The sharing economy is growing and is now worth an estimated $110 billion. Its impacts are being felt in cities and organisations as they adapt to new opportunities as well as threats. Thousands of people are also finding new ways not just to save money but to engage with their communities and develop income streams, which support more flexible but less certain work patterns.
What is changing?
The sharing economy continues to attract attention as it grows into an ever more significant economic force. Estimates of its scale vary and are, because of the very nature of the sector, difficult to achieve. One estimate put the value of the sector at $110 billion; another puts peer to peer rental at $26 billion. Airbnb, the room share service, is valued at $2.5 billion and has estimated revenues of $623 million in New York alone. Big numbers in anyone’s book.
Several things are driving the growth. The recession focused minds on cost; sharing economy options from rooms to wifi to parking to bikes helped contain costs. More importantly they also provide income streams for many people including the growing band of freelancers/ self-employed who either by choice or necessity are looking for different approaches to work. The growth of smart phones and the greater sense of ‘public trust’ engendered by the popularity of Facebook and other social media provide mechanisms both for booking but also verifying and keeping track if people are not ‘good sharers’. Venture capitalists have added to the mix with major investments.
The scale, potential for disruption and opportunity in almost equal measure and increasing professionalism of the sharing economy – it has just formed its first industry body PEERS – are focusing minds and attention on the wider impacts; not all of it complimentary. For example, critics say that branding it as the sharing economy hides a growing number of increasingly large organisations keen to make money on the back of it, when what they are really doing is enabling renting by another name. Local industries – such as taxi drivers and hoteliers– are beginning to complain at the loss of business, the lack of a level playing field in terms of costs and regulations. True, but the power of branding combined with technology and consumer demand is winning for now.
Cities are beginning to respond and develop clear policies and strategies to encourage the benefits and minimise problems. For example, each of the thousands of people using Airbnb in New York is estimated to spend an average of $880 – but greater clarity is needed about what is a short let, a hotel room etc. A new ‘policy primer’ from Shareable brings together suggested good practice and innovations in policy being implemented in US cities, which support sharing economies. It looks at a wide range of options such as: transportation – giving incentives on parking for car-sharing; food – have a land inventory of possible spaces for urban food growing; housing change zoning categories; use procurement to enable local cooperative ventures.
Elsewhere, Seoul’s Mayor is taking a strategic lead in turning the city into a sharing city; likewise the Mayor of San Francisco. In Seoul, they are vetting and endorsing key sharing service operators; providing investment and subsidies for start-ups; creating publicity and running an international conference. But the private sector is less well developed here than in San Francisco where it takes the lead.
And we probably ‘ain’t seen nothing yet’. Zipcar has estimated that for each of its shared cars 15 come off the road. When fleets of shared driverless cars really begin to take hold, which wold have the added benefit of coming to you and dropping you off – and many consumers are saying they would consider using them – the impacts could be far higher. The insurance industry, the car makers, public transport, taxi-drivers and the parking sector will all be significantly affected, and need to start looking at the impacts soon. If co-housing and shared equipment widened to items used more regularly than hedge trimmers or drills, such as washing machines, reduced sales or larger scale equipment may result.
And the sharing economy will also benefit public services. Many older people have gardens they find difficult to maintain, but are also lonely and have little access to fresh food. Growing veg in older people’s gardens could bring them company, greater contact in the community, improved diets and a bit of income.
We first talked about what is now known as the sharing economy in 2007 and 2009 – we called it usership, as opposed to ownership. We got the name wrong, but the trend right. The sharing economy is set to grow, and cities and companies will need to take stock; they will also need to take a more systems view of the options and benefits, develop more open and collaborative approaches to working if they are to benefit from the growing potential of the sharing economy, and ride its disruptive wave.
If you would like a review of how the sharing economy might develop and what it mean for your organisation, please contact us.