Disruption in unexpected sectors and corporates adapting their business models; find out what's next for the sharing economy in our 2017 predictions.

08 February 2017

Sharing Economy Web - Option 3 - v3The sharing economy is big business across the globe, with services like Uber, Airbnb and Deliveroo taking the UK, and indeed, the world by storm. Our recent study for the European Commission highlights that we expect the current £7bn-a-year industry to be worth £140bn-a-year in the UK alone by 2025.

But in an area of the business world that has driven unprecedented change and re-written the rulebook, just what will 2017 bring? Have we reached a ‘tipping point’ where growth will now subside or are we just getting started?

Here, we take a look at what we think will be the ten major movements within the Sharing Economy in 2017 - hold onto your hats!

 

1) Revenues set to continue their rise

We think the overall trajectory for the sharing economy is upward and if it evolves in line with our most recent projections, sharing economy transactions in five key sectors in Europe would increase by over 60% in 2017, equivalent to around €27bn. Calculated on the same basis, the UK’s sharing economy would also experience growth, at around 60%, equivalent to an increase of £8bn over the year. This would reflect slower expansion than the last few years, but the sharing economy would still be out-performing most other sectors of the economy. Providers should continue to be the big winners, taking home around 85% of total revenues, with platforms pocketing the remainder.

2) With growth comes risk and opportunity

A variety of factors have come to the fore that we think have expanded the range of uncertainty within our initial projections. In other words, it has never been a riskier time to be a sharing economy platform. Regulators are increasingly getting to grips with the movement and are tightening up and better enforcing rules. And legal rulings in areas such as employment regulation will continue to challenge existing business models. In the UK, we would not expect the prospect of Brexit to have any significant dampening effect on this rapid growth in 2017, given that activity is being driven by longer-term trends. But we do think Matthew Taylor’s independent review on Modern Employment Practices will be a watershed moment for sharing and gig economy platforms when it reports in the Spring.

3) Trust matters

Trust will remain the hot topic in the sharing economy and we think 2017 could be the year that the sharing economy starts to get ahead of this agenda. This will likely take a range of forms but one of the most important will be platforms proactively implementing self-regulation. In 2016, we saw Airbnb announce it will enforce the 90 day limit on Londoners renting their homes for short periods, and SEUK launch its “TrustSeal” kitemark (a project that PwC is actively involved in), and we expect more initiatives along these lines this year.

4) Tax - a new frontier

In 2017, we expect that the interaction between the sharing economy and the tax system will move increasingly into the spotlight. Firstly, there are potentially big tax consequences from different applications of employment regulations or classifications. And secondly, we are seeing increasingly novel examples for how governments and platforms are attempting to make the tax system work better for sharing economy participants. In 2016, Estonia’s tax authority partnered with taxi-hailing firms including Taxify to trial an innovative form of digital tax accounts. And Airbnb has partnered with a number of city authorities to collect applicable occupancy taxes. As part of our Paying for Tomorrow initiative, our tax team will be closely monitoring developments in 2017 and sharing their perspective.

5) Permeating new sectors

The sharing economy has been made famous with certain key sectors such as automotive, and hospitality, but 2017 will see the innovation ripple across established sectors. Industries where cost pressures are mounting, such as healthcare and retail, have the most to gain from leveraging sharing economy models. Medical equipment sharing platforms such as Cohealo have emerged across the Atlantic and as the UK healthcare system starts to collaborate more closely, we think 2017 will see the first opportunities for some NHS Trusts to share resources, including staff, equipment and estates in a more dynamic way - a trend we will be exploring in future blogs!

High-value add industries where margins are fairly healthy may still be surprised by the sharing economy in 2017. For example, in a recent blog we explored the impact of the sharing economy on the legal sector, where new start-ups such as Lawyers on Demand have emerged.

6) Silvers surfing the sharing economy

In 2017, we think that digital natives, the early-adopters who powered the rise of the sharing economy, will start to take a back seat to the “silver surfers” - who could well drive the next phase of growth. The over 50’s have already become the fastest-growing user group for many platforms, including Airbnb and DogVacay, and a recent Eurobarometer suggests that this age group is most likely to transact more frequently. The platforms that can capture this demographic in 2017 will gain a competitive advantage against their rivals.

7) Corporates becoming sharing economy platforms

In 2017, many corporates will become platforms themselves in order to tap this new source of talent. For example, last year we piloted the “Talent Exchange”, within a subset of our US Advisory business. The Talent Exchange is an online marketplace for professional, independent workers and it has surprised us how much demand there has been, with thousands of independent talent profiles now registered to be matched against relevant work opportunities.  As this trend evolves, HR departments will increasingly be asked to manage an increasingly diverse workforce and accommodate increasingly flexible ways of working.

8) Innovation around the core model

We expect sharing economy platforms to continue to innovate around their core model and invest significantly in the new services they introduced last year. For example, Uber expanded into food delivery with UberEats and ridesharing with UberPool, and Airbnb introduced Trips to expand their foothold in the travel market. The success of these new services will be an acid test of whether sharing economy platforms can eventually become the established leaders of their markets, or will forever be known as the “disrupters”.

9) Statisticians catch up with sharing

This year the Office for National Statistics (ONS) will be surveying individuals, households and businesses to develop a more accurate view of sharing economy activity. With the first data on individual’s use of accommodation and transportation services set to be released in August, this will be a landmark moment - when statisticians finally catch up with sharing.

10) A new type of hospitality

Peer-to-peer rental and home-swapping platforms have re-defined how people travel and 2017 will see continued growth in this sector with leading platforms expanding their offerings into corporate event spaces, food sharing, and experiences. We think growth in the peer-to-peer rental stock could well continue to outpace hotel room supply in 2017, and we expect more consolidation in the hospitality market in general as hoteliers respond and seek greater scale themselves.


2017 is set to be another year of extraordinary change within the sharing economy. At PwC we are committed to helping our clients both navigate and respond to the challenges and opportunities brought about by the onset of this new way of doing business. If you would like further information or advice please do get in touch with robert.p.vaughan@pwc.com or jack.x.ryan@pwc.com

Robert Vaughan | Manager, Strategy and Economics
Profile | Email | +44 (0) 207 212 2521

 

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