What does the ‘sharing economy’ mean to you? Maybe using Airbnb to book a stay in a stranger’s spare room? Perhaps using car service Uber instead of hailing a black cab? Or even renting the hedge trimmer you only take out of the shed a few times a year?
A guide to the trend – sometimes known as ‘collaborative consumption’ or ‘peer-to-peer renting’ – has been penned by Alex Stephany.
The former Magic Circle lawyer is now chief executive of one of the sharing economy’s brightest UK-based stars, the pre-bookable parking firm Just Park, which connects drivers searching for a space with anyone who has one going spare.
Sharing economy: What does the ‘sharing economy’ mean to you? Maybe using Airbnb to book a stay in a stranger’s spare room? Perhaps using car service Uber instead of hailing a black cab?
Just Park is merely the latest example of technology start-ups that are disrupting long-established business models where big corporates have traditionally dominated. The sharing economy is also empowering legions of micro-entrepreneurs who have realised the power of putting under-utilised assets to work earning money.
People are making thousands of pounds a year from renting out driveways or spare rooms or hiring out little-used designer dresses.
It makes for exciting times when anyone with a smartphone has the potential to run a small business. The taxman is becoming increasingly interested in whether everyone is paying the proper tax on this additional income and some fear further regulation of the sector could be around the corner.
For now though, business advisers PwC reckon the sharing economy could be worth a staggering USD 335billion (GBP214billion) by 2025 from five main areas: peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music and video streaming.
The UK’s slice of the pie could be worth around GBP 9billion in the same time frame, according to PwC.
The major difficulty sharing companies face while scaling up their businesses is whether they can maintain what PwC identifies as their uniqueness and authenticity.
This describes that sense of community found when using an Airbnb where it’s possible to connect with the owner, if only for a short time, due to the shared experience and reassuring testimonials from other users.
It’s also the social aspect to sharing a car journey with fellow users of the Lyft app, instead of jumping on an expensive train service, which helps to build customer trust and loyalty.
Looking ahead: Business advisers PwC reckon the sharing economy could be worth a staggering USD 335billion (GBP 214billion) by 2025 from five main areas: peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music and video streaming
The very label of the sharing economy is, however, somewhat of a misnomer. Successful start-ups have perpetuated the idea of ‘sharing’, but the hype disguises the fact they’re as focused on making money as traditional companies.
Other critics complain that charging to do a neighbour’s shopping or lending someone your bicycle or lawnmower is monetising what used to be good deeds.
Without that community spirit, humanity, and goals such as reducing consumerist wastage, the sharing economy risks being regarded merely as an alternative form of the same commercial model already available by patronising Big Business.
As Stephany notes: ‘Whether you spend your money with Airbnb or Marriott, you are a speck on their profit and loss. But with Marriott you are more likely to feel like one.’
To become more than a passing fad the sharing economy also needs to figure out how to overcome the 21st century’s obsession with rampant consumerism. The model works if users are persuaded en masse to pay to access goods and services only when they need them and not simply buying them. Big Business is, meanwhile, waking up and is undoubtedly keen to win back customers who have migrated to sharing companies.
The battle between the two philosophies is certain to intensify in the years ahead.