Elaine Casap
Sharing is certainly not a revolutionary new idea. People have been sharing their food, possessions and homes with family and friends for eons. The Sharing Economy has taken an old concept and retooled it for modern times, using modern tools. Let’s have a closer look at what it is, and what it isn’t.
I remember as I was about to leap into my first year of college, an old friend and fellow college student approached me with an idea – a “win-win” as she called it. She’d pick me up and give me a ride to college every day, in exchange for me giving her elderly Austin Mini a push whenever needed (the reverse gear didn’t always work.) I happily accepted, and her plan worked out exceptionally well for both of us – and my biceps were pretty impressive by the end of the year. A few years later, when I was a young married mom, our neighbour asked if her friends from Switzerland could stay at our house and use our car for three weeks when they came to visit her. In exchange, we would have the opportunity to live in their home and drive their vehicle in Switzerland for three weeks. My friend knew we were hoping to someday visit Europe, so the plan was a dream come true for our family. We had a wonderful and relatively inexpensive trip to Switzerland, and the other family fell in love with Canada. Though sharing was involved in both these stories, they aren’t examples of the Sharing Economy. So…what is it, exactly?
Wikipedia calls the Sharing Economy “a way of distributing goods and services that differs from the traditional model of corporations hiring employees and selling products to consumers. In the Sharing Economy, individuals are said to rent or share things like their cars, homes and personal time to other individuals in a peer-to-peer fashion.”
Investopedia, a website that explains complex financial concepts, also uses the term peer-to-peer in its description of the activities of the Sharing Economy. It expands on the definition by describing that activity as “acquiring, providing, or sharing access to goods and services, usually facilitated by a community-based online platform.”
Brooke Cagle
In other words, companies in the Sharing Economy set up a website and/or app that allows individuals and groups to make money from underused assets by connecting them with potential customers. Think of spare bedrooms that are empty for much of the year (an insight that launched Airbnb in 2008), or cars sitting idle in driveways (which led Uber’s founders in 2009 to offer peer-to-peer ridesharing). Or here’s an initiative I recently read about – Hello Tractor, which began in 2014 as a way to help alleviate poverty in rural areas of Nigeria. An app enables smallholder farmers to gain access to affordable agricultural equipment, while enhanced security is provided to the farm equipment owners through virtual monitoring. It has now expanded to Kenya, Mozambique, Bangladesh and Pakistan.
Companies such as Airbnb, Uber and Hello Tractor are profit-making, commercial business models in which a company provides (for a fee) a mobile app that suppliers and customers use for their interactions. But there are also nonprofit organizations taking part in the Sharing Economy.
Rawpixel.com
These are usually based on the same concept as book-lending libraries, in which goods and services are provided for free or for a modest subscription. A woman living in rural India can start her own business using a loan from a young business-owner in Stockholm via Kiva. A building caretaker can exchange an hour of repair work for tax advice from an accountant through TimeBanks. A seasoned teacher in New York can share lesson plans with a first-time teacher in Atlanta with the help of Khan Academy.
As you can see, the Sharing Economy is not just about vehicles and vacation homes – also think about people’s underutilized skills, knowledge, money, tools, clothing, and workspace. Here are some other peer-to-peer innovations that have recently popped up on my radar:
Fashion Platforms: websites and apps that allow for individuals to buy, sell or rent their clothes. Depop is one of the largest. It provides a mobile marketplace that enables individuals to buy and sell their fashion items on their smartphones. The Volte in Australia calls themselves “the Airbnb of Fashion”, and their website facilitates rentals of designer fashions by connecting borrowers and lenders.
Freelancing Platforms: Sites that match freelance workers across a wide spectrum with people who could use their skills on a project. One of the first was TaskRabbit, launched out of Boston, which matches freelance labour with individual consumers or small businesses who need help with everyday tasks such as moving, cleaning, furniture assembly and handyman work. Another is Fiverr, based in Tel Aviv, Israel. It offers a platform for freelancers to provide their services to customers worldwide in areas such as graphic design, animation, music production, writing, translation, proofreading, etc.
One of my personal favourite platforms is Etsy, the Brooklyn-based online artisanal marketplace, founded in 2005. Etsy is an amazing place to shop for handmade, vintage and custom-made items from crafters around the world, including jewelry, bags, home décor, toys, clothing, and fashion accessories. You purchase these items directly from the artisans themselves.
The Sharing Economy has taken old ideas such as sharing, swapping, advising, lending and renting, and with the help of the internet, made them into something new for today’s consumer. This appeals to people who perhaps cannot afford to own a car, or a fancy ballgown – or to those who only need one occasionally.
In China, the Sharing Economy is thriving, like nowhere else in the world. Platforms that enable peer-to-peer rental of goods in China are booming. This is probably due to the fact that China has problems of scarcity that need to be solved, and this is one way to address that problem. Also, there is less of a perceived need for individual ownership vs. shared ownership in China than in the western world.
Jake To
In 2016, the Chinese Sharing Economy accounted for $500 billion in transactions1 and included not only bike and apartment-sharing platforms, but also platforms to share basketballs, phone charging stations, umbrellas, and “napping pods” for tired employees in office buildings (which look like a body-sized capsule, equipped with a bed, fan, reading light and USB port).
But as the Sharing Economy evolves and grows, there are problems cropping up.
Homesharing organizations like Airbnb (and others such as HomeToGo and FlipKey) are growing so fast that they are running into complaints in popular travel destinations like Barcelona, Paris and Amsterdam. Residents are protesting that their neighbourhoods are being overrun by tourists staying in short-term lets, and want the practice restricted. Many landlords have realised they can make more money out of short lets to travellers than from renting to conventional tenants who live and work in the city year-round. Perhaps the time is coming for more regulations, such as different tax structures for people who are essentially renting out their homes on platforms like Airbnb.
The Sharing Economy also has the potential to disrupt traditional business sectors such as hotels, retail stores and taxi companies – and we already see this happening. The lack of overhead costs, minimal inventory, and a small staff help Sharing Economy businesses run very lean. Traditional businesses also deal with other expenses, such as hotels that have strict rules about fire alarms, elevator maintenance, and other costly safety and cleanliness protocols.
Most Sharing Economy companies only “facilitate” the interactions but aren’t responsible for regulating safety or cleanliness. Security and accountability can therefore also be problem areas.
Hassan Ouajbrir
But there are many positive effects from the Sharing Economy, which is why it is popular…and spreading around the world. It opens up a new marketplace and new ways to earn money, where people can set their schedule, be their own boss, and largely make their own decisions. The increased economic opportunities are especially beneficial for the unskilled or unemployed in depressed communities, but also provide more access to employment for other groups such as immigrants, the disabled, or the elderly. The Sharing Economy can bring extra income and flexibility for people who are furthering their education or pursuing other dreams. For many people around the world, it offers increased social and economic inclusion. And let’s not forget one other significant benefit – lower consumer costs, and often increased consumer satisfaction.
It seems to me that the Sharing Economy, even with its growing pains and many permutations, is here to stay.
- The World Economic Forum; Understanding the Sharing Economy; Report for the China Council for International Cooperation on Environment & Development; 2016.
