There’s been a shift over the past decade in consumerism and the way we perceive ownership. Goods and services have grown to become more and more expensive, and consumers have grown more aware and concerned about mass production and how it’s affecting our planet. Because we still need these products and services, there’s another solution for consumption - sharing.
In this article, we'll take a look at what sharing economy and how it differs from the access economy. You’ll also learn about the different models and businesses that revolve around the sharing economy.
What is the sharing economy?
The sharing economy is a model based on a peer-to-peer (P2P) exchange. This can be anything from acquiring, sharing, or providing convenient, easy, and more affordable access to goods and services. Oftentimes, the transaction is facilitated by an app or an otherwise online platform that allows these community-based, peer-to-peer transactions.
Different business ventures, startups, and investors have noticed this and jumped on this fastest-growing business trend of the decade. Since 2010, investors have been pumping in more than $23 billion in venture capital funding into startups operating within the share-based economy.
Advantages of the sharing economy
The goal of sharing economy is to provide more affordable and accessible options to everyone, all while utilizing otherwise already existing, unused assets and resources. This allows individuals to access valuable goods or services without owning them.
On the other end, individuals get to profit off of assets that they don’t necessarily use as much, like a spare bedroom or a car. Giving unused items the possibility for either a new or prolonged life also helps reduce mass production and consumption.
Sharing economy vs. the access economy
While the two are similar, but to put it simply: the access economy has one party, a rental business for example, that owns and distributes its assets to consumers. The sharing economy, on the other hand, works as a third-party provider, an app for example, that connects individuals and allows peer-to-peer exchanges to happen.
For example: if a business has an inventory from which customers can pick and choose what they want and have it available for them for a certain period of time, that's access economy. On the other hand, when a consumer uses a platform in order to buy or lend items from other individuals, that's sharing economy.
Either way, both of these economic models aim to change the way we consume from a more ownership-based approach to access-based. More and more businesses are forming under the umbrella of access and sharing economies, supporting and driving the change towards more sustainable consumption.
Examples of the sharing economy
The most known companies within the sharing economy are Uber and Airbnb, which are also a part of something known as collaborative economy or collaborative consumption. The idea of sharing or collaborative consumption has been around for a while already. However, with the invention of the Internet and the possibilities it has brought along, the market has significantly expanded and reinvented traditional market behaviors.
With the help of the internet and various platforms, it’s now easier to get your hands on the goods or services that you want or need, from the people that can offer them.
Like we’ve mentioned before, sharing goods is not a new concept. However, peer-to-peer marketplaces like eBay and Craigslist challenge the retail world by allowing users to buy and sell brand new or used items through their platform and have the products delivered straight to their homes.
A durable good by definition is everything that can withstand long-term use and not wear out. Food, for example, is not a durable good since it can be consumed in one go. Things like home appliances, sports equipment, cameras, and clothes are considered to be durable goods, since they're designed to be durable for a long period of time.
In addition to direct reselling, there are companies like Boxbee, which have launched a marketplace for peer-to-peer borrowing of unused goods. Instead of changing owners, the products get to be used when needed and returned to the owner in exchange for a small fee.
Benefits of sharing goods
The more traditional definition of sharing consumer goods is based on reselling products from one individual to another, instead of buying them directly from a retailer. These platforms let consumers browse and filter a variety of goods based on price, condition, and different guarantees. Especially with home deliveries, it’s an extremely convenient, affordable, and sustainable way of consuming goods.
However, the tides are changing as the previously well-known sharing economy platforms are more and more shifting to providing retailers an alternative marketplace. Now, established businesses can sell their goods on eBay, Etsy, and, of course, Amazon.
Retailers are catching up, but as fast as retailers are growing, so are the resale platforms. Platforms like Facebook and Instagram are offering marketplaces for sellers to sell their goods from their fingertips, and for consumers to find needed items within their price range and area code.
Disadvantages of sharing goods
There is always a risk with dealing with a seller on the internet. When making a purchase you don't really know whether you'll be receiving the product as advertised or not (or if you'll be receiving the product at all). There can always be problems on both ends when it comes to payments, quality of the product, deliveries, and so on.
That is, of course, the worst-case scenario. In other cases, you might end up dealing with unpleasant buyers or sellers, and without the convenience of customer support. Fortunately, the majority of platforms offer safe payment options, delivery services, guarantees, and support.
Home-sharing & Couchsurfing
Home-sharing has many forms, from offering short-term, whole vacation homes, single rooms, or simply a couch. It’s based on homeowners, also known as hosts, sharing their space with travelers, oftentimes when they’re not using the property themselves. This helps the hosts to keep their spaces occupied throughout the year, and travelers find suitable accommodation and save money.
Most known house-sharing platforms include Airbnb, Vrbo, and various Couchsurfing websites. As of December 2020, Airbnb alone has over 7.9 million active listings, with 5.9 million of these listings receiving at least 1 booking over the year.
Benefits of home-sharing
There’s an alternative to traditional lodging options, thanks to service providers like Airbnb. Hotels often lack amenities like a full kitchen, that make a stay, short or long, more comfortable, and often come with inconveniences like check-in and check-out times. With house-sharing, you can find suitable accommodation with all the amenities you need, whether it’s just one room or a whole house - often for cheaper than a regular hotel.
Sharing economy within the hospitality industry helps make sure that people are able to make money off of their unused spaces while offering more affordable and fitting options for travelers.
Disadvantages of home-sharing
The services and amenities that housing sharing has been able to provide as an alternative to hotels have had a negative impact on the traditional hospitality industry. This being said, unlike with standardized, big hotel chains, you can’t always be assured that what you see is what you get - either related to the space, or the homeowners themselves.
