Sharing Economy - A buzzword or a true reality?

12:39 PM


It’s already a while now, that I continue to hear this pair of words: Sharing Economy. No matter where I go or whom I talk with, it keeps repeating in my ears on and on. Some even say that it is as dramatic as the Industrial Revolution.
Since I consider myself as someone that takes an active part in this “Sharing Economy World” I decided to pause for a minute and try to understand exactly what do these two words mean while combined together and what are the major forces that are driving this phenomena.

After doing some research regarding the origins of this, it turns out that there are several definitions and uses of this term. While there are some differences in these definitions, they are all referring to the fact that in the Sharing Economy the power is shifting from main centralized institutions to individuals and small communities.

Among those definitions, the two definitions that were the best in my view are by Rachel Botsman (the author of the influential book “What’s Mine is Yours: How Collaborative Consumption Is Changing The Way We Live”) and by the Macmillan Dictionary.
Botsman's definition is:
“An economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary benefits”.
Rachel Botsman also referred to a common confusion and misuse of this term with the following “family related” terms:  “peer economy,” “collaborative economy” and “collaborative consumption”.
In the Macmillan dictionary it is defined as:
“An economic system based on the idea that different people or organizations share the creation and use of resources”

So now, after agreeing on the definition of “Sharing Economy” we can move ahead  and analyze what are the powers that are driving this phenomena/movement/model and if it is indeed such a big life changing revolution.

I decided to do this by analyzing examples of successful sites in this area and deriving the conclusions along the way.

I believe one can say without much doubt that amongst numerous sites in this field, the most known site, the one that really raised the Sharing Economy issue to the headlines is Airbnb. This houses & flats rental site that started as a small initiative by 2 students from San Francisco to rent their flat and generate a small extra income, was the first to reach high volumes and to excite the imagination of thousands of entrepreneurs around the world: how can they become “the Airbnb for…”

So what did Airbnb have that no other site before it had?

The simple answer might be: nothing: people were offering apartments for short time rent periods since ever and there were quite a few sites in this field before Airbnb showed up.
This is of course a wrong answer, a more suitable answer would be: everything!
They recognized the need; they had the concept, the technology, and the vision how to leverage this opportunity.

And these are the basic powers that are driving this economic model. Let us get into the details of every component.


The Need:
The foundation for every initiative, especially when there are 2 sides: the client and the seller.
And the need was there for Airbnb: on one side travelers looking for a decent cheaper accommodation place and on the other side home/flat owners struggling to pay their mortgage and looking for additional income source.
And the need was there for numerous businesses in this field:
For TaskRabbit there are people without the skills to execute various tasks and there are people living next to them that are looking for extra salary channels.
For lyft there are people that want to cut transportation costs and there are people that are driving their way and need more money to pay for the increasing fuel costs.
And so on...

The Concept:
This one is a key factor!
The idea that strangers will not only trust each other enough to use and keep the other side assets but that these stranger will also want to enjoy each other company and will actually look for this act of socializing.
This is true for Airbnb as well as for most Sharing Economy initiatives like LocalYoo that enables travelers to connect with local experts, EatWith that let you meet new people while dining at their homes, Couchsurfing that allows you to stay at stranger’s houses and many others...

The Technology:
Oh, the technology.
People are trading with others pretty much from day one. The internet spread and the technologies that generated this spread are the ones that enabled the leap forward for Sharing Economy, turning local initiatives into worldwide businesses.
The technology enabled people from one side of the world exposure to offering by people from the other side of it. Technology reduced transaction costs, made sharing assets cheaper, safer and easier than ever and therefore possible on a much larger scale for more and more people.

The Vision:
The fuel of the process.
There are many uncertainties in this emerging world, So many, that only a clear practical vision can walk you through them: A vision of generating a new way of commerce that will change not only the way people consume things but also the way they behave and think. A vision about a future world in which the power is shifting from the big enterprises to us, the real people.  A world where each individual can utilize his skills and gain control of his career and destiny.
A great example of a company that managed to implement such vision is fiverr. Their vision that was previously considered imaginary recently became a reality: Tens of thousands of people are selling niche skills and products through their website and make nice income of it.

The Opportunity:
Now is the right time.
Is it just me or you also share the feeling that making a decent living gets harder every year?
Did you know that some researchers think that by 2020 30-50% of Americans will work as freelancers?
I encountered many such questions lately and it seems to me that all the factors have just matured and aligned together to declare the following years as the Sharing Economy years. Many individuals and business already recognized that now is the time to utilize your skills and assets and go forward with your vision.

After reviewing all the above I think we can conclude that Sharing Economy is a real, live and kicking revolution and not just a buzzword. A nice perspective how to think about this may be the beginning of online shopping: 10-15 years ago people were afraid to purchase things online. It wasn’t obvious as today that buying online from sites like Amazon or eBay would become common practice. But with time, people made more and more successful transactions and gained confidence. The same applies for Sharing Economy: After one good experience with companies like lyft, fiverr, LocalYoo and many others, you realize that this model is feasible and can be used and duplicated to many other aspects of life.

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