The E-Revolution – Disrupting old business models

As part of the E-Revolution, “disruptive technologies” have been responsible for the demise of a significant number of large and small businesses, primarily because it has enabled people to challenge traditional operating models.

One of the biggest upsets was the invention and adoption of peer-to-peer file sharing, which proved devastating for the music and film industries. More recently, peer-to-peer sharing has been playing an increasingly important role in the physical realm, allowing what is called “collaborative consumption”, the “sharing economy” or the “peer economy”.

The origins of online peer-to-peer sharing can be traced back to websites like eBay, initially founded as a basic consumer-to-consumer sales platform. In the 20 years since eBay’s foundation, the online landscape has undergone such dramatic changes that your average internet user can now source virtually any good or service direct from another individual, without the need for a middleman.

Now, owners can rent out something they are not using, such as a car, house or bicycle to a stranger using these peer-to-peer services. The company would typically have an eBay-style rating or review system so that people on both sides of the transaction can trust the other. With the popularity of these services, many people don’t need to buy an item or service when they can rent them from others.

More recently, peer-to-peer websites have become increasingly bold, challenging more deeply routed business practices and consumer mindsets. Zopa, a peer-to-peer money lending service, and Kickstarter, a crowdfunding platform, are upsetting the manner in which finance is distributed. And sites like movebubble, which connects landlords and tenants, is beginning to become a thorn in the side of the traditional high street estate agent.

More examples include: The highly publicised website Airbnb allows property owners to rent out rooms direct to consumers. Or SnapGoods, a site for lending and borrowing high-end household items, such as cameras, kitchenware or musical instruments.  Or Relayrides, which allows users to loan their cars to others often at 30% of the cost of a typical rental car provider.

The real question lies around scalability. For the most part, these businesses currently occupy relatively niche segments of the market, but as consumers become more comfortable with the concept of transacting for more obscure goods and services online, there’s no telling how mainstream these services will become.

These “new kids on the block” will change life for all businesses, and the traditional businesses must review their current business model to adapt to the E-Revolution and the new customer journey.

In many corporate boardrooms, I can hear “This a fad” and “We are too big to be affected” statements.  Well I am sure this is what Blockbuster said before video streaming companies destroyed them and I am sure Borders directors were also saying the same before Amazon revolutionised the book market.

They key thing for traditional operators is to maintain their point of differentiation.  In the case of most established brands, this means offering customers the benefit of customer service and expertise unavailable to those shopping directly to the supplier/owner.