If I asked you “how well sharing economies are really doing?”, would you know ?
Obviously, unless you have lived under a rock, you know that something is up. You might have used a bike-sharing service to get around. You might have the Uber app on your phone. You have seen the staggering business figures. You have learned how traditional businesses are fighting to stop for consumers from slipping away. You have probably even seen the quote by TechCrunch that went viral in 2015, stating that: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
Indeed, something interesting is happening. Sharing economies is no longer a passing trend but a transformation on how people travel, finance, employ, inform and entertain themselves. Sharing economies have been estimated to increase global revenues from $15 billion in 2015 to around $335 billion by 2025 (PwC, 2015).
When breaking down the facts behind these figures, however, it is easy to detect that there still is a long road to walk until its full potential is even close to being reached. Currently, despite all the hype, they comprise a relatively small portion of the overall economy. For example, even the most optimistic estimates state that less than 10% of all accommodation bookings in the US are through sharing platforms (US Commerce Department, 2016). Furthermore, the statistics are heavily built on a few market giants: if you were to remove the consumers whose sharing economy experience is limited to for example Airbnb, the sharer numbers would drop down dramatically.
So why are we not there yet? As a consumer (and a person who always enjoys a little business disruption), I think sharing economies are extremely interesting phenomenon and entail a massive opportunity in terms of growth, employment, sustainability and social inclusion among other things. But so far we have failed to see these benefits being delivered. From what I have learned and witnessed, I believe there are essentially three major obstacles that must be addressed before they can become mainstream.
- Hipsters and millennials are not enough. Pew Research Center survey (2016) found that average sharers are likely to be young, urban adults who have a college degree and a higher income. These urban millennials are driven by their values: sharing economies allows them to have less commitments, consume smarter and be more sustainable. Unfortunately, these values are generally not priorities with many other demographic groups: for example, older generations tend to prefer owning things than renting or lending them, and think less about sustainability issues. At some point businesses will have to come up with other incentives to attract new users. Reaching larger audiences in all demographics is a massive opportunity for growth that no company - other than Airbnb to some extent - has succeeded in harnessing.
- Walking the legal tightrope is a headache. To be honest, the legislation around shared economies is a mess. Just look at Uber battling with court appeals and protests. And still, even though it has now been declared illegal in some countries (e.g. France, Italy, Spain and Germany), it continues to attract users without legal support or obligations. Policies continue to lag behind technological and cultural development, causing uncertainty, risks, confusion and stigma on both service providers and consumers. Forbidding all sharing economies is not realistic – they are here to stay – so the pressure is on policymakers to find a way to subject the new business models to legal obligations such as taxes, disability rules, worker classification, and consumer safety. The European pioneer here is Estonia, the first European country that chose to embrace ride-sharing services with legal and regulatory framework in February 2016.
- Critical mass is not seeing beyond cars and apartments. In order for sharing economies to scale up and diversify, consumers need to expand their horizon beyond the big names. There is so much more that we could share, but don’t. We already have a lot of ideas and start-ups trying to become the next Uber or Airbnb, with which you can share for example someone’s:
- parking space (Justpark)
- pet (BorrowMyDoggy)
- house tools (Streetbank)
- private flights (Skyuber)
- walking tour by locals (Vayable)
- sports equipment (Spinlister)
- wifi password (Fon)
- evening gown (RentTheRunway)
Just looking at the list you can’t help but think that we have barely seen the beginning of this new form of economy. It will be interesting to see what idea is the next one to take off in a big way.
So yes, sharing economies are changing the game, but how much and when – that remains to be seen. Businesses will need to tackle these challenges in order to become mainstream and to make sharing a standard way to consume. Technology is developing fast, but legal and cultural changes take more time.
Personally I am convinced that while the momentum and user numbers continue to increase, sooner or later the glass ceiling on sharing economies will break. However, we are still several steps away from this golden era. The change is coming, but don’t buy into the hype – we really are not there yet.
Relevant themes:
Sustainable innovation
Relevant tags: sharing economies, Social innovation, Technological innovation, Sustainability, Sustainable lifestyles, Circular economy
