Sharing economy: what’s it all about?

SHARING ECONOMY, THE PLACE TO BE

So what’s it all about? 👍🤖 💡📱

It’s the biggest phenomenon in the world right now. With a global market value of over $4 trillion and a workforce of nearly 1.5 million people, the sharing economy is undoubtedly the place to be.

It’s a sector that creates a great deal, destroys nothing and transforms everything and anything – a new world where innovation is as natural as breathing and investment is on the up and up.

Beneficial, smart, and ultra-modern it may be, but the sharing economy is not always that easy to understand. So what’s it all about?

WORD OF THE YEAR  Sharing economy – Time for us to share a definition 📒 Defining the explosive phenomenon that is the sharing economy is no mean feat, precisely because of the strength and pace with which it is breaking existing paradigms and engulfing everything in its path. One thing is for certain, however. The sharing economy is a process that puts people or organisations with goods or services that are not being used to the full in contact with other individuals interested in benefitting from these underused resources, in return for payment or other shared services or products. The industry is hugely diverse – people are sharing cars, offices, bicycles, clothes, homes. In China, people are even sharing umbrellas. The phenomenon has three main characteristics. The sharing economy is built on technology. Unlike all other commercial avenues, the sharing economy uses digital platforms to bring together buyers and sellers and to monitor the scale of goods being shared. The sharing economy makes it possible for us to earn money off unused capacity. How? By offering “shares” in the goods or services and making them available on a temporary basis, the owner of a product or service can make money off each portion of their recovered capacity – be that a car parking space left vacant during a holiday or a room to rent out in their hou The sharing economy relies on trust. There are no middlemen in the sharing economy and exchanges almost always take place between private citizens. This means that every buyer can evaluate the quality of the service they have received and indeed the professionalism of the seller, who can in turn form their own opinion of the buyer. It’s a transparent model which relies on decency and where the service guarantee is evaluated in real-time.

 

VIRTUOUS CYCLE TO MULTIPLE PARTIES

The benefits of the sharing economy🌳💰🏙

The sharing economy represents a virtuous cycle capable of delivering benefits to multiple parties.

It is certainly beneficial for the individuals who share goods and services and can earn some considerable amounts through this model.

Yet it is also good for cities, which see reduced pollution and congestion as a result of the increased use of shared modes of transport and green shared mobility services such as bicycles and electric cars.

The sharing economy is also beneficial for the environment, generating a reduction in waste and goods consumption as existing resources are used in a fuller, more optimised way, until they have been completely used up.

Last but certainly not least, the sharing economy also delivers advantages on a human, social level. It encourages people to come out of the shadow of individualism and possession and open up to the idea of sharing. In turn, this breeds a sense of belonging and closeness.

SHARING DIGITS The sharing economy by numbers 📋 55 million Americans (i.e. one in six) used at least one sharing service in 2017 (Larmer, 2017). A survey of 3,000 US citizens and 130 public-service leaders found that two-thirds believed sharing could lead to identical levels of user satisfaction as ownership (Accenture, 2016) According to PwC forecasts, the sharing economy will grow by 20 times between 2016 and 2025, reaching a total value of €570 billion across five key sectors: collaborative finance, peer-to-peer accommodation, peer-to-peer transportation, on-demand household services, and on-demand professional services (PwC, 2016). In the UK alone, activities managed by sharing platforms are expected to grow by 30% every year over the next ten years, creating transactions worth a total of ÂŁ140 billion by 2025. According to Yano Research Institute estimates, transactions on Japanese sharing platforms will increase in value from 29 billion yen ($260 million) in 2016 to 60 billion yen ($540 million) by 2020 (Takeo, 2017). The Kuwait National Fund has pledged $7 billion as government-backed funds allocating assets to sharing-economy companies for SME development (Strategy&, 2017). In China, the government promotes sharing to “improve efficiencies in resource usage” and “[make] people more affluent”: its Sharing Economy Research Institute suggests the market value of China’s sharing activity will grow at 40% per year and account for 10% of GDP by 2020 (Yan, 2017). In Latin America, a survey found that Brazil, Mexico, Argentina and Peru are leading the way in sharing initiatives (Inter-American Development Bank, 2016).

Some American cities are using sharing practices to boost inclusivity 🚗

In 2015, Los Angeles launched an electric car sharing programme in disadvantaged communities, bike sharing stations have sprung up in low-income areas of Minneapolis with subsidised pricing systems, and working groups have been set up to explore the potential of the sharing phenomenon in San Francisco, West Hollywood and Denver.

ECONOMIC REASONS AND SOCIAL DRIVERS

What are the drivers of sharing? 💡🌳💰🏙

The economic, social and environmental drivers pushing people to take part in the sharing economy vary between different sociodemographic groups and depend greatly on the type of user and provider in question.

A recent study carried out in Amsterdam revealed that accommodation sharing is fuelled by economic reasons, while social drivers are behind car and food sharing.

