The Mantra of the Sharing Economy

"The share economy blows up the industrial model of companies owning and people consuming.” — Forbes, Jan.

Introduction

Modern societies are characterized by the huge consumption and the complexity of the tax regimes, directly impacting the financial resources of individuals and families. All over the world, people in their struggle to boost their finances, reduce costs and waste management, has started to share goods and services between them. Especially, in the last two decades, it has been registered a considerable increase in collaboration, as a result of the benefits emerging from these interactions.

Nowadays, we live in an era where access takes precedence over ownership. Borrow, trade, rent, utilise reign in the heart of the sharing economy, enabled and facilitated by numerous digital platforms powered by technology. Hence, sharing has become more preferable experience than owning.

Sharing economy emerged on the U.S. scene in 2008, it was born out of technological possibility and economic necessity (Schor & Cansoy, 2019). It is a concept used to describe an economic model based on sharing, swapping, bartering, trading or renting access to products as opposed to ownership (Botsman & Rogers, 2010). Also, sharing economy is defined as the way of sweating underutilized assets, by building communities around them and turning consumers into providers. It connects people to their communities, saves money, and is environmentally friendly.

Figure 1. Collaborative Consumption, Botsman, R. & Rogers, R., 2021

As Botsman sees it, this is nothing less than a social revolution. “We are relearning how to create value out of shared and open resources in ways that balance personal self-interest with the good of the larger community,” she says. “For the first time in history, the age of networks and mobile devices has created the efficiency and social glue to create innovative solutions, enabling the sharing and exchange of assets, from cars, to bikes, to skills to spare space.”

The sharing economy registered not only huge increase in size, but also, the increasing pace is extremely fast (Luo, 2023). According to Proficient Market Insights, the market size of the sharing economy was $261294.51 million in 2024 and the market is projected to reach 1825853.50 by 2031, recording a CAGR (Compound Annual Growth Rate) of 32.01% during the forecast period.

“All over the world, people are renting rooms from strangers through Airbnb, outsourcing grocery trips to TaskRabbits, and getting across town with ride-sharing service BlaBlaCar. These people are participating in the sharing economy, an estimated $26 billion sector that has rapidly grown from a niche market to a mainstream social movement” (Finley, 2013). In the sharing economy – also referred to as “collaborative consumption” – consumers are empowered to transact directly with one another, a disruptive collective behavior that is redefining traditional market relationships and impacting previously ubiquitous business models of production, distribution, and consumption. Rachel Botsman, pioneering author and advocate at the helm of the movement, argues that the sharing economy isn’t a transitory trend, but rather “a powerful cultural and economic force reinventing not just what we consume, but how we consume,” an effective transition from a culture of “me” to a culture of “we” (Botsman & Rogers, 2010).

Figure 2. Sharing Economy Companies, Future Lab, 2018

Social drivers

Continuously, population and urbanization are increasing, as older people are living longer, and as younger cohorts are flourishing. On the other hand, there is a rapid increase in the consumption of the natural resources (land, water) across the world. As a result of the unprecedented consumption, people are striving to adopt some other alternative consumer behaviour that will increase efficiency and reduce waste. So, in order to achieve sustainability and prosperity in the world, people will need to extend the sharing of the resources with each other. Hence, the urban populations will have the opportunity to grasp the largest benefits of sharing, in regard to the number of neighbouring consumers they have.

It is projected that 75 percent of the population will live in the world’s cities by 2050 (Hejne, 2011); "an indicator for the creation of a successful marketplace". Because of the complexity of these phenomena, parties within the sharing economy, not only transact but enter in rich social experiences. The collaborative consumption enables formation and fosters the connection of people with neighbours and local communities across the world.

Economic drivers

The global financial crisis disrupted the traditional models, significantly affecting the consumer behaviour and provoked a value shift in which people started to assess what

satisfies them and how to best satisfy their wants and needs. After the recession, P2P (peer-to-peer) firms evolved as concrete solution to both economic crisis and a larger psychological value shift. Enacted by the consumer distrust and financial strain, into surface came out two economic themes: the power of idling capacity and ideological focus on access over ownership. In this sense, consumers have realized that they are surrounded by idle value such as: skills, time, land, equipment, and spaces, stuff – which in the meantime can be shared and monetized. Respectively, parties in the sharing economy can maximize yield management of what they already possess. (Gansky, 2010).

Furthermore, in the sharing economy based on the principle of idling capacity, importance is given to access over ownership. For example, cars are expensive, underutilized and ubiquitous assets. In this case, car owners benefit from sharing or not owning at all, saving money on insurance, maintenance and other expenses. So, both parties in the transaction benefit from the access to goods-idling capacity.

Figure 3. Driving Force behind Shared Economy, Geospatial World, n.d

Technological drivers

The rising sharing economy has been empowered and facilitated largely by the technological advancements in every aspect of it. With 33 percent of the world’s population connected to the Internet and a projected 70 percent of the world’s literate population owning a Smartphone within four years, society is connected at an extraordinary magnitude and depth (Suster, 2013). Social networks are the most impactful Internet feature driving the sharing economy, by gathering supply and demand at an unprecedented speed and scale.

The availability of data renders transactions cheap and easy; using social networks, sharing businesses can “define and deliver highly targeted, very personal goods and services at the right time and location” (Gansky, 2010). Most of the transactions in the sharing economy are made through e-commerce and online payment platforms. Thus, nowadays technology makes sharing or renting something a very smooth experience.

