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A resume of the Sharing Economy and its implications in today's Capitalism
Tipo: Monografías, Ensayos
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Luis Felipe Bárcenas de la Cruz (Consultant, Entrepreneur, Business analyst)
Universidad Juarez Autonoma de Tabasco
Villahermosa, Tabasco. P.C. 86019
luisfebarcenas@hotmail.com
+52 993 118 16 79
This article intends to show a different perspective, including resulting forms of business, challenges and insights, of the collaborative or sharing economy, aiming towards a democratic future. The following ideas are a personal perspective achieved principally from hours of reading articles and books and listening to personal experience form other analyst and business model innovators.
It will be charted in 5 different areas, in which I will firstly expose the context of the collaborative consumption (what it is, its role in today’s economy), then I will give a detailed description of the key components of the collaborative economy to then emphasize the insights and derivatives from this new economic system in which I will include some examples to address what is a p2p business model and what is not.
The next subject will be the insights for the application of this new economic system and which are the main concerns and objects of study for achieving success under this particular economic system. In the fourth part I will discuss some derivatives that have been shown after analyzing the collaborative economy and its insights, some which are already object of study for other business analyst. Lastly I will give my personal opinion of the opportunity areas and the future of the “sharing economy” and its role in a future world with few resources and a lot of necessities.
KEY WORDS
Sharing economy, Community, Assets, Value, Models
As it was mentioned before, the intention of this article is to enhance the creation of businesses and business models, but to develop something first you have to understand it, to apply it in the best way possible, therefore, a description of the essential subjects that surround this economic system will be listed next. It includes the components and insights that this system has shown trough the last 10 years of its existence.
Key Components
Collaborative consumption builds networks by connecting people with “needs” with “haves” or providers/suppliers with customer, through third parties or institutions.
[FIGURE 1]
Roles [FIGURE 2]
Institution
Online platform that builds a network by connecting people with “needs” and people with “haves” trough personal information or “data”.
E.g. Airbnb, SharedEarth, BlaBlaCar
Provider
User that owns a set of underused skills or assets and offers them through an online platform to match them with people that need them. E.g. Host, Landlord, Driver Customer User that needs certain skills or assets but couldn’t usually find or afford to pay for them on a regular basis. E.g. Guest, Land user, Rider
Value Share Under the sharing economy scheme, there are two principal transactions in the sharing of goods which I will illustrate below and which play a fundamental role for achieving what’s called a collaborative consumption.
The first one is the exchange or “sharing” of “unused” or “underused” value of “assets” between the provider and the customer. This value can be classified into 3 main groups, which I will detail later in this article, that include goods like everyday things (vacuum cleaner, drill, bicycles), skills for certain jobs (TaskRabbit allows you to post minor jobs which providers bid for accomplishing, like assembling furniture, walking your dog or water your
There is a continuous but individual information exchange between users and platforms online, this exchange unlocks both a key component and huge areas of concern for users, private institutions and governments in terms of data handling and trust between people which I will expose later in this article. Some of the information include, name, age, payment methods, interests and a history of behavior and transactions that we can sum up into a term called “Reputation”.
There are certain characteristics that define whether a business model is or is not based on collaborative consumption, hereafter I will discuss the main components of p2p services and some case studies to address if an app or company is based on the peer economy or just an efficient way to deliver products or services to regular customers.
Unlock And Share Of Unexploited Value
“Peer economy” builds networks by connecting providers with customers, achieving the share of unused or unexploited value of goods or assets, but what kind of goods or assets does this definitions refer to? The possibilities are endless, there already are existing startups for ridesharing (Lyft, Uber, Blablacar allows access to transportation without necessarily owing a car in a more efficient way than public transport), accommodation (Airbnb, LoveHomeSwap, CouchSurfung allows you access to accommodation in spaces that people wouldn’t usually use at a lower price than a hotel would), space renting (JustPark, LiquidSpace, SharedEarth allows
you access to private spaces for a variety of uses such as parking, office space or even gardening), vehicle renting, dinning , education , childcare , petcare, health & beauty, labour and simple tasks , professional advice , clothing and accessories, investing , tech assistance , every day goods , tours and many others.
These goods can be classified into three main groups:
Physical Goods
This goods are tangible, they could be lent, rented, swapped or bought and include a variety of examples like toys, games, transportation means, tools, spaces, buildings, clothing, food sharing, etc.
