New Era for the Sharing Economy?

We all value the importance of technology. Our generation is experiencing a change in internet improvement, from the birth of the first computer to the existence of AI. They call it “the Fourth Industrial Revolution”. Technology allows the sharing economy’s growth since many tasks can be completed online, but is the new era for the sharing economy coming? 

 The metaphor, sharing economy, can be interpreted into a short term leasing that happens between the provider and the consumer only. It is often discussed with the gig economy (which involves the independent workers) and peer-to-peer economy (connect seller and consumer only). The main idea of the sharing economy is “share”, to share your idle items (car, room, parking, etc.), to share your leisure time (work as a contractor), or to share everything you can think about.

 It seems like everything can be shared. There are more than 100 active sharing economy companies whose services cover every need in urban daily life. The main categories are transportation (ride-sharing/vehicle renting/bike sharing), accommodation, rent space (share office/parking), labor (childcare/petcare), and good (cloth, jewelry, food). However, as we can tell, not every sharing economy company success. The top two most famous representatives are Airbnb and Uber so we notice that transportation and accommodation play a more important role than other sharing economy categories. These two products shorten the time for users to match with short-term housing and a ride. According to Statista, “In 2017, the number of adults using Airbnb in the United States amounted to 33.9 million…to reach 45.6 million by 2022.” For the number of sharing economy users in the US, it grows from 44.8 million to 81.2 million this year and will reach 86.5 million in 2021. In other words, there are more and more sharing economy participants. It sounds like a good deal that can invest and create a green community-based economy. 

There are many sharing economy groups/organizations. On February 5 to 6, the first sharing economy global summit was held in London where gathers the sharing economy industry groups and their members all over the world. The event organizer, Marketplace Risk, aims to get information for the sharing economy and marketplace startup ecosystem. They believe in the advantages that the sharing economy brings. The event sponsors are mostly fans of the sharing economy including two famous organizations call Shareable and SEUK (sharing economy UK). One interesting fact is that Marketplace Risk’s headquarters is located in San Francisco while other sharing economy companies such as Uber, Lyft, Airbnb, Postmates, Doordash, TaskRabbit, and Lending Club have their headquarters in San Francisco. It is not hard to guess that a big city like San Francisco deserves the benefits of the sharing economy. 

 What are the strengths of the sharing economy? On my first blog, I mentioned that four big reasons for the rise of the sharing economy are technology allowance, environmental concerns, global recessions, and community re-connection. Now I would like to talk about the third reason global recessions. After the economic bombing, most countries are experiencing an economic downturn, thus people feel like they have to save money. The sharing economy allows consumers to find a cheaper alternative in a similar quality, and allow people to gain extra income by working as a contractor or rent out some idles things. The resource reallocation can make most people better off. As Shareable believes, “The sharing transformation shows that it’s possible to govern ourselves, build a green economy that serves everyone, and create meaningful lives together…we can solve the world’s biggest challenges — like poverty and global warming…” The sharing economy fans believe that by sharing, we can have a hand on the economy and make sure we all gain from the trades. 

 However, the opponents think the sharing economy is a lie. Taxi drivers hold a protest against ride-hailing and car-sharing services in major cities because their career is at risk of being replaced. A license for Taxi driving is needed but a ride-hailing driver only needs a regular license which means Taxi is safer in general. Other than damages to the traditional economy by taking job opportunities the sharing economy also damages the market by taking out long-term housing since those housing turn to Airbnb. It leads to the rise in rents in major cities even though the supply of short term housing increases. The safety concerns reduce the trust of the sharing economy since it is so easy to participate in the system. Opponents also claim that those “sharing economy companies” are simply turning short term leasing completed through online platforms; they do reallocate the resources. For example, Uber drivers initially are for whom they own a car and willing to give a ride to somebody in their free time, but now many people turn to become full-time Uber drivers. Items sharing should be a way people gain from renting their items out, but most item sharing becomes an online luxury rental. 

 Everyone, however, wants to get a slide from the sharing economy pie. How can we lighten the sharing economy? Some suggestions are to perfect the law (tax, regulation, license), public the information and data, and self-regulation. The authors Arvind Malhotra and Marshall Van Alstyne from the Viewpoints suggest, “To a great extent, the viability of shared services hinges on the quality of review systems because people rely on them to decide whether and what to purchase.” I agree with this idea because consumers have no choice but checking the reviews so if the reviews are fake, the trust is gone. This applies to all sharing economy products. 

 The sharing economy is still a baby and it needs to be improved. If all the suggestions above are taken, the era of the sharing economy will come in the recent future.