They say sharing is caring and the latest economic trend seems to agree. The “sharing economy” is a socio-economic ecosystem that’s built around the sharing of both human and physical resources.
Whether you’ve hailed an Uber car, hired someone to walk your dog, rented an instrument or a DVD, traded products on a buy/swap/sell page, enjoyed a social dinner through ShareWithMe or rented a holiday home through Airbnb; this is the “sharing economy”.
The sharing economy is a system that takes the “what’s yours is mine, what’s mine is yours” idea and adds a fee; the government has been singing its praises for creating “micro-entrepreneurs” and economists are impressed by the ability to put “excess capacity” to good use.
It’s a sector that is growing fast and one that more and more businesses are looking to involve themselves with. An increasing number of organisations and individuals are increasing their sales and profits by sharing access to resources they do not actually own.
San Fransisco based Airbnb is a prominent example of the sharing economy, in which people rent beds, rooms or properties through private individuals, rather than your standard hotel chain. Since its launch in 2008, more than 4 million individuals have used the service and Airbnb have seen their gross bookings grow at over 300% year over year for the past four years. The company claims to have more than one million rooms available and is currently valued at $20 billion dollars, falling only slightly short of Hilton and Marriot, but miles ahead of other hotel chains around the globe.
Similarly, Uber is expecting a threefold rise in global bookings this year (estimating $10.84 billion in global bookings) and the company is expecting to see that number rise to $26.12 billion in 2016. The ride hailing service, which currently operates in over 50 countries around the globe, is somewhat of a poster child for the benefits of the social economy with its explosive growth.
Technology is making the sharing of assets cheaper and easier than ever before and allowing individuals and organisations to share assets on a much larger scale – so it’s no surprise that economists are predicting the sharing economy will be the next big thing for the next 10 years.
The sharing economy has become the next growth sector to invest in. It’s a sector that is growing and expanding daily, with Compare and Share’s What We Know About the Global Sharing Economy study finding that an estimated $28 million is invested in sharing economy start-ups each and every day. 28% of the world’s adult population are members of sharing services with a huge percentage of individuals choosing to share goods rather than own them.
In this collaborative economy, consumers either get what they need from each other – or they pay for access to goods and services rather than own them.
But not everyone’s so happy. Just as the eCommerce boom raised a lot of questions 15 years ago, the sharing economy is raising those questions once again; is it safe? how do we regulate it? what about business? who pays the tax?
When a new idea pops up in the business world, controversy is bound to happen and regulations and jobs simply need to evolve accordingly. Sharing is the new buying and savvy business owners are exploring ways to embrace rather than escape this trend.
The Economist predicted in 2013 that, just as online shopping had forced retailers to change the way they did business, “so online sharing will shake up transport, tourism, equipment hire and more”. We are in the midst of a global economic, political and social shift towards greater sustainability – meaning we’re owning less and sharing more.
But if we’re sharing more, what does that mean for businesses who are selling the products to begin with? Overall demand for first-time purchases may shrink for products that consumers can use communally, however, companies can consider creating their own platforms to encourage users to share their products – and thus benefit from the sharing of resources that they do not actually own.
The real opportunity for companies is to evolve their services to increase the value that consumers (and those they share with) can gain from using their products. This expands the scope of interaction with consumers; moving from a simple buy/sell transaction to a long term relationship throughout the entire user experience. During this process, companies also have the ability to gain more insight and data into how their products are being used and shared over time. The more companies know, the more helpful they can become.
The sharing economy is not just a passing trend, it’s an ecosystem that will shake up the way we all buy and consume. Whether it’s developing a new sharing start-up to further encourage the sharing of resources, or transforming the way we develop products to better meet the needs of this sharing revolution; the sharing economy is one trend we all need to be paying attention to.