Young people and people with low incomes are more motivated by economic reasons, while groups with medium to high incomes and a better education are more motivated by social issues. Furthermore, the study showed that women are more motivated by issues relating to environmental protection than men. (Bocker & Meelen, 2016).

The ubiquity of smartphones, the low cost of sending data, and the high population density in cities are making it easier and easier for us to use sharing platforms.

Moreover, the large quantities of resources concentrated in urban areas means that the ideal conditions are in place to monetise excess goods, boost skills contracting, and to optimise the ratio between supply and demand. With the added issue of the uncertainty surrounding the global pension system, sharing assets is potentially a good way of boosting the income of pensioners and preventing poverty in old age. However, this too could mean that older people may decide to continue living in cities in order to be able to access these resources.

Several countries have now dedicated offices or strategies for promoting sharing. Japan’s Sharing Economy Promotion Office provides information and counselling for companies and municipalities (CIO Japan, 2017). Denmark recently launched its sharing-economy strategy, addressing issues such as rules for unemployment benefits in the context of the sharing economy (Prelsler, 2017).

Other city governments have institutionalized sharing-economy practices through innovation offices (Seoul and Amsterdam), working groups (Vienna), a task force (Denver) or similar institutions dedicated to advocacy, awareness and furthering the agenda of sharing in cities. Many cities are also looking for regulatory solutions to best address their specific social, economic and cultural context.

ABOARD THE SUSTAINABILITY BANDWAGON 

Is shared mobility really a friend of sustainability?🚕🚐🚲🚋

Choosing low-environmental-impact mobility, buying into the culture of recycling, taking more informed decisions, and using more eco-friendly modes of transport… there are plenty of ways to hop aboard the sustainability bandwagon. We’ve had bicycles, electric cars and trains, but now we’re getting to grips with shared mobility, a more recent phenomenon which could make our cities more pleasant places to live in. It represents a new way of getting around, where the idea of owning your own car for your own private use no longer fits.

This eco-friendly, smart approach to shared mobility has the objective of reducing the number of vehicles on the road and easing traffic congestion in our cities, all the while saving us time and cutting harmful CO₂ emissions in our air.

Less stress, cleaner air and more time to enjoy it all – sounds good, right?

Unsurprisingly, the phenomenon is growing fast. According to the second national report on shared mobility, in the three years between 2015 and 2017 the use of shared mobility services (car sharing, bike sharing, scooter sharing, etc.) in Italy alone increased by an average of 17% per year.

There are multiple advantages of the shared mobility model. By increasing the number of people using each vehicle, we can reduce user costs and thus cut the cost of city mobility by up to 50%. On top of that, by reducing the number of cars in circulation, we also have less of a need to use up urban space on car parks, which can be converted into parks, pedestrian walkways and cycle paths.

Sharing mobility and the green revolution: utopia or reality?

Created as an ally of sustainability, with the aim of delivering big benefits for cities and offering valid alternatives to the model of citizens owning and using their own vehicles, shared mobility has – however – had one big downside.

What is it, we hear you ask? The fact that shared mobility has generated previously non-existent demand.

Indeed, a study has shown that around 55% of shared mobility journeys would never have occurred at all had it not been for the existence of these services.

Before the creation of shared mobility, and particularly car sharing, carpooling and ride hailing, many people used public transport, bicycles or simply walked. Yet all of these options are now being abandoned in favour of new shared modes of transport – all of them engine-based.

Using a car is convenient, fast, and undoubtedly a less tiring way of getting around. The result? Congested traffic, slower journeys, delays and more pollution.

In other words, the exact opposite of the desired effect.

Time banks in Barcelona ⏰💃

In Barcelona, the Programme of Time and Caring Economy is running a time bank project in collaboration with local communities and the AssociaciĂł Salut i FamĂ­lia (Health and Family Association).

The project works by people exchanging time to be used for day-to-day activities like providing care for a loved one, reading books to the elderly, helping young students with their homework, taking care of pets and plants, repairing objects, and helping people to go for a walk. Users are able to redeem time given by benefitting from the time of other people.

The city currently has 28 time banks. It’s an initiative that promotes solidarity, reciprocity and cooperation.

  THE HUNT FOR BIG DATA  Sharing economy proving a hit with companies in China  The sharing economy is a phenomenon that has come about as a way of offering a tangible service to consumers, using smart technology to make products and spaces more accessible, and to allowing private citizens willing to share their goods with others to earn extra money. At least that’s how it’s worked everywhere in the world – except China. In China, a country governed according to a radical form of communism, the sharing economy is – paradoxically – a more commercial, consumerist phenomenon. And it’s one that companies love. The sharing economy makes it possible to generate huge revenues and operate strategically, so it’s little wonder that companies are keen not to miss out.   Behind the mask of the sharing economy: the hunt for big data The influx of Chinese companies into the sector has changed the face of the entire sharing economy in the country. More and more companies are taking advantage of the sharing economy trend to grow, claim a bigger market share, and diversify their products and services in order to monopolise their industries. Take the ride-hailing app Didi Chuxing, for example. The company taking on Uber is opening up parallel shared mobility business initiatives in order to boost revenue and increase their bargaining power. Electronics company Jiedian – meanwhile – has launched a shared power bank, installing its smartphone chargers in over one million bars and cafĂ©s in China at a convenient cost to users. But what do these companies get in return? Data, data and more data. Quite simply, big data is the Holy Grail tempting Chinese companies into the sharing economy. By offering clients a plethora of products and services (from umbrellas to basketballs) and launching leasing, sharing and exchange services, companies are easily able to observe and identify users and track their behaviour. So, it might look like nothing more than a shared electrical socket, but it’s actually a way for companies to get their hands on precious information: how much time you spend at a bar or cafĂ©, the type of device you use, how much you use your smartphone… This wealth of information is worth its weight in gold to companies, who use it to get to know their clients better and improve the targeting of their offerings. You thought the sharing economy had freed you from being slaves to possession? No chance – get ready to slap on the handcuffs of big data.

