Factors like growing population, steep economic condition, expensive, and scarcity of natural/other resources have made people realize that they should lower the consumption. As the wave of realization started spreading, it has attracted the attention of young startups and entrepreneurs. They saw it as an opportunity for growth and came up with a different solution.
You can go to work by riding a bicycle or Uber. You can order the food from any of the online delivery services relevant to your price range. Companies like Uber and Airbnb have dominated the world’s business economy through a thunderstorm. They’ve also created a culture of sharing economy. Now the question is what the sharing economy really is about, we’ll discuss in detail today.
What is the Sharing Economy?
The sharing economy is the socio-economic system through which you share assets, resources and time among people. According to an estimate, the growth of sharing economy would reach approximately 300 billion US dollars by the end of 2025.
Different products, services, and applications use the term umbrella instead of sharing economy. Professor Attila Marton at Copenhagen Business School divided the sharing economy into three main types;
- Gift Giving. You give something for free with some attached expectations like; Napster, birthday cake, and etc.
- Real Sharing. You give something for free without any expectations like Wikipedia or sharing of food among family members.
- Pseudo Sharing. You offer something with the purpose of earning money through it like; monetization, Uber, Airbnb.
How Sharing Economy Works
Just like in the pre-schools, teachers tell us sharing is the glue that holds all of us together. It follows the principle of letting someone borrow your thing and take a turn. It creates a culture of generosity, compassion, and trust among people. The sharing economy follows the same code of consuming the resources collaboratively.
According to the traditional and conventional systems of the capitalist economy, you have to own things in order to use them. For instance, you have to own a car if you want to visit the store, shopping mall, touring, or airport. You have to buy gardening tools if you want to trim your garden. They call it personal consumption.
Collaborative Consumption is when some people own the product/service, but they allow other people to use it for a certain amount of money. In other words, we can call it monetized sharing.
For instance, you have a car and you’re going to visit someplace with friends this weekend. If you don’t use the car, its value would depreciate over time. Why not use it and earn some money from it.
Benefits of Sharing Economy Model
Some of the benefits of a sharing economy are as follows;
The thing about the sharing economy that people really like and drawn into is the flexibility that you don’t need to own certain things. You can use them for traveling, transport, or sharing a room without owning them.
For instance, it has made it much easier to work in the era of the digital economy. You can share food by ordering a cheap delivery service, share transport, and share bicycle racks in Barcelona. Platforms like Blablacare and Amovens allow sharing long-distance rides.
German companies like drivenow and car2go offer car-sharing services all over Europe.
Technology and the digital age have made it much easier to do everything. You just have to download the application on your mobile, run it, and find your nearest mode of transportation, and you’re good to go.
If you don’t like the traditional work environment of offices, then a sharing economy would be good for you. It doesn’t focus on the traditional environment of offices, where you don’t have to worry about the dressing codes and moving protocol.
Cowork spacing environment is a very good example where different people share the same space for a certain amount of money. Freelancing is even one step ahead of where you don’t be present at one workspace, you can work from anywhere.
Use of Resources
The sharing economy allows you to rent your unutilized resources and earn some extra money from them. For instance, Airbnb rents outhouses, room, garage, and even the leftover food in the fridge. It helps you to reduce waste by reselling and reusing your resources, instead of just throwing it away.
Spanish platforms like Vibbo and Wallapop provide you the option to resell consumer products. Eatwith and leftoverswap provide you the option to resell, share, and swap your food and groceries with others. Lendi helps you lend and share your resources with neighbors. So that you can save your time, money, and better utilize resources.
The sharing economy brings people together and it creates an atmosphere of trust and collaboration. Reviews, stars, and comments play a key role in the sharing platforms because it creates an atmosphere of transparency and honesty in the sharing economy sector. Badi, a platform Barcelona, makes the city accessible to everyone by connecting individuals with shared spaces.
The most obvious advantage of the sharing economy is that people get financial benefits out of it. According to a report conducted by Deloitte on the impact of Airbnb, people save approximately $88 by using the shared accommodation of Airbnb.
Examples of Sharing Economy
Freelancing platforms like Upwork, Taskrabbit, and care.com help the freelancers by connecting them with the companies that are hiring. Care.com offers the service of helping both elderly people and children.
Cowork spacing companies like WeWork provides the service of shared workspaces across the world. Young entrepreneurs, freelancers, and startups companies that don’t have to suffice capital for traditional offices. Shared cowork spacing is a great option for them, it provides mail handling, coffee, tea, internet connections, and a working environment.
Peer-to-Peer platforms like lending clubs provide the service to lend money to other people at a much lower interest rate than banks and credit card companies. It works for both parties, the borrower gets money and the lender earns some interest on his money.
Fashion web platforms like thredUp and Poshmark give you the option to resell the clothes that you’ve used gently. Le Tote gives an option to its subscribers to borrow your clothes and return the same.
FAQs About Sharing Economy
Here are some of the frequently asked questions;
Is sharing Economy Good?
Yes, absolutely. A sharing economy is perfectly good for the people.
Is the Sharing Economy Sustainable?
Yes, it’s sustainable in the long term because many entrepreneurs and startups are working on different ideas on how to clean up the environment.
Reasons behind the quick Growth of Sharing Economy
There are many reasons behind the quick growth of the sharing economy, some of them are; it’s cheaper and financially good for the people, waste reduction, cleanliness of the environment, and bring people together by creating a culture of sharing.
Future of Sharing Economy
Our future needs a sharing economy more than ever because it would help us to diversify data and resources. Perhaps you would have also noticed that some of the big platforms are updating their offers. It’s highly probable that we’ll see more sharing platforms in the new areas.
The energy sector also has a scope of sharing. Microgrids would provide access to renewable energy, the national or regional grid would share it between users and sellers.
After a detailed study of the sharing economy, we have realized that it is good for society, economy, and the environment as well. It’s because we are living at a time where living cost is increasing, the sharing economy helps us to consume collaboratively.