controlling for factors like rental characteristics, location etc., non-black hosts in New York are
still able to charge 12 percent more than their black counterparts

▪ Example: Uber
▪ College students give lower ratings to older drivers
▪ Male riders give lower ratings to female drivers who don‘t respond to their flirtatiounsness
▪ Drivers with disabilities experience lower ratings
▪ Black drivers have lower acceptance rate than white drivers

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 26

 SHARING ECONOMY
Trust strengthening, virality and E-WOM

▪ Word of mouth and e-word of mouth accelerates the growth of sharing economy marketplaces
and decreases information asymetry to quickly find high-quality providers (and make a low-risk
choice)

▪ Trust strengthening by social proof (positive influence created when someone finds out that
others are doing something)

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 27

ESTABLISHED PLAYERS GET COLLABORATIVE

▪ Google & Toyota: Substantial investor in Uber

▪ Conde Nast: Invested in Rent the Runway
▪ Walgreens: Task Rabbit partnership
▪ IBM: Delivery deal with Deliv
▪ General Motors: Invested in Lyft
▪ Avis: Acquired ZipCar

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Grundlagen des Informationsmanagements | Prof. Dr. Dennis Kundisch | Wintersemester 2019/20 28

 SHARING ECONOMY
Problems with the sharing economy
Example: Uber
▪ Many cities are afraid to lose taxes and regulatory fees
▪ Taxi drivers in New York need the so-called medallion that can cost over $1 million for a single car
▪ Firms that have made these investements don´t want to see newcomers who don´t have to shell-out
the same expenses

Example: Airbnb
▪ Neighborhood associations are afraid that family homes are now located next to operating commercial
properties that bring large group of unknown non-neighbours into their apartement buildings

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