TOWARDS A SHARING ECONOMY
As social media grows and more applications are born, we are gradually shifting towards what some have dubbed the ‘sharing economy’.
The sharing economy is a peer-to-peer economic model, whereby people rent out and borrow goods and services directly from each other.
Participants of the sharing economy bypass traditional providers of goods and services, such as hotels, car rental agencies or high-street stores, and rather connect to individuals directly through social media platforms.
Below are just a few examples of these social media platforms where lenders and renters can find each other and match their needs:
-Airbnb – where people rent out their own rooms and properties
-Zipcar – where people rent out their own cars
-LiquidSpace – where people rent out empty space as office space
-RaskRabbit – where people rent out their free time to run errands for other parties
-Bag Borrow or Steal – where peole rent out their own designer bags and accessories
Each social media site above operates in a different industry and altogether, these provide just a glimpse of the different sharing opportunities that are growing.
The success of this system has the further potential to have a substantial impact on local economies, should it grow more mainstream.
By giving the opportunity to owners to turn the different assets in their possessions into a lucrative business, the sharing economy is generating a new wave of entrepreneurs with small-sized businesses.
Moreover, the sharing system also means that consumers have access to more convenient and cheaper opportunities.
For example, instead of renting a car for a minimum of one day from a car rental agency, one can rent it from a private car owner at a cheaper price, for the few hours that are needed.
Instead of buying a highly expensive designer bag, one can rent it for just a month, at a much cheaper cost.
Instead of booking a hotel room, one can have the more affordable option of renting a room in a private apartment, or of renting an entire apartment for the same amount of a hotel room, for example.
Hence, while the sharing economy is providing new opportunities for anyone to create business, it is also encouraging the emergence of goods and services that answer specific needs, at cheaper prices.
In response to the success of these peer-to-peer transactions, some industry leaders have started to change the way they operate.
The car industry provides a good example of how some giants in this sector had to restructure their business.
Avis, for example, has bought and incorporated Zipcar into its organization in order to attract the growing clientele of the sharing economy.
The possibility of renting cars whenever needed, for the amount of time needed and at cheaper prices also mean that less people see the need to buy cars.
According to Jeremiah Owyang, industry analyst at research firm Altimeter Group, ‘every car-sharing vehicle reduces car ownership by 9-13 vehicles; a revenue loss of at least $270,000 to an average auto manufacturer.’
Toyota, as a consequence, has begun providing a short-term rental service, emulating the sharing car concept of renting out a car just for the specific time needed by the consumer.
Owyang further says that the entire sharing model is gradually ‘becoming mainstream’. More people are turning to it to rent and borrow, and more social media applications are springing to provide increased sharing possibilities, in more industries.
This mounting popularity of the peer-to-peer system is thought to be, moreover, a more sustainable business model on the long-term.
Sharing goods, instead of producing new ones, means that the need to use the planet’s scarce resources does not have to be as strong as it used to be.
Instead, existing goods can be shared, putting less strain on the world’s diminishing resources and providing hence a more efficient system of production and consumption.
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