Why pay full price for something when you can rent it cheaper from a stranger online? That is what an increasingly number of people are thinking today. Some share for fun, others of economic reasons but the fact is that we are sharing as never before, challenging established notions of how individuals, businesses, and governments interact, as well as elements of the legal system.
Collaborative consumption, the sharing economy or the ownerless economy is exploding and creating new industries. Many people are increasingly questioning the value of having possessions such as cars, bikes, books, music, and even dogs. Today, technologies are available to let them share, rent, or barter for these items easily, almost anywhere: growing urbanization means that there is a critical mass of people to participate, so ownership is simply not necessary. Nor is it desirable for many as concerns over the environment and global issues prompt a rethink of consumption itself. The question is not just do we need to own it? It is do we need it at all?
The sharing economy has actually existed for decades: libraries have lent books, stores have rented music and movies – although physical renting is a dying market, and people have joined the gym instead of buying a treadmill or a rowing machine. What’s new is that the digital age has made the potential for sharing goods and services much easier and more transparent, allowing the sharing economy to take root in an increasing number of communities and industries.
The term “the sharing economy” began to appear in the mid-2000s but as the financial crisis hit the world’s economy in 2008 and unemployment rose sharply, sharing became a way for many people to “survive” in a restrained economy. New business structures were inspired by social technologies and today the growth of sharing platforms can be found in almost all categories from digital and physical media, transportation (cars, bikes, boats, air planes), to physical spaces such as garages, storage, parking, spare rooms, and infrequent-use items such as household items, event equipment, and sporting goods. However in Switzerland and Germany the sharing economy goes analog as free mailbox sticker signify goods resident are willing to lend to neighbors.
Bur who is driving the sharing economy? Some commentators suggest it is the debt-loaded millennials, while others believe the sharing user base is much broader and based on a renewed interest in all things green, as well as a new brand of thriftiness that started during the recession. (Source: The Line) According to a study by Latitude in collaboration with Sharable Magazine, “…participants aged 40+ were more likely to feel comfortable sharing with anyone at all who joins a sharing community (with varying levels of community protections in place) and to perceive ‘making new friends’ as a benefit of sharing, whereas millennials tended to feel comfortable sharing only within smaller networks. Attitudinally, however, millennials were more likely to feel positive about the idea of sharing, more open to trying it, and more optimistic about its promise for the future. It’s worth acknowledging that millennials may simply consider a wider network of people to be ‘friends’ or to have more granular understandings of digital privacy controls, thanks to the rise of social networking – so the relative sizes of these two generations’ trusted networks may not differ greatly, even if their labels do.”
Entrepreneurs, in particular, have tapped into the possibilities of sharing business models, and individuals have gained from an exploding number of choices to meet their needs. However, in the sharing world trust is critical, because sharing means allowing strangers to share our personal space.
The sharing economy has grown into every industry and category and is reshaping many industries, e.g. car rental, accommodation, lending, and taxi services. As the collaborative consumption movement starts to impact every industry, it is becoming big business. Rachel Botsman, author of “What’s mine is yours,” says the consumer peer-to-peer rental market alone is worth US$26 billion. Since Airbnb was launched in 2008 more than 4 million people have used it, 3 million in 2012 alone – reports in March 2014 of its latest capital raising suggest that it could be valued at an eye-popping US$10 billion, more that hotel stalwarts such as Hyatt. In November 2012, Lending Club, one of the leading peer-to-peer money lending platforms in the U.S., exceeded more than US$2 billion in loans, and is doubling in size every 12 months. In Europe, the market for car sharing services is estimated to grow from 0.7 million subscribers in 2011 to 15 million by 2020. By 2014 more than 1.5 million people had used the TaskRabbit online service to hire strangers to do odd jobs, and in October 2013 Chegg filed a public version of its documentation to go public, seeking to raise US$158 million by selling 14.4 million shares at between US$9.50 and US$11.50. (Sources: Boston Magazine, npr, VentureBeat)
Those firms that buy in to the concept increasingly want to participate, so much so that there’s now a venture capital firm, Collaborative Fund, dedicated to investing in sharing-based start-ups. In other internet-related markets the influx of venture funding has been a core force in accelerating growth of the sharing economy. According to Altimeter, which surveyed 200 sharing start-ups, there has been an influx of more than US$2 billion, with the average of funding per start-up at US$29 million. Such venture capital interests could be the key to rise in the sharing economy.
Companies that believe sharing is only a reaction to the recession and a niche trend that soon will disappear could well be in for shocks ahead. The economy of sharing is changing the way we behave, consume, seek new options, and commit to decisions. Sharing has become a new cultural phenomenon for people to fulfill their needs.