Which sectors will feel the greatest impact from the coming growth in the sharing economy and what will it mean for investors?
With more than $23 billion of venture capital funding invested since 2010, the sharing economy is one of the fastest growing business trends in history. According to McKinsey, 162 million people, or 20 to 30 percent of the workforce, in the US and Europe are providers on sharing platforms such as Uber, Airbnb and eBay.
In simple terms, the sharing economy—also known as collaborative consumption—is the use of technology to facilitate the exchange of goods or services between two or more parties. The accessibility of the internet and mobile technology has fueled the rise of the sharing economy, which has a history of material disruption on the sectors of transportation, tourism and finance.
The trend toward sharing economies is expected to continue as we become even more connected digitally, and many other traditional sectors will soon begin to undergo change. In light of this, when reviewing your investment portfolio, it’s worthwhile examining and understanding which sectors are likely to be disrupted in the future—and the nature of that disruption—as a result of growth in the sharing economy.
Demographic trends and urbanisation have driven a shift in preference towards asset ‘access’ rather than asset ‘ownership’. In particular, the transportation business is moving from a privately owned and operated model to a professional service run by large firms with experience in mega-fleet management, with key markets in China, the US, India, Europe and South Korea. This trend addresses a key inefficiency for car owners, who typically use their cars for less than one hour per day. Morgan Stanley analysts estimate that shared kilometres could account for 25 to 40 percent of global vehicle kilometres travelled by 2030, compared to less than four percent today.
Global parcel carriers such as UPS and FedEx are facing the threat of emerging start-ups whose business model focuses on crowdsourcing last-mile delivery at a local level. This trend is enabling bricks-and-mortar retailers and local merchants to compete with e-commerce by offering same-day delivery at a reasonable price. In addition, ecommerce giants like Amazon have started ‘in-sourcing’ their delivery channels, further threatening traditional parcel carriers.
Marketplace lenders offer disintermediation by connecting investors directly with borrowers, without the need for a bank as the go-between. These lenders represent a potential challenge to banks on price, service offering and convenience. At the same time, they are prompting banks to increase their efficiency and timeliness.
While current disruption to the global hotel industry from accommodation sharing is limited, Morgan Stanley analysts are watching developments carefully with recent cautious comments that have come out of Europe and the US. At present, online travel agents such as Expedia and Priceline are at higher risk due to their greater focus on leisure, rather than business, travelers.
There are a number of other sectors that are at risk of possible future disruption:
Aerospace and defence. Sharing of defence equipment across nations may reduce overall demand.
Luxury brands. Sharing of high-end goods such as handbags is making expensive brands accessible to a wider population, with the risk of a loss of luxury status.
Business services. Websites that enable individuals to seek direct employment for a range of tasks online represent a threat to recruitment companies
Healthcare. The sharing of expensive laboratory equipment could reduce the cost of R&D, particularly for early stage biotech companies. In addition, the sharing of medical data from new diagnostic and monitoring tools is expected to reduce the total cost of treatment for payers by matching patients to the most appropriate therapies.
Technology. New technologies are enabling more effective technology sharing. For example, the cloud enables companies to share entire datacenters.
Telecommunications. The sharing economy demands increased connectivity between people-to-people, people-to-things and things-to-things, which will help accelerate broadband and mobile penetration, especially in regions where it currently lags.
Utilities. Distributed energy resources, such as solar, and electric storage allow consumers to share, sell or buy energy, reducing their reliance on the grid.
The sharing economy is poised to redesign the competitive landscape, with important implications for consumer access, supply chain, labour markets, price formation, consumption trends and investment incentives. Moreover, the sharing economy itself is likely to evolve in response to regulations and advances in technology which reduce the need for intermediation, upon which the sharing economy is still reliant. As an investor, you should keep in mind the potential impacts of the sharing economy on sectors and incumbent sector leaders that have traditionally been profitable and competitive.
For more on the sharing economy or a copy of our research report, speak to your Morgan Stanley financial adviser or representative. Plus, More Ideas from Morgan Stanley’s thought leaders.
 BCG Henderson Institute. Hopping Aboard the Sharing Economy. Available at https://www.bcg.com/en-us/publications/2017/strategy-accelerating-growth-consumer-products-hopping-aboard-sharing-economy.aspx.
 McKinsey & Company. Independent work: Choice, necessity, and the gig economy. Available at https://www.mckinsey.com/featured-insights/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy.
 Morgan Stanley. Sustainable Economics: Worth Sharing?