Sharing economy is rapidly growing, allowing users to gain temporary access to various resources. According to Statista (2018), the value of sharing economy is expected to reach USD 335 billion in 2025 from USD 15 billion in 2014. The study led by eMarketer in 2017 predicts 86.5 million users by 2021 in U.S sharing economy.
World Economic Forum (2018) defines the term “Sharing Economy” as a concept of creating shared value of underutilized resources in a digital platform among mutual parties that would create economic, social and environmental value. The stakeholders of this trend are the people, the technologists (startups, investors), the established (corporations, government) and the influencers (press and media).
Technology, Social and Economy are the main drivers of sharing economy. The innovative mobile technologies, reduced transaction costs, and social networking are the technological factors influencing the growth. Increasing population density, need for more resources, and desire for community are the social factors which fuel its development. The need to monetize idle inventory and increase in financial flexibility along with the option of access over ownership makes it popular in the economy.
Sharing economy has disrupted in numerous industries. With sharing economy, it appears that there is no prerequisite for people to own car or vacation property. Industry pioneers like Airbnb, Uber and Upwork are the leading name in sharing economy. Uber dominates the shared transportation industry with market cap of USD 72 billion followed by China’s Didi, worth USD 50 billion. Individuals are also seeking towards sharing economy in finding alternative sources of income. Professional service provider like Upwork and TaskRabbit is evolving in sharing economy with platform for individuals to employ their skills for businesses. eBay is leading the consumer goods sector in sharing economy with USD 36.8 billion letting customers rent variety of products. Adoption of ‘sharing economy’ model in health industry is thriving and is expected to generate annual revenue of USD 8.7 trillion through sharing economy by 2020. The fashion industry is also embracing the sharing economy with emerging platforms like CaaStle incorporating the goods-sharing trend where big fashion-brands can rent out their inventory.
Thereby, brands have capitalized on the trend of sharing economy – Goods (Craigslist, Etsy, eBay), Services (Instacart, Elance), Transportation (Uber, Lyft), Space (Airbnb, Liquidspace), Money (CircleUp, LendingClub) and Online Content (Flickr, Soundcloud) are the tip of the ocean.
Along with the evolvement, issues of barrier exist in sharing economy. One of the biggest barrier is “trust” which is especially linked with accommodation services as per eMarketer in 2017. In 2017, Maru/Matchbox report shows that home-sharing platforms like Airbnb were not considered safe by 31% of US consumers. Similarly, 28% have the trust issues in shared transportation services.
The requirement of adequately sized marketplaces and regulations such as taxation, insurance, consumer protection are some of the constraints which holds sharing economy to some extent.
However, the element of benefits and opportunities for users and businesses through sharing economy cannot be overshadowed. And with the technological advancements, sharing economy is forecasted to grow as well as collaborate with other traditional sectors. The consumers’ need for convenience, variety, and cost-effectiveness provides a strong rationale for the startups and the established to explore new options in this new world of sharing economy.