HERE IS WHAT YOU NEED TO KNOW ABOUT THE SHARING ECONOMY
home by only downloading their app. Through Upwork one can easily hire freelancers specialized across multiple fields.
And if you take a close look at these companies, you will notice that they operate on a similar economic model which is called the sharing economy, often also referred to as the peer-to-peer economy, collaborative economy, collaborative consumption and gig economy.
These companies including freelancers and outsource organizations are recognized to share their resources, skills and services via internet to meet the growing customer needs.
So what exactly is the sharing economy? How does it benefit organizations? What fuels the sharing economy?
Let’s find out.
What is the sharing economy?
The sharing economy primarily revolves around utilizing underused assets, resources and services by sharing them with other companies or individuals. As defined by Investopedia, sharing economy is “economic model in which individuals are able to borrow or rent assets owned by someone else. The sharing economy model is most likely to be used when the price of a particular asset is high and the asset is not fully utilized all the time.”
Thus it mainly emphasizes on making the most out of the resources around you to minimize their wastage. This economic model was introduced in the mid 2000’s. Thereafter various technological advancements, easy access the internet and the wide collection of information available online made it possible for people to exchange goods and services instantly using tools like GPS tracking systems and social media.
What makes the sharing economy successful?
- Excess Capacity
How does it benefit organization and the users?
This type of economic system can benefit the supplier as well as the user. Meaning, while suppliers are given the chance to earn from their underused resources, equipment, goods and services, users are given access to these resources at a lower cost.
Consider the role of a freelancer. They offer their skills and expertise at a lower cost in areas which companies aren’t specialized in. Thus, while the supplier (freelancer) obtains a smaller fee out of it, the user (the company) is able to accomplish minute tasks at a minimum cost.
Imagine having an empty space/room in your office. Having underused space or equipment in an organization is a cost. But by renting this place out for entrepreneurs or even a separate company, you are able to utilize your space effectively while also generating revenues. And, at the same time, these external parties are able to use your space at a lower cost.
Trust is the sharing economy’s currency. With resources and services being shared between two parties via the internet, the supplier should be able to trust the receiver to pay on time and the latter should be able to trust the supplier to deliver quality products and services. Trust and transparency are crucial for AirBnB, which connects property suppliers with renters looking for short-term rent.
For small business –
Based on what it offers, the sharing economy can be highly advantageous for smaller businesses. This system provides small businesses to make use of their underused resources to generate additional income for the company. One of the significant features of the sharing economy as stated by Bplans.com, is the lack of corporate influence. So emerging businesses are able to help each other by sharing assets they already possess.
The present and the future.
The ability to share, facilitated by the numerous advancements of technology has made organizations around the globe like BMW to encourage and empower collaborating within their organizations. Companies are now embracing this system to discover lucrative opportunities.
Some of the leading giants in the current sharing economy include Uber, Airbnb, Upwork.com and etc. In Sri Lanka, Pickme is a popular app that helps users to easily book cabs and three wheelers by just downloading the app. This sharing economy firm has been able to earn rs750 million valuation within the three months of its launch. With its increasing demand, Pickme now has over 2,000 vehicles – 60% of which have been tuk tuks registered.
According to statistics, in San Francisco, a person who rents out their homes makes $9,300 for an average 58 nights a year. Also, it is shown that Americans, who make money from performing tasks on labour platforms such as Uber and TaskRabbit, a marketplace for outsourcing errands, earn an average of $533 (£373) extra each month. Additionally, the European collaborative market gave rise to €27.9bn worth of transactions between May 2015 and May 2016.
“IN 2030, if we need a ball gown, a grandparent to babysit our kids or a screwdriver to repair damage at home, we’ll simply go online, pay a small fee and borrow one.”
With the rapid development in technology, such as, for example, the Forbes mentioned Blockchain, which will facilitate the way we share wealth, we can safely assume that sharing economy is here to stay. Through innovative ways it has enabled the most efficient sharing of resources between small and large businesses as well as individuals. As such, it is no wonder, that it is estimated to grow by $335 billion by 2025.