Digital platforms in the sharing economy have played crucial role on the rapid growing of this sector, by facilitating the engagement of the participants and contractors, providing wide accessibility, flexibility and easily entrance in everyday transactions. For that, sharing economy platforms have been defined as "digital matching firms" (Yaraghi & Ravi, 2017).

Figure 4. Sharing Economy, Khaled Bendib, 2016

Critics

Based on the impact, size and development pace of the sharing economy on one hand, and on the other hand, the serious competition it makes towards the traditional industries, normally raised a lot of rumours and critics, provoking intense public debate concerning the functioning and operation of the sector, respectively the digital platforms that power the sharing economy.

"Beginning with consumer advocates who have expressed worries about safety, discrimination and accessibility (Schor & Cansoy, 2019), labour unions are alarmed for the exploitation of the people doing the work (Scholz, 2017)". There are serious assumptions that claim for example that "renting rooms or driving for money had anything to do with sharing (Hill, 2015). "As Slee argues that the sector has caused reduction in the supply of rental housing and have made transformation of neighbourhoods into Airbnb enclaves". Also, there are serious concerns raised towards the regulatory challenges in regards, to privacy and data ownership, price and racial discrimination and security (Yaraghi & Ravi, 2017).

The benefits of the sharing economy can only be realized if P2P marketplaces are safe and stable. In the past few years, numerous incidents have occurred that have posed threat to the permanent rise of the sharing economy. For instance, apartments were ransacked and stolen of an Airbnb host; in the other hand, using stolen identities and credit cards in HiGear were stolen four cars. Despite the critics and rumours, the sharing economy is rapidly growing and expanding. Consumers have responded with enthusiasm and appreciation for these new services (Schor & Cansoy, 2019).

Figure 5. The Future of the Sharing Economy, BCC Research, 2020

Conclusion

The world has witnessed a steep rise and penetration of the sharing economy facilitated by the growing digital platform and willingness of consumers to try mobile apps that facilitate peer-to-peer business models, shared entrepreneurial enterprises etc. (Yaraghi & Ravi, 2017) Besides the traditional booming sectors of the sharing economy as hospitality (Airbnb) mobility (Uber) and home service sector (TaskRabbit), sharing economy is occupying seriously other important sectors of the world economy too, such as the crowdfunding, human resources and energy sector. According to a Pwc study, in 2025 the revenue of sharing economy companies will grow 22-fold in respect to 2013, respectively reaching up to 335 billion dollars (Pwc, 2015).

However, the sharing economy will continue to face several regulatory concerns and challenges while growing, to which the sharing economy companies and the whole sector, need to respond adequately. On the other hand, the traditional market players have embraced a wave of antipathy as a result of the continuous loss of the market share and the change of the status quo by the new entrants from the sharing economy sector. From this perspective, the verbal and occasionally physical protests against sharing economy companies, and legal action, could be seen as a form of 21st century “Luddism” (Pwc, 2015). Nonetheless, the sharing economy is set to continue the rapid grow and occupation of a larger portion of the global economy. Thus, be an interesting theme that will continue to provoke debate, attention and of course, an area for further deeper research.

Bibliographical References

Botsman, R. & Rogers, R. (2010) What's Mine Is Yours: The Rise of Collaborative Consumption. HarperCollins Publishers. New York.

Finley, K. (2013) Trust in the Sharing Economy: An Exploratory Study. Centre for Cultural Policy Studies. The University of Warwick, Coventry CV4 7AL, United Kingdom.

Ganski, L. (2010) The Mesh: Why the Future of Business Is Sharing, Penguin Group inc, New York, USA.

Hejne, R. (2011) American Dream vs. American Responsibilities, CMA, San Jose, California.

Hill, Steven, (2015). Raw Deal: How the "Uber Economy" and Runaway Capitalism are Screwing American Workers. New York, NY: St. Martin's Press.

Luo, H. (2023). The Rise of the Sharing Economy, BCP Business & Management, Volume 44, School of Economics, University of Wisconsin-Maidson, Wisconsin, US.

Pwc (2015). Sharing or paring? Growth of the sharing economy, Budapest, Hungary.

Suster, M. (2013) Both Sides Of The Table: Are You Ready to Earn or Learn, Hyperink, Kindle Edition.

Scholz, Trebor. (2017) Uberworked and Underpaid: How workers are disrupting the Digital Economy. Malden, MA: Polity Press.

Slee, Tom. (2015). What's your is mine: Against sharing economy. New York, OR Books.

Schor, Juliet B., & Cansoy, M. (2019). The sharing economy. The Oxford handbook of consumption, 51.

Yaraghi, N. & Ravi, S. (2017). The current and future state of the of the sharing economy, Available at SSRN 3041207.

Visual Sources

Figure 1. Botsman, R. & Rogers, R. (2021) Collaborative Consumption (Cover Image), LinkedIn, https://www.linkedin.com/pulse/collaborative-consumption-sharing-economy-ankit-roul

Figure 2. Sharing Economy Companies (2018) Cover Image. Future Lab. https://www.kreezalid.com/blog/78403-what-is-sharing-economy

Figure 3. Driving Force behind Shared Economy, (n.d), Cover Image. Geospatial World, https://www.geospatialworld.net/prime/business-and-industry-trends/the-driving-force-behind-shared-economy/

Figure 4. Bendib, Khaled (2016), Sharin Economy, (Illustration) OtherWords. https://otherwords.org/the-sharing-economy/ 

Figure 5. The Future of the Sharing Economy (2020) Cover Image. BCC Research. https://blog.bccresearch.com/the-future-of-the-sharing-economy