There has been much debate over the last year around exactly what is The Sharing Economy. A clear definition is needed not only for purposes of clarity and to enable meaningful discussion, but also to provide a precise aim and direction to those working to enable, foster and create a better and more collaborative Sharing Economy.
The Sharing economy, also known as ‘shareconomy’ or ‘collaborative consumption’, refers to peer-to-peer-based sharing of access to goods and services coordinated through community-based online services. The Sharing economy can take a variety of forms, including using information technology to provide individuals, corporations, non-profits and governments with information that enables the optimisation of resources through the redistribution, sharing and reuse of excess capacity in goods and services. A common premise is that when information about goods is shared typically via an online marketplace, the value of those goods may increase for the business, for individuals, for the community and for society in general.
Collaborative consumption as a phenomenon is a class of economic arrangements in which participants share access to products or services, rather than having individual ownership.The consumer peer-to-peer rental market is valued at $26bn (£15bn), with new services and platforms popping up all the time.
Whilst the Sharing Economy is currently in its infancy, known most notably as a series of services and start-ups which enable P2P exchanges through technology, this is only the beginning: in its entirety and potential it is a new and alternative socio-economic system which embeds sharing and collaboration at its heart – across all aspects of social and economic life.
The collaborative consumption model is used in online marketplaces such as eBay as well as emerging sectors such as social lending, peer-to-peer accommodation, peer-to-peer travel experiences, peer-to-peer task assignments or travel advising, car-sharing or commute-bus sharing.
The Sharing Economy encompasses the following aspects: swapping, exchanging, collective purchasing, collaborative consumption, shared ownership, shared value, co-operatives, co-creation, recycling, up-cycling, re-distribution, trading used goods, renting, borrowing, lending, subscription based models, peer-to-peer, collaborative economy, circular economy, pay-as-you-use economy, wiki-nomics, peer-to-peer lending, micro financing, micro-entrepreneurship, social media, the Mesh, social enterprise, futurology, crowdfunding, crowd-sourcing, cradle-to-cradle, open source, open data, user generated content (UGC).
In one sense, it has been with us forever, but over the last decade, it has grown from a means of transaction between friends and family, to become a global movement of businesses which are increasingly being valued in the billions.
As the mega-trends evolve and collide, the sharing economy is becoming an increasingly accepted feature of the business landscape. PwC estimate that the five main sharing sectors (peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music video streaming) have the potential to increase global revenues from around $15 billion now to $335 billion by 2025.
The decisions that organisations make today will decide how far the sharing economy can live up to its potential. We have spoken to a range of influencers in this space to find out where they think this trend is heading.
However you define it, the sharing economy is a disruptive force in a slew of industries, particularly travel, consumer goods, services, taxis, bicycles and car rental, finance, music, employment and waste. And the disruption may be long-term if the new businesses permanently change consumers’ attitudes towards ownership. In the PwC study, 81% of people familiar with the sharing economy agreed that “it is less expensive to share goods than to own them individually” and 57% agreed, “Access is the new ownership. Twitter ”
Whether attitudes towards ownership change for good remains to be seen. Another supposed aspect of disruption seems far less likely to endure. While 78% of the people surveyed by PwC said that the new sharing companies helped build a stronger community and 86% agreed that it was more fun doing business with these “upstarts” than with traditional companies, research published in the Journal of Consumer Research takes issue with this “romanticised view on access.”
According to the researchers, Giana M. Eckhardt (Royal Holloway University of London) and Fleura Bardhi (City University London), users of Zipcar “don’t feel any of the reciprocal obligations that arise when sharing with one another. They experience Zipcar in the anonymous way one experiences a hotel; they know others have used the cars, but have no desire to interact with them. They do not view other Zipsters as co-sharers of the cars, but rather are mistrustful of them, and rely on the company to police the sharing system so it’s equitable for everyone.”
In fact, companies take the trust issue very seriously. Some go so far as to carefully vet those they do business with. DogVacay has a five-step screening process that certifies only 15% of applicants to offer dog sitting services. TaskRabbit runs identity and criminal record checks as well as in-person interviews. And many companies provide some level of insurance.
Virtually all the sharing companies establish trust through crowd-sourcing. Online reviews are at the heart of the sharing economy. Before anyone agrees to use an Uber driver, rent an Airbnb room, sleep on a Couchsurfing couch or hire a TaskRabbit handyman, they check out what others who they have used the particular service have to say. And companies facilitate this through easy-to-use technology and easy–to-understand rating systems.
If community and trust are not key variables in the value proposition for the sharing economy, what is important is what has always been of most value to consumers: convenience and cost. In the PwC survey, 86% and 83% respectively agreed that sharing companies make life more affordable and more convenient and efficient. According to Eckhardt and Bardhi.
Whatever your opinion on The Shared Economy, it is clear that the sharing economy is set to expand rapidly. If you look deeply enough, you will more likely than not find that you have already had a first-hand encounter with it.