From the homeowners’ perspective, there is always the risk of their properties being trashed by party goers who present themselves as a calm family during the booking process. While, for example, Airbnb’s Host Guarantee program offers support and payback guarantees for the owners, it doesn’t cover everything and is still left to deal with a huge inconvenience.
The most known forms of ridesharing or carsharing are apps like Uber. The ride-hail industry is based on private individuals with personal vehicles, providing on-demand services (aka rides) to people who need them. The prices are calculated based on things like either the distance or time spent in a ride, type of car, reviews, and so on.
Companies like Uber or Lyft, offer a platform that connects individual drivers and customers in need of a ride. Other apps offer carpooling services, where it gathers up a group of people heading the same route, and even car rental services, where you can rent a privately owned car by the hour or day. Ridesharing has challenged and changed the traditional form of transportation. These platforms like Uber have challenged traditional players like taxi companies with a more technologically advanced position.
With an efficient application, on-demand prices, and a network of drivers that are ready to put in the work for a good rating and a tip, consumers are almost guaranteed to get a good user experience. This results in significantly lower prices, which has dramatically affected the traditional business model. To give some perspective, there are roughly 4.5 times more Uber drivers than taxis in New York City alone.
Benefits of car sharing
Platforms like Uber provide consumers with an alternative to car ownership. Consumers no longer have to rely on public transportation, and with the flexibility of rides and cheap prices, they're becoming more and more common means of transportation. For car owners, on the other hand, it’s an alternative way to get paid using what you own, or as a side gig.
Disadvantages of car sharing
Unfortunately, since the drivers aren’t “employees”, they’re fully responsible for their own gas, insurance, cleaning, and car depreciation incurred while working. Even with the newly ruled minimum wage that the drivers will be receiving, they carry the risk of something happening to their vehicle or themselves.
From the consumers' perspective, there have also been safety concerns related to Uber rides over the past years. While there are definite perks of ridesharing, there is still a lot of progress to be made - from both the drivers’ and passengers’ perspectives.
Freelancing & Talent sharing
Just like with marketplaces for consumer goods, there’s also a marketplace for talent and special skills. Platforms like TaskRabbit or Fiverr offer freelancers and handy people a place where they can provide others with their services. This can be anything from mundane tasks such as housecleaning, running errands, or more specific skill sets like editing, or writing.
Benefits of talent sharing
While it’s unlikely for traditional jobs to be replaced with talent-sharing, it’s definitely making a change and creating opportunities for those who are willing to do the work. A talent-sharing marketplace can offer a more flexible form of employment, without the stress of traditional hiring processes and other arrangements. In short, it’s a relatively easy way to make money, sometimes even from the comfort of your own home.
In addition to being great for the ones looking to make money, it’s also great for the ones in need of assistance with daily tasks, or even companies looking for freelancer’s services. Usually, these services are also considerably cheaper than more traditional options of getting personal assistants, gardeners, and freelancers.
Disadvantages of talent sharing
This being said, it is worth mentioning that because you’re not using a specialized company with set-in standards and guarantees, there’s a risk that you won’t get your money’s worth. For the freelancers, there is no stability and no perks that may come with more traditional forms of employment.
Coworking in the sharing economy allows you to have all the perks of office space, without having to deal with the rent, utilities, storage, and office supplies all by yourself. In addition to private co-working space providers, there are also public ones like universities and co-working hubs that offer facilities with perks like coffee, WiFi, printers, storage lockers, and conference rooms, all for a weekly or monthly fee.
Pros of coworking
The perks of coworking spaces are undeniable. No need to deal with the trouble of finding a suitable office space and not having to take care of all of the expenses. It provides with There's also usually someone taking care of the facility, and paying only for the time that you use the space, and networking possibilities.
Cons of coworking
Just like with any shared space, you can expect to have some downsides. You won’t always know who you’ll be sharing space with, which could some days end up being distractive and unproductive. There could be noise, lack of privacy, and it could end up being costly in the long run for what it actually is.
Other forms of sharing economy
While the most known and common examples of sharing economy are based on collaborative consumption, there are other models that are revolutionizing older, more traditional business models and pushing them towards a change. One of these traditional industries that are being challenged is banks. Here are some sharing economy business models that are reshaping the way people are able to get the financing they need:
Peer lending or peer-to-peer economy allows individuals to lend each other money without going through the traditional route of taking a loan from the bank. Lending platforms provide an opportunity to lend money at rates that are most of the time cheaper than at banks.
Crowdfunding works based on the same idea as the peer-to-peer economy: the individuals get money from the ones who are capable of giving it. Unlike peer lending, however, this money usually isn't returned. This works as a sort of grant, which is capable to fund projects, starting businesses, and personal causes.
Rentle's role in reinforcing access-based consumption
Rather than participating in the sharing economy and becoming a peer-to-peer facilitator, Rentle has taken its role in driving access-based consumption by supporting rental businesses. By providing all the necessary tools a rental business can need, we make sure they're able to offer their customers modern and better access-based services.
Whether it's the sharing or access economy, there is still an enormous amount of room to grow and provide more options for consumers that help decrease ownership. At the end of the day, despite the differences in the economic models, we share a common goal of replacing ownership, offer more convenience and more efficient use of resources.
To sum this up, the main difference between access and sharing economy is that in the access economy, the business provides the platform and the goods or services, while in sharing economy it's more about providing the platform for individuals to offer their items or services.
If both of these economic models continue to grow as expected, we're going to be seeing a bigger change in consumption trends that doesn't revolve around ownership.
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