The Rise of Companies that Don't Own any Goods

Lifestyle 18 Sep 2018

This week for #TechTuesday we’re going to look at the phenomenal change sweeping the international business world!

For centuries, business centered around providing a specific good or service. If you were a cobbler, you made or repaired shoes.

But the Industrial Revolution and the invention of factory machinery created sweeping change. Private businesses began employing hundreds to thousands of people who often worked on production lines. Goods became mass produced for the first time in history.

Now there’s a new wave of change crashing down on the business world. It is the rise of mega-companies that provide a good or service…without actually owning any goods service!

Major companies that don't own any goods

These companies act as “middle-men” or interfaces between the customer and the actual good or service. Most of these companies are using internet-based platforms, such as Apps, to enable their business to grow without limitations. This model has become so profitable and successful that most of the world’s top corporations are in fact now “middle-man” enterprises.

For example, since launching in 2009 Uber has become the world’s largest taxi service…and yet it doesn’t own any vehicles. It simply connects local drivers and customers together on an App. Their service is acting as the interface, not as the direct service provider.

Similarly, Alibaba (China’s version of Amazon) is the world’s most valuable retailer, but it doesn’t own any inventory. Alibaba lets other companies produce the goods, then they provide the e-commerce platform to sell those goods.

Likewise, Airbnb is the world’s largest accommodation provider, surpassing all other hotel chains worldwide…without actually owning any property, of course! Meanwhile, many the world’s fastest growing banks or currencies are purely online enterprises that don’t have real cash in their pockets, such as SocietyOne (online banking) or Bitcoin (cryptocurrency).

People using their smartphones

And the list goes on! From finance to food to retail, more and more companies are owning less and less tangible goods!

The invention of the internet and Apps has certainly helped push this “middle-man” business into the mainstream. But what else accounts for it's speedy corporate domination?

Well, the benefits of not owning actual goods or providing real services are enormous for companies! It helps streamline profits and cut costs.

Imagine if Amazon had to make all the goods it sells online... Or try to picture if Uber had to supply all the cars it has in service globally...

The starting up costs for DIY internet or app-based companies is much lower than traditional business models.

The trend in the world’s largest companies has sparked a change throughout the world. But what does it mean? What can we expect to see as the ‘norm’ in the future?

One thing is certain, the integration of technology into business will continue to grow. It’s also likely that App-based service providers will dominate the service sector in years to come, including tourism, hospitality, shopping and much more. It also means that many goods and services will be streamlined and more accessible to people around the world (if you have a smartphone that is…)

It’s also likely that mega-companies will become the new ‘norm’ for business culture and they will spread like wildfire, globalizing even the furthest corners. Companies will cross borders far and wide, causing a great socialization of humans and business. Business, people and technology will be connected in way we can only imagine. 

We’re excited to see what the future holds!

-The NOERDEN Team