There is a new business model in town, and it goes by many names. Some call it the gig economy and others the on-demand service economy, but most refer to it as the sharing economy.
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In Rachel Botsman’s 2010 book entitled, What’s Mine Is Yours: The Rise of Collaborative Consumption, she pioneered the concept and defined it as “an economic model based on sharing, swapping, trading, or renting products and services, enabling access over ownership. It is reinventing not just what we consume but how we consume.” When bartering, goods and services are shared, but usually nothing is given away. Most individuals and business are taking part in the sharing economy by buying and selling products and services, especially services.
What do people buy, rent or swap? The use of products that we cannot afford to buy for ourselves, in most cases. In a Forbes article titled, What is the New Sharing Economy, Janes Gardner called it “a movement born and sustained by three things: the advance of technology, the ongoing economic pressures that face businesses, and the human imperative for simplicity.” Uber, Airbnb, eBay and Kijiji are household names, but only represent a tiny fraction of the depth and diversity of goods and services offered as part of the sharing economy.
Sampling the shared economy
A small sampling of the goods and services offered in the sharing economy include Rent a Friend; GetMaid; Uber, Lyft and Zipcar for car sharing; Bixi and Niceride for bike sharing; Solar City and One Block for solar power; BabyPlays for toys; BookRenter for textbooks; Art.sy for art; Boro Clothing; Netflix; Toolspinner or Toronto Library for tools; Neighborgoods or Rentoid for just stuff; Gidsy for interesting stuff to do; Airbnb and Roomorama for travel digs; Rover for a dogsitter; Kickstarter for venture capital… You can even rent company for dinner conversation. There are simply too many to mention. Check out Collaborative Consumption for an impressive list of product and service providers.
According to an article in The Economist, The rise of sharing economy, “The big change is the availability of more data about people and things, which allows physical assets to be disaggregated and consumed as services.” After all, is it not the experience we seek rather than the product that will make that experience possible?
With smartphones and the Internet, gathering information and communicating with people and businesses everywhere have become easy and instantaneous. With the level of convenience, it is no surprise that those who are connected will search far and wide for the right pet walker, bicycle rental shop or venture capitalist at the best available space.
A survey released in April 2017 by the Canadian Centre for Policy Alternatives states that “workers who say they’ve provided ‘sharing economy’ type services may not be who you think. They are young and educated: 71 per cent are under the age of 45 and 90 per cent say they’ve attended college or university.”
It’s a different lifestyle
The general consensus among economists is that real wages stopped growing in 1978. Meanwhile, the standard of living has risen dramatically and most people can’t afford goods and services that used to be considered essential. We have seen a huge trend toward discount retail outlets such as Walmart and Dollarama. Payday loan outlets have popped up everywhere, and people are downsizing their homes and vehicles, vacations and wardrobes.
But is it just economic necessity that drives people to seek out shared products and services? Many people get huge satisfaction from shopping for a bargain, and some go to flea markets more for the adventure than to save money, anyway. Bartering is a way to meet new people and being smart with your money, and reusing is even better than recycling for the environment.
The younger generations are more connected than ever, and they want to establish their own personal brand. They watch and wait for the latest gadgets, fashions, language and attitudes, extracting the parts they want and throwing the rest away. Millennials brand themselves with their Twitter handles, Facebook headers and Instagram pages. After all, you cannot differentiate yourself from the competition (your twin sister, for example) if you shop at only big box retailers. This desire to create a personal brand extends to the gift economy and even the virtual economy of the video game world.
More and more people are opting in
In a survey released in April 2017 by the Canadian Centre for Policy Alternatives, “Out of the 2,304 residents [of Toronto] surveyed, nine per cent say they have worked or currently work in the sharing economy and 38 per cent say they have purchased services within this sector.” They identify the three biggest issues for users of the sharing economy as low income, underemployment and dispute settlement.
The Centre warns that “The on-demand economy is one of the most precarious labour markets in the GTA. Workers in this sector are considered independent contractors and are denied protection like minimum wage and overtime pay provided through the Employment Standards Act.”
It will be a while in coming, but do not be surprised to see professional organizations and governments established to standardize practices and register users for taxation purposes.
The future is full of surprises
Will gig sharing ever have mass market appeal or will it simply fade away? The sharing economy is another milestone along the evolutionary road from the old product-service economy, energized by tight budgets and a search for identity in an over-informed populace. It is a sort of populist movement where anyone can offer or accept goods or services more tailored to their needs and budgets than can be found at the box retailers, and it is here to stay.
Corporations and other traditional businesses have long entered the fray and are entrenched players, but the sharing economy is about doing things on the cheap, acquiring goods, and services that are unique in some way and not mass produced. It would be hard for a corporation, without the most amazing 3D printer ever, to reproduce an experience like visiting a site like Boro clothing, and making yourself up for an appearance at a weekend music festival.
Earl Warhus | The Edge Blog