We are entering a new economy that will change the way we work, buy things and utilize our assets. Put it in a thumbnail sketch, the new economy will be: the return of on-demand/gig economy and the rise of sharing economy.
Long ago people did business directly through bartering. Later, the barter system was replaced by money. Due to increasing demand and consumers in the market, production became more complicated. A producer had to recruit more workers and orchestrate production in a more systematic way.
The Internet era has ushered in the new economy, digitally connecting people worldwide. The information barrier between producers and consumers has disappeared. Now it is easy for producers to connect directly with consumers through a single click.
Replacing the travel agent, airline tickets can be easily booked online. The Internet enables us to buy and compare ticket prices easily. As a result, conventional travel agents have lost their relevance in the new economy.
Mushrooming online stores offer a far wider range of products than agents or brick-and-wall stores. This advantage is not only enjoyed by consumers but by producers as well. Renting a shop to sell things is not necessary anymore, because everything, ranging from offering, selecting, paying, can be undertaken online, causing conventional shops to lose their relevancy in the new economy as well.
Working environments have also changed. In the job market, outsourcing is easily undertaken. Part-time jobs have become the new normal; people change jobs all the time. More people work on a specific project rather than working permanently for a firm.
The firms are still around, but redefined. Firms will have two functions: pure producer of goods and services and platform provider for a meeting point between producers and consumers.
We are inadvertently reverting to the on-demand/gig economy of the past, but now on a global scale.
Another feature of the new economy is the rise of sharing economy. The longstanding under-utilized assets such as cars, spare rooms, etc. are easily exposed and shared with others who need them. Again, all communication and transactions are undertaken via the Internet. These dormant assets are now being managed professionally and become new threats to conventional businesses such as taxi operators and hotels.
The Internet-based economy poses challenges to consumers, government and conventional firms.
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