AirBnB is the world’s largest accommodation company, with 150 million users, 640, 000 hosts and 3 million listings. Its concept is simple, people rent free rooms, spaces or houses/apartments to tourist traveling to their city. This through a website where you can look for the called “listings”, during your traveling days, through a map of the area or a simple list that shows you available spaces, the web page include filters like pricing range, type of space (private room, shared room or house/apartment) that makes your ideal search easier. You can get in contact with the hosts of the listings you are interested in to discuss concern terms if so and the just book your stay through credit card or PayPal.
SharedEarth is the largest garden community in the world, it allows you access to front or back yards that people don’t use or don’t have time to take care of, so you can grow your own plants or food in their rental spaces, through their website people publish their free spaces, after you found one according to your needs and location you get in touch with the landlord and rent his free space.
Sharing Instead Of Owning
Another insight of the collaborative economy is the statement “sharing instead of owning”. In an economy with an increasing rate of population and a decreasing rate of resources this is critical, Have you ever realized how much time do you use your power drill through its entire lifetime? Or how many days a week you use your washing machine? We live an economic system in which our money is there, marginalized, just waiting for us to finally give it the power it really has.
This applies in every of the previously mentioned areas, employed people or with part time jobs with college studies and loans have all their money and time invested in their education standing by, like a waste, waiting for them to take a benefit or profit from them, so this economic system brings them a new way to access to this profit or benefit without necessarily being hired, full- time, with a company.
The average hours of use of a power drill through its life span is just 8 hours, just 1/3 of a day, meanwhile the rest of the time its capacity it’s just kept unused and a lot of value is lost. Think about your washing machine, you probably spend 2 or 3 days doing laundry, while out there is people that can’t afford a washing machine that could perfectly use yours any other day of the week, and this would represent some extra money for you and savings for them. And the variety of uses and applications gets wider and wider.
Trust In Online Transactions
The last insight exposed is the trust in online transactions that involves two different cases, exchanging money and interacting with people. This system is based mostly in online payments
(fees, subscriptions, purchases, rents) so a lot of money is involved, that’s why people are concerned about whether the company they are giving money is safe or not. On the other hand there is the provider which is also a matter of concern for customers in terms of trust worth, adequate capabilities or skills or a quality customer service (as in every kind of service human interaction is inherent).
Every business has developed their own ways to certify their developers and customers in terms of identity and capabilities (through official identity documents, study certificates and in some cases background and credit checks), and a reputation to measure their development through the business (Measurable things like efficiency, quality in process, knowledge, experience in the case of providers and payments, offering a safe work place or any other facilities in terms of customers). Childcare and tutoring are areas that widely concern this topic.
Wyzant is a service that brings students access to tutors online, but the main users of this platform are children (18-) so this webpage had to manage to develop their own certification system to provide both parents and children a safe service.
As a tutor in the Wyzant community, we ask that you furnish your legal name, residential address, Social Security number, and any aliases you may have. In addition, as a tutor, you must provide an authorization for a background check when requested by Checkr within seven (7) days of the original request. Once this is received, as requested by a tutor, student, or parent, Checkr will conduct a National Criminal Database search which will return results limited to the following:
Reports from 2014 indicate that in the U.K. there were 1.4 million spare homes (Hope, C. (2017)) another report from the U.S. in 2018 indicates that there are 17.3 million unoccupied houses (Bank of St. Louis (2018)). The raw material is there just waiting to be transformed into pure value.
Companies like AirBnB, HomeAway, ShortTermStays or RoomORama allows Real State owners access to people that need accommodation, no matter if it’s a private space in a house or the house itself in exchange of some money. One interesting example is LoveHomeSwap, this web allows you to post your home in exchange of another home in any travel destination available, so when your travel to your tourist destination the owner of the house you’re staying in is using yours, and no money is involved, neither any value is lost. But it doesn’t always has to be accommodation. With Spacii for example you can either sell your unused space such as your attic, garage, or empty room in your basement, or you can rent that unused space.
As I mentioned before, there are also several everyday goods that we use partially, like power drills, washing machines, bicycles, grillers and everything that you can possibly imagine that your neighbor may own and webs like NeighborGoods allow you to rent instead of buying them.
Self-Regulations
Every web platform is developing their own “metrics” and “regulations” according to their customer and provider interactions, they have some commonalities like basic identity access (ID card) or residence, but depending on the mentioned provider-customer interaction additional information is required.
This has caused a lot of concern between analysts and governments to find a way to set legal standards for certain sensitive industries like childcare or tutoring. This leads to the next subject.
