The Pros and Cons of the Sharing Economy
July 26th, 2016
Startups like Uber and Airbnb have long been firmly won the preference of users to its convenience and quality of service. At the same time, they have caused protests - consider how many taxi drivers protested against Uber, even getting noted in the daily news. These projects are not “just another startup,” they qualify for a special niche that shows first signs of the new economy, a new (or, renewed) type of economic relationships between people. Sharing economy is the general name for startups like BlaBlaCar, Lyft, Uber, Airbnb, and many other that offer the model of joint consumption.
While it is a widespread thing, it is hardly possible that this model will drastically affect the usual economic relations and people will use Uber and Airbnb instead of buying cars and homes. However, this model of joint consumption will take its rightful place among the services.
So what is sharing economy, why are journalists writing about it, and why do startup authors look towards it with hope and businessmen with fear?
The main idea behind shareconomy is not to buy a service or material goods so as to own it or use it alone. Instead, it’s the idea of sharing the benefits of the service or goods with other people.
For example, instead of driving to work or looking for a taxi, you find a companion with whom you can split the cost. In a way, shareconomy is like rental service - when people do not want to overpay for unnecessary services and rent a usual apartment on Airbnb-like sites instead of booking a more expensive hotel room.
We do realize that the actual idea of shareconomy is far from new. Rental services, as well as sharing services, existed for the beginning of economy in general. However, with the rise of Internet, mobile technologies, and geolocation features, shareconomy has reached a global level. There are online platforms that help to find “customers” (people who are interested in paying for services or goods other people might offer). Have you ever thought about renting out your bike while you’re at work and earn money that way? Or that you can reimburse the new drill you’ve bought and used a couple of times? Internet services of the sharing economy era can help you find people willing to pay for such items and goods (as well as give you ideas on how else you can earn money.)
For many projects, joint consumption has become a logical continuation. One of the prime examples of collective projects where the creators have spent a time to create it while being employed elsewhere, was, of course, Wikipedia. Crowdfunding or co-financing concept is another shareconomy offsprings as well as online education services like Coursera.
Another popular example today is the co-working idea. Renting a workplace in a large office or even a separate room is much cheaper than renting the whole office. And for a freelancer (who is a representative of shareconomy as well) having a separate office is just a waste of time, while co-working allows to achieve work-life balance as well as to draw a boundary between work and personal life (if one compares it to working from home).
HOW IT CAME TO BE
The sharing economy concept emerged and became popular for several reasons. One of the reasons is, of course, the numerous available online booking tools for housing and cars. Flexibility, mobility, and readiness to change - these qualities of a modern man were an anachronism a few decades ago, when people kept within bounds of one profession during their entire life, bought their own homes and cars. Modern man is not only able and willing to change, in most cases, this degree of flexibility is required to stay “afloat,” to be successful and popular.
SHARING ECONOMY FUTURE
Sharing economy holds quite a potential for the future. Take for example Airbnb and Uber. They are the most expensive US startups with Airbnb evaluated at $25 billion at the moment and Uber - $65 billion. The total investment into these projects has been $2 billion into Airbnb and $6.5 billion into Uber.
Experts predict a rise in shareconomy in the coming years. Thus, according to the PWC report, the most popular segments for sharing economy is accommodation rent, crowdfunding, car rental, and music & video streaming. These segments are also expected to exhibit more rapid growth than the traditional economy sectors. Peer-to-peer financing and freelancing have been among the leaders in the work shareconomy environment.
NOTABLE SHARECONOMY PROJECTS
- TEMPORARY HOME: Rover.com - rent accommodations for your dog. This service allows you to find the place where your dog can live while you are gone on vacation.
- RIDES: Zipcar and RelayRides provide car rental, Lyft allows you to join someone for a ride, and ParkatmyHouse and Parking Panda provide parking spaces for rent.
- VARIOUS: Zilok and Rentoid give you the opportunity to rent various things (even weird things like an inflatable horse costume), GetArtUp is the place to rent contemporary art, and Liquidspace is a workplace rental service. Using Easynest, you can even search for a companion for a holiday.
- UNIVERSAL: Universal shareconomy services also began to appear, for example, Rentorant - a service where you can rent or lease pretty much anything, from tableware to a rare musical instrument.
SHARECONOMY ADVANTAGES
Among the main advantages of the sharing economy, affordable price is not the only thing, even if lower cost is definitely a plus and one of the main criteria of choosing sharing economy over the traditional one. Renting a luxury apartment on Airbnb is comparable to the price of a hostel and a ride using BlaBlaCar will not cost more than a train ride. At the same time, those people who own the goods - for example, cars or house - can earn a bit and cover their own expenses by sharing a ride with others or renting out the apartment while on vacation.
In addition to economic benefits, share economy also contributes to new experiences, new acquaintances, and, the most importantly, the ability to get the service or good at a convenient time and in a convenient location. Airbnb service was launched in a very natural way when homeowners decided to rent it out to conference visitors when there were no hotel rooms available. BlaBlaCar’s advantage was the ability to create a route or trip where usual buses or trains don’t go usually (or you would have to switch a few means of transport.)
SHARECONOMY CHALLENGES
Despite all sorts of benefits, sharing economy has a number of challenges. One of the top issues is a lack of sufficient attention to security issues. Getting into the car with the unknown person, the shareconomy client trusts the driver with his / her life and health, relying on the presupposition that the driver will follow the rules and law. However, there are no guarantees. Similarly, chances to find a fire extinguisher or an evacuation scheme at an Airbnb apartment are minimal as well while at a hotel these are a must.
We have experience in creating the on-demand projects.