THE SHARING ECONOMY, AFRICAN STYLE

The sharing economy is set to carry Africa into the future 🚀

By now, we have grown used to the sharing economy and the logic behind it. And we’ve almost forgotten about the revolutionary impact of this innovative model.

We share bicycles to allow us to move around our cities with ease. We lease homes from other private citizens to help us travel the world conveniently. We work in shared offices to ensure we fit into the new flexible working phenomenon.

It’s all so… ordinary, right?

Not for less developed markets, it’s not. These places see the sharing economy as their ticket out of the paralysis of the present and towards a more modern future.

Take Africa, for example, a continent where new apps and start-ups are springing up, determined to tackle the real-world needs of the people.

While in the rest of the world it’s about apps that allow us to access car, bike or bus sharing services with a simple click, in Africa one of the most innovative new start-ups is Moovr – an Uber for cows. The business was founded to put lorry drivers in contact with livestock farmers, thus making it easier to transport cows to market for sale. By making the most of this shared transport system, livestock farmers living in remote areas can benefit by sending their livestock together with that of others, sharing costs, and avoiding very long journeys.

Another such brand is Flare, a cloud-based app aiming to coordinate ambulances centrally by emulating the way taxis are organised in Western countries. The overall aim is – of course – to increase the efficiency of the routes taken by emergency services in cities such as Nairobi, which has signed up to the service. Before Flare, there was no coordination to the way ambulances moved around the city – and it could take hours for those in need to get help and yet more time to find a hospital with space.

More projects like these are springing up all the time. Africa is welcoming innovation with open arms, eager as it is to take a big step towards the future.

For example, in Kenya, carriers with empty or unused vehicles are being put into contact with people who need to make a delivery, while in Nigeria work is being done on a tractor-sharing service, and in Lagos an app is set to launch with the aim of coordinating the transport of blood for medical purposes.

Could this be the end of the Third World?

DEMOCRATIC LUXURY  The sharing economy: an enabler of new wealth You’ve heard about democratic luxury, right? Well, what has previously been nothing more than a saying is now coming to life, thanks to the sharing economy. For the average person, the sharing economy is about sharing bicycles, taxis or offices, but for the more well-off among us, it could be their ticket to super-richdom. And here’s why. The sharing economy: bicycle or yacht, it’s about shared consumption In reality, it’s not that hard to see why the sharing economy is helping the wealthy to make the step up the social ladder to the promised land of the super-rich. Uber, Airbnb and other companies that offer shared goods and services may usually be targeted at the middle classes, in order to tap into the mass market, but if they turn their attentions to wealthier people, they could see their profits soar. While we order a delivery using UberEats, somebody else – which a few more zeros on the end of their current account balance – could be booking a day on the water in Dubai with UberYACHT or a return helicopter trip to São Paulo with UberCOPTER. Similarly, while we book a house in Puglia for our July holidays, another user might be reserving a super-apartment in London to stay in during a work trip, or a luxury villa on a Caribbean island for their next holiday. And they just might decide to go by boat, thanks to GetMyBoat – a new company that makes all kinds of luxury vessels available (from superyachts to jet-skis) and operates in over 7,000 places around the world. Beneath the leading players in the sharing economy, there are plenty of new start-ups springing up too, tempted in by the growing demand. Introducing NetJets, the fifth-biggest airline in the world with a fleet of over 700 jets and partnerships with hundreds of airports all over the world. Thanks to NetJets, even the second-tier wealthy can afford to fly on a private jet by simply booking one whenever they need to. The service also offers a super-smart purchasing experience: users can buy company shares in order to receive an allowance of flight hours, or alternatively buy prepaid cards with a total number of trips to use up. How are the super-rich reacting? By making money from it! If you think the super-rich are annoyed by the invasion of nouveau riche, think again. Their desire to maintain a sense of exclusivity and keep up appearances is being cancelled out by the promise of more cash. The truly super-rich – the owners of luxury goods such as private yachts and jets – are able to earn money off them simply by renting them out to those a little further down the money tree. In truth, you would expect nothing less from people who have spent all their lives making money for making money’s sake!