Trust
All throughout history, human organization has been governed by institutions, as a result of this today we have governments, educational institution, financial institutions, religion or corporations. This form of organization results efficient and sometimes even intuitive in small scales, but when it turns to manage millions of people the system becomes inefficient and blurry, access to information becomes unclear and dull and this eventually leads to corruption and mismanagement due to centralized power, that’s the main reason why in terms of collaborative consumption it is often mentioned the phrase “we’ve stopped trusting institutions and started trusting people” (Botsman R. (2016)^ We've stopped trusting institutions and started trusting strangers).
We as users, either customer or provider, are always looking forward to find a figure that make us feel safer and protected when it comes to exchanging value and interacting with “strangers”, that’s why we need different levels of trust to acquire new and unknown services like the ones offered by collaborative economy.
Nowadays with networks like Ethereum (block chain), we are able to keep track of every transaction realized by someone from day 1, without the posbility of cloning or changing it, so any person that wants to check on to the quality of service of any kind of provider (not only in the sharing economy) can be sure that the information provided is real.
Some experts claim that this system will end up replacing business and government intermediaries with the use of technology like smart contracts, providing every customer with certainty in their purchase.
Access To People
The key for success of the sharing economy have been smartphones, this simple gadget allows web platforms reaching people in places never before thought, but this diversity has given as result other concerns like data handling or legal regulations.
As it has been already exposed, web platforms allows users to know the provider or customer ,depending the case, they will be interacting with, so every user must share personal information with the third party (web platforms) to access their community. This identity access allows web platforms provide assurance to their users that all transactions and interactions are safe and in case of failures be protected.
This derives in not just reaching people but reaching humans, and access turns out not to be just another ID number but accessing personal detail. This is the key on building strong reliable communities.
Building Partnership & Community Instead Of Industry & Market
The core of the collaborative economy is to share. But with the action of sharing comes the determinant factor that makes this economic system different from the others, human interaction. And it’s this, the human interaction the main concern for the companies that exploit this system, taking a more human approach in its businesses, promoting the values of a community inside an environment provided with certainty and open access, with strong identity and built onto trust.
As a supporter of this new democratic way of acquiring goods or services we should promote the cooperation between companies to define standards for what is usually called the customer service, environment conditions for transaction and information access, and also develop ways of promoting the growth of both the businesses and users of the Sharing economy.
[FIGURE 9]
On the other hand, the spirit of Porto Alegre represents the aims and wills of what today is called the global left: Horizontalism, Spread power, Relatively Egalitarian, Relatively Democratic .A system in which all needs and demands of any kind are equally important, equally urgent and not deferrable, and in which people are represented and speak by themselves and work together to achieve the common good.
Everyone is free to choose which side to support and impulse.
The main obstacle the spirit of Porto Alegre is that now system like that has ever existed before, but theoretically it could work. The global left today is split into two main groups, the cultural and economic left. Now in terms of the economic left, the one that concerns this review, the next goal for the enterprises and companies that work under the sharing economy is to join forces and help escalate this system, promoting its values and benefits, working together with “peer sharing” ventures to reach new customers and increase the quality of service given by the providers. At the end this will cause that more and more people get interested in the dynamics of this system and consequently develop new ways of exploiting its value.
As a conglomerate of industries, sooner or later we will be looking for crossing the next “chasm”, reaching the 15% of a significant statistic, could be 15% of enterprises working with the sharing economy, or 15% of the total transactions, maybe in some country or even the world, we will eventually find out, but until then, the ones that support a democratic future have to work towards pushing a little bit to the side of the spirit Porto Alegre, making simple actions that finally achieve greater results.
“Nobody can work out the institution parameters of a system in the future. You only have a certain trust that you’re trying to create that system” (Wallerstein, I. (2017). The contemporary relevance of Marx)
Our only certain thing, in our relatively near future, is that capitalism is coming to an end and every person will take actions that push the bifurcation into one way or the other, not only in terms of economics but also in terms of politics, social structure, cultural beliefs, education and so on, taking action not only in how to produce money but in how to also generate and manage potable water, energy, communications and knowledge, but at least, with the sharing economy we have come to a great start.
References Botsman, R. (2018) Thinking: The Collaborative Economy (2014), Rachel Botsman from https://rachelbotsman.com/thinking/ Airbnb (2008) https://www.airbnb.com/ TaskRabbit (2008) https://www.taskrabbit.com/ Uber (2009) https://www.uber.com/ Wyzant (2005) https://www.wyzant.com/, https://support.wyzant.com/ hc/en-us/articles/115002246146-Background-Check-Policy JustPark (2006) https://www.justpark.com/
