How peer-to-peer platforms like Airbnb, Uber and Etsy help solo entrepreneurs support their customers
In this article...
- Small businesses are using the sharing economy to their advantage, challenging competitors that were once out of reach
- Developments in tech are allowing entrepreneurs and freelancers to scale and grow at a pace never before possible
Serving your customers 24/7 is a colossal milestone for any small business, but especially for contract workers who manage their own marketing and IT.
In the U.S., the proportion of freelancers, contractors and gig workers is projected to reach 40 percent of the workforce by 2020. Most of these gigs will be transacted over a cloud-based marketplace where small businesses look just like big ones. These solo-preneurs can now go to market with the same tech tools as their corporate competitors.
“Freelancers and contractors are expected to make up 40% of the workforce by 2020.”
The power of the sharing economy
Mega-platforms like Airbnb, Etsy or Uber have made the peer-to-peer economy possible. But providing platforms and apps for freelance workers creates major technical challenges. Data reconciliation is difficult when there are devices in the wild writing first-party data back to the same central database and even more challenging when millions of other clients are making API calls at the same time. Throw in real-time requirements for things like inventory, shipping and taxi pickups and you have an ominous-looking cloud.
But pulling together this data has become not just manageable, but profitable, thanks to two technological factors. The first comes from the processing of historical data about customer behavior. This data is used by platforms to create site-wide search engines and auto-recommendation modules that highlight products to the right customer segments at the right times, without the individual sellers needing to do a thing.
On a storefront platform like Etsy, sellers experience this benefit just by virtue of the platform’s user interface. Etsy’s designers and engineers have developed its UI by using analytics insights from marketing experiments such as A/B tests in which several designs are deployed to live customers to see which one gets the best conversion rates. Important decisions have been made about Etsy’s mobile layouts and checkout flow through this process.
“Asset sharing allows small teams to split the costs of ownership while sharing the profits.”
Add in other data-driven marketing feats—programmatic ad buys, profiling and retargeting—and entrepreneurs find themselves benefiting from information about a huge population of potential customers, of whom their existing fans are just one small part.
Asset sharing is a second breakthrough factor—that is, individual entrepreneurs partnering around durable goods that make money. By co-owning or renting cars, equipment and real estate, small teams can split the costs of ownership of these big-ticket items while sharing the profits (and the data about what’s profitable). Like commercial airlines, which optimize a plane’s uptime with master-planned route maps, groups of operators can share the profits and costs without needing management or bureaucracy to keep things fair.
For the technology platforms that host all this commerce, these breakthroughs raise the bar. When small businesses leverage their technology to act more and more like their bigger competitors, they can grow exponentially faster, compounding increases in transaction volume, dollars and data. For the CEOs of these platforms, this is a great problem to have—user numbers and transaction volume shoot skyward.
But for technology teams, this creates an existential challenge. After all, architecting out the best-fit infrastructure is a peer-to-peer platform’s reason for being. Simple hybrid solutions maintain what’s already working while giving IT teams the cognitive freedom to think about what they need to build for tomorrow’s exponential growth. If platforms like Airbnb, Etsy and Uber can insulate small businesses from scaling decisions and growing pains, then entrepreneurs can get back to what matters—their customers.
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