Which of the following firms has a peer to peer business model

The peer-to-peer business model

The digital age of the internet is transforming many businesses such as music, e-commerce, travel, and much more. It is heralding new business opportunities for individuals where new products are rolling out every day without intermediaries. One such business model that has risen owing to new technology is the peer-to-peer network or the P2P model. 

Many peer-to-peer business models have a direct impact on traditional businesses. They are changing their workings every day. Many tech giants like Lyft, Uber, Airbnb, Amazon have adapted this model to function with ease. Let us know more about this peer-to-peer economy and how it works in the business world. 

What is a peer-to-peer economy?

Investopedia defines a peer-to-peer (P2P) service or economy as a decentralized business model. In a P2P model, two individuals or business parties interact directly with each other to buy, sell, or produce services and goods together. There exists no intermediary third party or any middle person of any business firm. 

To make it simpler, buyers and sellers exchange the payment directly concerning goods and services in peer-to-peer transactions. In such a type of peer-to-peer model, the producer is often an independent entity who has the ownership of both means of production and the finished product. The seller consists of an independent individual who looks after the manufacturing of merchandise and its selling.

It eliminates the need for any separate firm for producing goods and labor in the manufacturing process. Although the P2P model focuses on direct association between the buyer and seller, it is not entirely possible to eliminate the middle person. P2P systems have become a success chiefly owing to the internet transactions making online payments accessible. 

Third-party involvement is often out of the picture in P2P transactions that contributes to some risks. The producer might fail in delivery, a product might not be of good quality, or the buyer may refuse to pay. But, a lowered overhead cost resulting in a lower price will prove beneficial in such scenarios. 

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Peer-to-peer versus sharing economy

The peer-to-peer economy is often sourced as an alternative to conventional capitalist firms as it takes charge of both production and finished product. Often, the P2P model involves a platform that connects both sides of buyer and seller. This platform looks after the payment systems, rules, regulations, and other transactions. 

The IT revolution has altered the P2P economy into an operational system in today’s age. It has not only spurred the service sector but also made P2P transactions more safe and efficient. All this without getting explicitly involved in the manufacturing or provision of P2P goods and services. 

The sharing economy, on the other hand, is a P2P-based activity of attaining or providing shared access to goods and services via a community-based platform. Professionals can also craft eye-catching slideshows and deliver a persuasive speech explaining both terms to ace their presentations. 

A shared economy involves short-term P2P transactions of sharing the use of idle assets or facilitating collaboration. For example, idle assets like spare bedrooms can be rented when not occupied. It may also include B2B transactions. Some sharing economy platforms include:

• Fashion platforms
• Co-working platforms
• Peer-to-Peer lending platforms
• Freelancing Platforms

Payment Models in Peer-to-Peer Network or P2P Network

P2P payment refers to the money transfers that take place electronically. Generally, these transfers happen from person to person via an intermediary like a peer-to-peer payment gateway. P2P payments usually get transacted through any mobile or E-device having Internet access. It offers quite a fitting substitute to other conventional payment methods. 

P2P transactions are a great hit in the E-commerce and online selling marketplace. Here buyers and sellers choose any third-party payment application to send and receive payments. For example- eBay. 

Here’s how the electronic money transfers take place:

• Application- The seller chooses an application for the P2P payments.
• Bank link- The buyer and seller’s bank accounts get linked to that P2P payment application. 
• Transaction- The money gets transferred from the buyer’s bank to the seller on the purchase of any item. 
• Record- Upon transaction, the balance in the account gets stored in the P2P application’s database. It can then either store the transacted money in the seller’s payment account or directly transfer it to the bank account. 

Since its inception, the peer-to-peer network has constructed its space in the business world with these payment models. It has boosted digital marketing and extended convenience to buyers. The advent of mobiles has also played a huge role in P2P transaction applications.

Online selling and e-commerce 

Ecommerce has come a long way since its beginning. It is constantly transforming the way we shop, live, and conduct businesses. Majority of businesses with an eCommerce store leverage eCommerce platforms for conducting their online marketing. They create apps or websites to connect with their buyers and host a P2P business. And, of course, the payment method is seamlessly digital. 

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Wrapping it up

The P2P e-commerce business model has accelerated with the pandemic lockdowns in every country. E-commerce took a major turn with most people trusting the no-contact policy of the online selling platforms. Consumers now prefer to connect directly with the seller online rather than going to physical places. 

Today’s business world is all about shifting models and adapting to new ones. The peer-to-peer business model has gained prominence in the last decade. Easy for the seller and easy for the buyer, this model is based on convenience. The up-and-coming P2P businesses will surely keep on transforming the business scenarios in the coming times as well. 

04/05/2021