The rise of the sharing economy

The ‘sharing economy’ is a term we’re hearing a lot these days. So what exactly is it and how does it work?

The sharing economy is essentially a socio-economic model where resources (whether products or services) are shared. I won’t drill down into detail exactly how this economic model all works – instead I’ll try to explain why it’s becoming increasingly prominent and appealing, and how it’s empowering everyday people by providing more choice, value and opportunity.

Nowadays when you hear or read about the sharing economy, it’s likely there’s a reference to Uber or Airbnb as examples. These two companies are definitely regarded as pioneers, but the sharing economy extends much further than you probably realise.

News and information was once predominantly controlled by media empires that owned newspapers, TV and radio stations. Books were printed by a select bunch of publishing houses. Music was controlled by record companies. To watch a movie you’d have to either go to the theatre or video store. Shopping involved heading to the mall. Think about how much all of these things have changed. Blogs are the new newspapers, Netflix the new movies and television, Spotify the new radio and CD, and Amazon and Ali Baba the preferred ways to shop.

The general population used to be at the mercy of big businesses and monopolies. Now, we’re living in a new age. The choices we have force enterprises to offer more for less, making for a more competitive marketplace. The sharing economy is about anti-ownership, and tears down the former barriers that once forced us to either use the products or services of one or two main players. The consumer is now more empowered than ever, and companies that stick their head in the sand will be left behind.

Businesses need to adopt the mindset of the new consumer and look at what they hold dear in order to future-proof themselves. Here’s a list of what the typical customer wants (and expects in today’s world):

  • Competitive pricing
  • Quality
  • Fast delivery
  • Anything that saves time and/or makes life easier
  • Personalised service
  • Easy access
  • Safe and secure transactions
  • Exceptional and fast customer service

The funny thing is all of these things have always been somewhat important to the customer, but we haven’t had the choice or the voice until recently. Social media, reviews and testimonials allow us to be vocal about our experience, whether it’s exceptional or terrible. We also rely on what others say, like or share, whether from family, friends or complete strangers when making our purchasing decision. Negative ratings and comments from others will most likely put us off, so we’ll poke around and go elsewhere.

One of my favourite sharing economy services is Uber – a well-known, disruptive app-based transportation and taxi service. Uber’s offering is simple, but incredibly attractive. The company uses a smartphone application to receive ride requests and then sends these to their drivers. Customers use the app to request rides and track their reserved vehicle’s location. Both riders and drivers can rate each other on the experience, which means Uber is able to ban unruly customers and remove poorly-reviewed drivers from its service – something we cannot do with the taxi industry. All my rides with Uber have been fantastic and seamless. What makes it even better is the cashless payment at the end of your journey – no more slow or faulty EFTPOS or credit card machines (or 10% surcharge that typically accompanies the transaction), you simply get out of the car and your fare is charged to your nominated payment method. A receipt arrives moments later via email.

There’s little wondering why investors place great stock into Uber. They simply see the value proposition for consumers and that the company has struck the right cord in both the tech and transport markets. It is at the heart of the sharing economy, and its rapid expansion across the globe is a testament to how much it is valued. Uber is challenging and changing how we get around, and is disrupting the status quo. The taxi industry opposes the service because it is direct, strong and favoured competition. Likewise many governments around the world object to it and conjure up whatever desperate reasons they can to prevent or restrict Uber’s operations. Why? Typically the taxi industry provides the government with a huge source of revenue. In Australia, taxi number plates cost cab owners around $375,000 – substantially less than it did six years ago, thanks to the likes of Uber. Treasurer Joe Hockey recently warned his cabinet on how technology is changing the economy and employment.

Airtasker is another company that operates as part of the shared economy. Airtasker is a trusted community marketplace for people to outsource tasks, find local services or complete flexible jobs to earn money – online or via mobile. Whether it’s handyman work, office admin, photography or anything else, users can simply post a task for free and then choose from rated, verified and reviewed people ready to work straight away.

The platform launched two and a half years ago and work volumes increased seven-fold last year, handling around $12 million worth of jobs each year. Airtasker takes a 15 per cent fee on the value of work from the runners. A star ratings system allows users of the service to grade ‘runners’ (people who complete the task) on a scale of one to five. These ratings are very influential when customers are deciding which runner bids to accept.

I’ve only used Airtasker once to date, but will definitely be using it more often. I need to move a dining table and four chairs from my apartment to a friend’s place two suburbs over from me. The furniture wouldn’t fit in my car so basically my options were to hire a truck or van and move it or hire someone else. I didn’t want to engage a moving company directly because I knew this’d be expensive – they typically have a minimum booking time, fuel surcharges, and costs for getting to and from a gig. Instead, I turned to, posted the job and what I was willing to pay, and within minutes I had several runners interested. I assigned the task and made the necessary arrangements with my runner. I ended up getting it all moved for $50 and the whole process only took 30 minutes. It was brilliant! The benefits of services like Airtasker are obvious – they essentially drive prices down.

If you’re considering starting a business, its well worth thinking about building an offering for the sharing economy. There is a strong appetite for disruptive companies, and thanks to ever-advancing technology and constant connectivity it looks like this model is not only here to stay, but one that will also continue to rise in popularity in markets around the world.

What are your thoughts on the sharing economy? Please share your comments below.