If you’ve got the option to rent out something for a much cheaper price, but from a stranger online, would you do so?
The sharing economy currently operates in areas including ; Hospitality & Dining, Automotive & Transportation, Retail & Consumer Goods and Media & Entertainment…..As a result, will it be the next big thing? (PWC, 2015).
Welcome all readers to today’s post.
The internet, is a powerful space in which basically everything is for hire. The ‘sharing economy’ is starting to rise, with expanding networks of buyers going on the search for certain products and services, and sellers who have the potential to deliver what these buyers need. A concept in which individuals and groups are able to earn some income through advertising their underused assets. Typically, the sharing economy is commonly used where individuals are able to rent out another individual’s assets. Additionally, the sharing economy may be referred to as peer to peer exchange. (The Economist, 2013).
But what’s the most important part about this concept? It’s simply about the fact that transactions are dealt directly by one individual to another, via the internet, without an intermediary sitting in-between to finish off the deal. The direct exchange of goods and services is established among the individuals themselves. As a result, the concern of this concept arises here. Where businesses are often involved with local, government, federal or state authorities/legislation, the sharing economy is typically run by unlicensed individuals offering rental services. Due to this reason, prices are often charged at a lower rate with the use of peer to peer exchange services. (Investopedia, 2016)
Now take Uber and AirBnb, the most popular and well-known examples of what the sharing economy basically is. (Walsh, 2014).
The founders of AirBnb, in hopes to earn some extra cash to pay for their rent had built a website, then advertised that they were offering a place for individuals to stay in their apartment, sleeping on an air mattress, with a home cooked breakfast. From that moment, AirBnb came about. (Sacks, 2011).
In 2011, AirBnB was present in more than 8,000 cities that rented out cars, houses, yachts, castles and even igloos. AirBnB on average serves 425,000 guests nightly, which is nearly 22% more than Hilton worldwide. This equates to AirBnB serving 155 million guests on an annual basis where as Hilton Worldwide had only served a number of 127 million guests in 2014. Take Uber, who has operated for five years, was valued at $41.2 billion in February 2015. (PWC, 2015).
As a result, we can see the rise and increased use with the concept of the sharing economy.
Now, If we got bored of reading this blog post and just scrolled all the way to the here, then I ask you to view this short video on the sharing economy entitled “Spotlight on the sharing economy”
However, a potential main challenge with the sharing economy is that there needs to be a supply and demand. Both sides need to be present in order for this peer to peer exchange to continue and occur. It would be useless if individuals were looking for a place to stay, however there were no places available as no one was offering.
Additionally, trust becomes a major concern within this concept. How honest are the renter or owner? You’ve got 69% of users saying that they are concerned about placing trust in using this space. It’s an issue that has been raised for this model. Next, how consistent will the level of quality be? You might have had a successful transaction with one individual, but with the next, it might’ve not been as great. With 73% of users saying that they are concerned with the level of quality. (Sacks, 2011).
However, despite such challenges, these are only considered as speed bumps, which we will be able to overcome them.
So, will ‘The Sharing Economy’ be the next big thing? What are your thoughts? Have you ever tried this concept before? Why or why not? Share your ideas with me in the comment section below, I’d love to hear your experiences. Image Source
Also, just before we leave, I want to quickly share a reading with you all. Those who are keen on wanting to know more about ‘The Sharing Economy’, please have a read of this paper.
Additionally, I want to introduce to you an extra few companies that also operate in the sharing economy. And if you’re keen, do let me know if you’ve ever heard of them, or if you know of any other sharing economies yourself that I haven’t mentioned, please feel free to share them with me as well.
In the mean time, thanks for your time folks,
Until next time,