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The sharing economy’s next target: Business-to-business

Some parts of the sharing economy took a big hit during the pandemic. But businesses sharing with other businesses is poised to be an incredibly lucrative model for the future.

The sharing economy’s next target: Business-to-business
[Source Image: Sylverarts/iStock]
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The Great Recession of the late 2000s initiated a societal shift, introducing the concept of the sharing economy into the mainstream. Some cost-conscious and environmentally aware millennials eschewed ownership of physical objects such as expensive cars and preferred accessing them as affordable services only when needed. Digital platforms such as Uber and Airbnb, accessible on mobile phones, made it effortless for individuals to share their cars and homes with others and generate additional revenue while retaining ownership, thus maximizing the value of their assets.

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This business-to-consumer (B2C) sharing economy took off so quickly that, in 2015, PwC projected the B2C sharing economy would grow from $15 billion in 2013 to a whopping $335 billion by 2025. Fast forward to 2021: the COVID-19 pandemic has decimated the sharing economy, which depended heavily on mobility and vacations. Uber lost $6.8 billion during 2020 while Airbnb posted a net loss of nearly $4 billion in the fourth quarter of 2020 alone.

Does this mean that the sharing economy is about to die? The answer is no. The sharing economy is merely evolving from its volatile adolescent stage to its mature and stable adulthood.

After enabling consumers to share goods and services for the past decade, the sharing economy—as a concept and a practice—has achieved enough maturity and credibility to convince businesses to start sharing their physical and even intangible resources with each other. As a result, in 2021, we will see the rise of the business-to-business (B2B) sharing economy.

Given its sheer volume of transactions, this rising B2B sharing economy could potentially be worth trillions of dollars.

[Source Image: Sylverarts/iStock]

The multiple benefits of B2B sharing

By sharing their physical and intangible resources with each other, companies can do better with less, that is: generate more revenue while reducing costs and waste. Specifically, by sharing resources, businesses can:

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Reduce capital expenditure

B2B sharing enables firms to turn high fixed costs into low variable expenses. Rather than waste their precious capital to build new factories, industrial firms can expand their business swiftly and cost-effectively by leveraging on-demand manufacturing capacity. By “renting” production capacity from thousands of highly specialized machine shops, big businesses can flexibly increase their supply chain capabilities to address demand spikes.

Lower operating costs

Healthcare providers in the U.S. and Europe must contend with wide price fluctuation and shortage of drugs and medical supplies imported from abroad (as we saw during COVID-19). To solve this issue, these hospitals can pool their buying power to enter into collective long-term purchasing arrangements with domestic suppliers, hence reducing their operating expenses while stabilizing the delivery of critical medical products. Civica Rx, to take one example, is a nonprofit group that aggregates hospitals’ demand to reduce the cost of generic drugs.

Generate new revenue streams

In the U.S., 30% of all warehouse space goes unused on any given day. In Asia, that figure can be as high as 50%. On-demand platforms such as FLEXE, Flowspace, and SpaceFill help warehouse owners make money from their underused facilities by renting them to Fortune 500 firms and e-commerce startups desperately seeking space to stock their inventory.

Maximize the value of intangible assets

Businesses can also extract more value from their intangible assets—which today account for 90% of the total value of the S&P Index—by sharing them with others. Each year, the U.S. generates more than $6 trillion in intellectual property (IP)—patents, copyrights, and know-how. Yet, $1 trillion of it goes to waste annually as U.S. firms lack a clear strategy to extract maximum value from their IP, such as new technology inventions. These firms can use IP brokering services such as yet2.com and NineSigma to make a profit from their unexploited intangible assets such as patents by sharing them with innovation-seeking buyers.

[Source Image: Sylverarts/iStock]

Boost resilience and agility

During COVID-19, as customer demand plummeted, manufacturers—especially small ones—were left with idle factory capacity. On-demand manufacturing marketplaces such as Xometry, Fictiv, and 3D Hubs make industrial firms more resilient and agile when markets unexpectedly shift—by connecting them rapidly with new clients, so they keep their factories and workers fully utilized.

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Innovate faster, better, cheaper

Big brands can use B2B sharing to fully seize the upside of innovation while mitigating its downside. Take the consumer goods industry, which each year invests billions of dollars in R&D. Yet 95% of new consumer products fail at launch as they don’t address real customer needs, leaving brands with costly unused inventory. Rather than guess customer preferences and rely on mass production, brands could use platforms such as Thestorefront and Appear Here to open pop-up stores in strategic locations where they first test multiple new product concepts with customers. Depending on which concepts are popular in which geographies, brands can then use on-demand manufacturing and fulfillment platforms to produce multiple well-defined items in small batches and ship them rapidly to various locations.

Satisfy customers seeking end-to-end solutions

In sector after sector, customers are no longer seeking point solutions—such as individual products or services from distinct brands. Rather they are building their own “mecosystems“—end-to-end tailored solutions from multiple brands that comprehensively address their broader needs and deliver wholesome experience.

For instance, to satisfy customers’ growing need for point-to-point mobility solutions—that seamlessly integrates car-sharing, train and bus rides, and rental biking—transportation and mobility service providers will need to share data on their assets and customers with each other to deliver a seamless experience to their shared clients.

Beyond business benefits for companies, B2B sharing will also yield significant social benefits. For instance, by connecting fired employees rapidly with new jobs, People + Work Connect, an AI-powered employer-to-employer platform, shrinks the long and traumatic cycle of unemployment for these workers. Similarly, Floow2, a digital platform that enables hospitals to share their medical equipment and services, helps anxious patients get faster and better care by identifying a hospital with the right equipment readily available to treat them.

As the U.S. moves to value-based healthcare—which holds care providers responsible, and rewards them, for successful health outcomes for patients—hospitals and clinics will need to share their patient data and assets with each other. By coordinating their activities synergistically within B2B sharing ecosystems, care providers can deliver better quality care to their shared patients while lowering healthcare costs.

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[Source Image: Sylverarts/iStock]
By curbing waste, B2B sharing will positively impact the environment too. For instance, the Les Deux Rives project in Paris operates by the sustainability principles of the circular economy, enabling its 30 co-located member organizations to work together to reduce disposable food packaging, aggregate carpool services, and collectively manage waste.

Convoy, an AI-based digital freight network, vies to make the transportation industry sustainable. A third of trucks on the road today are driving empty. In the U.S. alone, these “empty miles” account for 72 million metric tons of CO2-equivalent emissions each year. Convoy’s Automated Reloads program, which bundles multiple truckload shipments into a single job for a driver, could reduce these empty-mile emissions by 45%.

The B2B sharing economy offers compelling economic, social, and ecological benefits. By wisely sharing their tangible resources and intangible assets with each other, purpose-driven businesses can make immense gains in efficiency and agility and positively contribute to communities and the planet. The fledging B2B sharing revolution promises not only to upend industries and reinvent our economies but also to help us build inclusive and regenerative societies in the post-COVID-19 world.


Navi Radjou (naviradjou.com) is an innovation and leadership scholar and adviser based in New York. He is the coauthor of Frugal Innovation: How to Do More with Less.