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Front and Back

April 5, 2015

What do Uber, Airbnb, and the Amazon sellers have in common?  It’s called the sharing economy.  Maybe it’s even something new.  All of the front-end services are provided by a large company. Many individuals provide the back-end services.

The front-end services are things that an individual can’t do by themselves.  There’s a web site and an application for mobile devices that connects to this web site.  The web site supplies payment processing, often with a shopping cart.  The company provides their reputation as a good place to find all of these services.  They also notify the individual when back-end services are required.

Depending on type of product or service, the individual may be responsible for rides, accomodation, or inventory and shipping.  Still, the individual is not an employee of the company.  They do have a relationship, of course, but it’s more like they are a client of the company.  They contract with the company for the front-end services that they can provide.  They need these services to operate their end of the business.  In fact, they are more like a small business that needs services from a large business.  Since one of these services is payment processing, they do get paid by the company.  Because there are so many of them, they also compete with other back-end suppliers.

Back-end suppliers are a new business model.  The large company makes it easy for them to start up.  It’s something they could do part time, at least at first.  They are a business, though.  They will be treated as a business for taxation purposes.  For some, it will become a full time business.  For some, it will become their only source of income.  What can they do if this income is inadequate?  It’s a small business after all, perhaps one with no employees except for the owner.  The’re not in a position to make demands of the large company.  Somebody else will always be happy to accept what the company provides.  I can’t see much happiness here.’

 

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