This Shared Economy Startup Idea from the 1001 Startup Ideas collection of YoStartups is to build a digital Reputation Platform for Shared Economy Business which will be linked with all the social media platforms and shared economy businesses to build your complete digital profile. These digital reputations can be used as a benchmark for doing transactions over the shared economy platforms.
Market Definition for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
As per a report on Brookings.edu, the sharing economy is expected to grow from $14 billion in 2014 to $335 billion by 2025. The key drivers of this growth will be the rapid market growth of Airbnb and Uber. According to a study, more than 50% of Americans were reported to have used shared economy services in 2016.
Social media or we can say overall online trust plays a key role in the growth of the shared economy, and that is why we see a direct correlation between social media growth and that of shared economy businesses.
According to a survey done by BCG, one of the principal reasons consumers find sharing services advantageous is because of digital transparency, and it builds trust through ratings and ratings. In peer-to-peer models, the online profile of the seller plays a very important role in deciding whether the consumer will take the services or not.
Competitor Analysis for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
While there are plenty of shared economy online businesses, there are not many companies that are working to collate all the user interactions over a single platform. All these platforms maintain their individual user ranking system where they rank the users based on his/her interaction and transactions with the specific platform.
There is London based company, Deemly, which is a reputation and social verification tool for P2P marketplaces and sharing economy businesses helping them build trust for their community. The platform also allows users to take their reputation with them from one marketplace to another.
Pain Point & Target Audience for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
The target audience for the startup would be shared economy businesses and the users transacting on them.
Today, when most of the transactions are happening online without any physical interactions, having a trusting digital profile becomes important. Its need becomes even more paramount in Peer-to-Peer business or shared economy models, due to one highly unpredictable factor, i.e., Human Factor and the viability of the businesses entirely depends on the trust between the transacting parties.
When two individuals start transacting over these platforms, the platform only becomes a facilitator, and just a handful of fraudulent transactions can entirely ruin the trust factor that the platform builds over the years. This makes it important for the platform to verify the digital identity of the users and their behavior over other shared economy platforms to help other users make informed decisions while transacting with them.
Last year South China Morning Post mentioned a bizarre incident that took place in China with one of the shared economy startups that used to lend umbrellas to urbanites on-the-go. They reportedly found 300,000 of their umbrellas missing just in few months of launching their business. This kind of incidents can wipe out an early stage company from the market.
Value Proposition for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
The proposed startup will establish a single platform that will collate the complete digital identity of the users. The startup will develop its proprietary algorithm to calculate the ‘trust ranking’ based on user’s social media profiles, engagements/transactions over other shared economy platforms and Government ID verification.
This will help the shared economy businesses to get this trusted information about the users on the go, rather than building it themselves over a period. The businesses can showcase the ‘trust ranking’ openly on their platforms making it safer for P2P transactions. Businesses can also provide exclusive offers to high ‘trust ranking’ users, which will further provide an incentive to the trusted users.
All in all, this will be a big boost to the sustained operation of the shared economy businesses, and we will see many more Uber and Airbnb coming up in different segments.
Business Model for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
The proposed startup will work on B2B SaaS model with a monthly or quarterly subscription. The startup will provide the API for ‘trust ranking’ to the businesses for a fee which they can showcase on their platforms.
The profile creation will be completely free for the individual users, and all they would need to do is to link their all possible social media platforms, provide email ID being used on other shared economy platforms, and verify their Government IDs. Once this is set-up, the user can enjoy the privilege of his/her social credibility over all the partner platforms by just logging in either with any of their social media profiles or their registered email ID.
Way to Market for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
The first thing, the startup needs to do is to establish the algorithm to calculate ‘trust ranking’ for the users. The startup should include as many factors to make the ‘trust ranking’ closest to the true identity of the user.
Once it is established, the startup should work with a few of the mid-scale shared economy platforms to onboard the users and test/refine the algorithm. Any new user coming on these shared economy platforms would need to complete the first time sign up, which will further reflect on all the partner platforms.
Milestone for 1001 Startup Ideas – Reputation Platform for Shared Economy Business
The startup must target to develop the interface and algorithm in first three months of incubation. After that, the startup should start working on the beta trial of the algorithm with shared economy businesses.
The solution will be entirely cloud-based, so the startup should not limit itself to a specific geography and should target to onboard upto 100 platforms by the end of the first year.
Investment needed for Prototyping | Reputation Platform for Shared Economy Business
The startup should look to raise upto $75 from angel investors or accelerators focused on Big Data or Digital Startups.
The entire investment should be spent on algorithm development and onboarding shared economy platforms. The startup need not spend heavily on marketing, as the partner platforms will itself help in onboarding users.
Team Capability | Reputation Platform for Shared Economy Business
The startup must have co-founders with experience in the field Big Data, analytics and exposure to Artificial Intelligence would be an added advantage. The team must also include a member with expertise in back-end development.
Investor/Expert Take for this Business Idea
Shared economy is at its all-time high, and we see shared economy companies in almost every segment, from rideshare, used apparels, to shared infrastructure and equipment.
In March 2017, Airbnb was valued at $31 billion, which is roughly the same as Marriott International after the acquisition of Starwood Hotels. In New York, Uber is already having 3-4 times more taxis in its fleet that Yellow taxis. We see the spring of coworking spaces around the world which is giving tough competition to the traditional real estate. All these examples show the huge power the shared economy models can command if executed properly.
The only challenge in any shared economy model is building the trust factor, and if anyone solves this problem, they can tap into a huge market.
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