The sharing economy is a model which has been examined, vilified, championed and questioned time and time again. Most people either like it, hate it or have no idea what it is. No matter which side of the fence you’re on (or if you didn’t know the fence existed in the first place), you’re underestimating the power of peer-to-peer. Let’s start at the beginning...
What is the Sharing Economy?
The Sharing Economy is when two individuals take part in a transaction, usually online, of goods or service. This can be anything from paying a stranger to drive you through Lyft, sleeping at someone else’s house through CouchSurfing, or selling your unwanted travel plans through TransferTravel. The way you advertise or buy these goods or services is either through specific digital platforms like the ones just mentioned, or generalised marketplaces like eBay.
Unless you’ve been under a rock for the past ten years, you’ve probably heard of these businesses before. The title of this article doesn’t apply to you then, right? Wrong.
What do you mean, I’m not paying “enough” attention?
Just because you know what eBay is, it doesn’t mean you’re well-versed in how the sharing economy is going to change the way you buy over the next decade.
Let’s start at the beginning: which website is your go-to when you need to book a hotel room, for instance? Probably one of the big travel aggregators like Booking.com. Where will you buy new shoes from Nike or Adidas? The Nike or Adidas websites. For the most part, people are more inclined to buy from a recognised name. It makes sense, though, when you consider how peer-to-peer buying and selling often takes place.
Unregulated sites like Facebook and Craigslist create distrust amongst digital transactions without the protection of a big corporation. For instance, if you buy a sofa from a stranger on Facebook or Craigslist, the sofa could be delivered and look nothing like the pictures. You might transfer them the money and never get a sofa at all. On the other side of the transaction, you might be trying to sell your sofa online, but the person never turns up, or they take the sofa and say they’ll pay you but they never do. One bad experience like this could lead you to think that the peer-to-peer transactions online are riddled with risks.
In fact, there is running joke on social media comparing clothes that are advertised on eBay and the actual product someone receives. The disparity between the image and the reality is so bad that you have to laugh, otherwise you’d dwell on the money you wasted. You can’t be blamed for your distrust of marketplaces when it’s almost characteristic of them to be so unreliable.
Surely if they’re so notoriously false, it makes more sense to make a purchase with a brand you (and everyone else) knows, right?
Actually, no. Dedicated platforms like Lyft, CouchSurfing and TransferTravel make sure that what you pay for is exactly what you receive. This is because they’re part of the current trajectory the sharing economy is on and realise that it’s going to be an important part of how e-commerce will expand.
The numbers speak for themselves. TransferTravel, which is only two years old, has already created a community of 150,000 users and it’s on track for explosive growth in 2019. CouchSurfing has connected 14 million people in more than 200,000 cities. In 2018, Lyft reported over 23 million users, completing over 1 million rides per day. Revenue for the company increased by 400% from $200 million to $1 billion between 2015 and 2017. Peer-to-peer models are doing more than just functioning - they’re thriving, and they’re presenting a genuine problem to the corporations out there.
Why should I care?
This is a valid question. Even if they are successful at what they do, why should you bother choosing businesses in the sharing economy over traditional businesses?
To begin with, you’re already participating in it without realising.
At some point or another in the past, you’ll have used a business which is part of the sharing economy. At some point or another in the future, you will need to use one. Every time you do so, it’s seen as a vote of confidence through your money, thus empowering the platforms in the sharing economy and on a smaller scale, empowering the person at the other end of the transaction.
Due to the impersonal nature of many companies nowadays, using such a platform which allows you to reach out to another person is almost refreshing. Digitisation of communication is not necessarily as bad as the sensationalist headlines claim if it allows small scale transactions take place on a global scale.
Many of these traditional businesses are strict in their regulation of price and customer rights. Alternatively, the sharing economy is much more flexible by nature. For instance, there may be a T-shirt you want which costs $30 on a website, no matter what. However, you would potentially be able to make an offer or bid for it on another website and get it for half the price. A $30 T-shirt is nothing to a large manufacturer making thousands of them every day, but to a budding designer on Etsy, it has a much bigger personal impact.
Another example is when you go to book a hotel room from an online travel agent (OTA). They often only offer non-refundable options which means that, of the 250,000 hotel rooms which are pre-paid for and never used, all of the money is pocketed by the OTA or the hotel. However, you can buy people’s unwanted non-refundable hotel reservations online to make sure they get some money back on the trip they couldn’t go on, whilst also getting a good deal on your booking too.
Helping someone out by buying something you need from them is an easy step to make, and gives the individual autonomy in a seemingly corporate world.
Big corporations are getting bigger - it’s time to diversify the economic power. The most obvious purchasing option right now might be the household name you’re familiar with, but the future is shared.
How can I participate?
Money is often considered a substitute for votes of confidence. View your $10 bill as a voting slip and where you choose to spend it is an indicator of the kinds of companies you like. By choosing to spend money on a peer-to-peer platform instead of a B2C company, you’re putting your money where your values are.
If it’s financially possible for you to do so, then actively choose to support businesses which support their users. The businesses which champion their customers need to grow in order to keep offering people alternatives to the one-size-fits-all approach of the corporations.
Even if you decide not to proactively buy or sell with one of the many sharing economy platforms, the numbers indicate to a future where peer-to-peer will be the norm, where both the economic and personal benefits will challenge those of the big brands.