If you haven’t yet heard of the Sharing Economy, it’s time to come out from under your rock! With massive investor valuations of young companies, flashy TV ad campaigns, and coverage on major media outlets, the Sharing Economy has been used as an umbrella term and is becoming a bit of a buzzword. However, it is important to understand the differences between various peer-to-peer models and where you fit into the mix as the supplier and/or consumer.
Rather than reading another article titled “why the term ‘sharing economy’ needs to die”, we want to shed light on the common terms and examples of companies using various models.
Although the cornerstone of the of the Sharing Economy model is a monetary transaction, we cannot overlook the altruism of Sharing and its implications on the world. At the end of the day, the Sharing Economy would not work without a monetary exchange. Peer-to-peer platforms initially gained traction because they offered alternative money-making opportunities. On average, a Lyft driver makes $9,000 per year, an Airbnb host makes $9,300 per year, and a Skillshare instructor brings in $24,000 per year. This supplemental income can make a huge difference in someone’s life; whether they are saving, reinvesting into their shared asset, or spending that money, it is almost always injected right back into the local economy.
Aside from the money, there are other drivers motivating collaborative consumption. It is no secret that we are in the Golden Age of mobile technology whereby smartphones and tablets are ubiquitous and engagement is unprecedented. “In fact, you’re more likely to be reading this article on a phone or tablet than you are a laptop or desktop computer, as over 50% of internet traffic now comes from mobile devices. According to TechCrunch, over 80% of all adults who use the internet also own a smartphone”1. The proliferation of mobile devices enables consumers to connect with providers of goods and services on the fly using their fancy pocket computers.
A shift in socioeconomic mindset is also fueling growth. The traditional portrait of success, the white picket fence with a car in the driveway, is no longer as highly revered. Access is the new ownership. So instead of owning a car, home, boat, tool, one can simply pay to access the asset. This often cuts the cost of using the asset over the long run and gives the individual freedom of location, and allows them to cut down their overhead and be more financially agile.
As Millennials rise up, they represent a drastically different workforce and consumer. The flexibility of the “be your own boss” mentality is very attractive as well as the Millennial attachment to and understanding of the Internet. We are the first generation of our kind, having grown up with technology makes us digital natives, and have played a major role in the social network revolution. The interconnectedness of our society and desire for community empowers the Sharing Economy to take activities, interactions, and transactions that are traditionally offline, online. As Brian Chesky, founder of Airbnb, says, “it’s the internet coming into your neighborhood.”
What Is Being Shared and Who are the Pioneers?
More peer-to-peer platforms are popping up every day, with over 7,500 companies launched globally. Whether they be location-based or for a niche customer (i.e. Shuddle) these startups are bridging the gap between a consumer’s needs and desires with on-demand service or good providers.
Just one year ago, the Sharing Economy and its (then) five sectors were valued at $15 billion, but it is projected to reach $335 billion by 2025. Investors have picked up on these emerging trends and have been dumping money into startups at a rate of $28 million a day totalling $12 billion in worldwide investments! With so much activity and attention, the peer-to-peer space shows no sign of slowing down.
Now, it’s not just investors who are crashing the party, more consumers want to participate as well:
- 40% of consumers say they will attempt new types of Sharing
- Up to 50% of Millennials intend to engage in more Sharing in the coming year
- 91% of sharers say they will recommend Sharing services via social media
- 91% of adults intend to continue Sharing in future
- 60% of adults in the UK say they’ll swap goods in the future
Ridesharing: Uber, Lyft, and BlaBlaCar
Car Rental: ZipCar, GetAround, and Turo (formerly RelayRides)
Boat Rental: Boatbound
Living Space: Airbnb, HomeAway, Couchsurfing.
Workspace: PivotDesk, LiquidSpace and WeWork.
Event and Creative Space: Peerspace, Breather.
Skills and Services
Services: TaskRabbit, Thumbtack, and Handy (formerly HandyBook).
Skills: UpWork, Fiverr, and Elance
Tools and Equipment: Getable
Electronics, Sporting Goods, and More: Peerby and Spinlister
Local and Small Business: DoorDash, Postmates
Food Delivery: GrubHub, Seamless, and Instacart (groceries)
Meal and Ingredient Delivery: BlueApron, Sprig, and Munchery
Alcohol Delivery: Drizly