By Ron Watson, Jr.
The recent phenomenon of the sharing economy, which allows everyday people to sell services, rent underused valuables, and monetize durable goods they no longer need, has become the fastest growing digital business concept in the past ten years. In 2013, Forbes magazine estimated the sharing economy pulled in more than $3.5 billion and projected industry growth of 25% annually for the next decade. If you’ve bought a pre-owned item from a craigslist seller or used eBay to acquire an out-of-production collectible, you’ve participated in the sharing economy whether you realize it or not.
In this first installment of a three-part series, we’ll shed some light on how this idea came into being, why people are taking part in it and how everyday people are finding ways to supplement or even earn full-time income via this emerging business model.
A Short History
The term ‘sharing economy’ began appearing early in the 21st Century, just as the Internet’s business potential was being recognized by the ordinary consumer. The idea is also known as ‘collaborative consumption’, a term coined by a pair of behavioral researchers in 1978, where people share access to products or services instead of having individual ownership. In 2011, Time Magazine named collaborative consumption one of the ‘Ten Ideas That Will Change the World.’
The sharing economy was poised to make a paced and steady rise into the second decade of the millennium as computer technology boomed, but one event catapulted the idea to the forefront – The Great Recession of 2008. The credit and housing crunch that forced mass layoffs, outsourcing of established middle class jobs, and the banker bailouts left qualified workers without jobs, pensions, and benefits earned through lifelong careers. As a result, many people took to finding ways to make money through the burgeoning Internet, whether it was selling items on eBay or offering services through various message boards. This led entrepreneurs to create digital entities tailored to specific industries soon after. For example, online shipping site CitizenShipper, which connects people who need shipping services with independent drivers, was born in 2008. Airbnb, which allows residence owners the ability to rent their property to customers who would ordinarily stay in hotels, also came to prominence around this time.
Waste Becomes Profit
Another gear in the machine of the sharing economy is making use of the full potential of resources. As sensibilities change from the financial excess of the 1980s and 90s to a more efficient, economical and streamlined mindset, consumers are learning to share the items they own that are underused. Uber, the car-for-hire service that enables normal car owners to earn money by operating similar to taxi cabs, estimates vehicles are not used 92% of the time. The idea also extends to renting smaller valuable goods like chainsaws, lawnmowers, tools and even ladies’ handbags and jewelry.
Working hand-in-hand with the movement to transform waste into profit is the sharing economy’s focus on the environment, or green sustainability. Simply put, if someone is traveling across the country, they can offer to deliver items along the way, saving natural resources that would be spent delivering the items separately. As a bonus, the driver earns money performing the task and the customer saves money on costs charged by shipping corporations.
The digital technology also reveals another silver lining, particularly in the online shipping industry, allowing individual independent drivers to stay in touch with their customers in real time and affording them the same digital footprint as large shipping companies. This personal angle convinced a CitizenShipper customer that the sharing economy has become a viable alternative to traditional shipping avenues.
“The first time a I got a call from my driver telling me he was traveling through bad weather but would be on time with my furniture I was very impressed, because before I could only track the shipment on the shipping company’s website,” said Vivian Coco, who hired a driver to transport a Mid Century Modern console last year. “You can call it the sharing economy or whatever you want, but it was much better than using a big company. The driver was nice, plus I knew my console wasn’t getting banged around in a big truck, getting loaded and unloaded or sitting on a dock somewhere.”
“This was my first time using someone I found on the Internet, but if this is any indication these big companies are in for a run for their money.”
In the next article, we’ll look at the challenges sharing economy entities are facing as they grow, particularly from established service-sector companies.