Falling Down the Sharing Economy Rabbit Hole
What is the sharing economy?
Democratised access to excess capacity through a platform.
The sharing economy takes something which is usually expensive but underutilised and enables it to be used more efficiently by allowing it to be used by more than just the owner of the product.
The consumer does this in order to save on the cost of purchasing an item they may only use once and the sharer does so because he can recoup some of his expenditure by sharing.
The quality of transactions is often ensured through review systems which rate both the consumer and the sharer. This ensures high quality on both sides of the exchange/transaction which is essential in ensuring and building trust.
Trust is the currency which enables transactions to occur in higher frequency.
The sharing economy helps assists in the establishment of an economically more viable world which are simultaneously more environmentally efficient. It actively assists in the reduction of the number of cars required on the streets, the number of hand tools that need to be purchased and the amount of food waste we generate collectively.
It creates and cultivates an incredible feeling of community among its users. By building platforms which enable transactions to occur a community of people emerge who evangelise the service and bring virality to its expansion. The people who utilise a service come to define it, even more so than the founders and creators.
The emergence and development of platforms are controlled by user behaviour which prescribes the direction in which it will grow. They identify the features that must become a pre-requisite in order for their use to continue to flourish.
Does it exist as imagined above?
The sharing economy though can be a disingenuous term which misleads the public into thinking the businesses aren’t profit-centric organisations. The reality is that the vast majority of companies operating within the sphere are.
Uber, Airbnb and Etsy all fall under the umbrella of the sharing economy moniker. The sharing economy façade is undoubtedly a welcome descriptor for these which dilutes their unmerciful focus on profitability by humanising their intentions. And there is nothing wrong with that. Companies exist to make money and sharing economy startups should be no different.
People have grown to expect more from companies in recent years. It has almost reached the stage where it isn’t enough to only produce an incredible product. Companies must now have a purpose to impress upon its potential customers that it is more than a faceless corporation. A purpose is a differentiator which creates an affinity with consumers and acts as a call to arms.
Deviation back to the expected path
Purpose can be anything but it has to have higher meaning than simply making as much money as you can from your customers. Brewdog’s purpose is ubiquitous, create the best beer in the world, and their customers know they can trust everything produced by the company is with that mission in mind. The sharing economy element of their business model is the equity for punks model which sees direct investment in the company by those who are most invested in it producing quality products for them to consume — the customers.
This owner consumer model is an incredibly interesting concept when viewed through the prism of alternative companies operating within the peer economy. The investment gives control by endowing the network with the capability to actively shape the future. It dissuades the company from exploiting the community as they are all the community together.
And it simultaneously ensures remarkable brand loyalty which creates a hugely defensible position in the market. Additionally, it creates a viral marketing engine of evangelist ‘users’ who happily spread word about the quality of the product.
What Next?
The time for use of the sharing economy descriptor as a viable tagline has expired. Hitching your waggon to the back of a fading differentiator is futile. Companies need to become more and outwardly express that not just join an imaginary club of companies. The positives of the sharing economy model, significantly reducing excess and more socially conscious business’, have proliferated public consciousness to such an extent that they are now expected of every business. This is a great thing.
Now new businesses must emerge and embrace elements of the sharing economy business model while moulding it to become even more effective. The sharing economy model will be fondly remembered as the first iteration of a business model that millennials can empathise with, understand and champion but it isn’t the end game.
Next will come reinterpretation of huge incumbent businesses which will lead to tremendous disruption; Everlane and Dollar shave club are two examples of this — they are sharing economy 2.0. They are transparent, honest and sincere. They are products for you without the bullshit which accumulates cost.
By refusing to treat the customer like idiots and not milking them like cash cows sincere ties can be built into a defensible position which creates incredible brand loyalty. That is the next step: business as a service which accentuates your image of self. Businesses then become part of our daily life by effectively partnering with us instead of exploiting us.
The sharing model will proliferate through to brands, they will connect you with customers in your general location by providing a platform on which transactions can occur and they will take a small commission. The slowdown in technological development necessitates it.
The sharing economy might be false but the reality of what it achieves is very true.
The sharing economy is dead, long live the next wave.
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