Did you know that we now live in a world in which you don’t even have to own your own umbrella — because there are services that let you borrow one when the heavens open and then give it back when the sun comes out?
That’s an example of the kind of businesses now thriving under what’s been termed the ‘sharing economy’. The concept is a relatively recent one; virtually unheard of in 2013, it’s become big business in the half a decade since. The thinking behind it is arguably a bit like the ‘make do and mend’ ethos of the Second World War, as it’s arisen from a period of economic gloom that’s seen many of us have to rein in our spending. But what is it, exactly?
What is the sharing economy?
While there are many different forms of it, the World Economic Forum defines the sharing economy as having a “focus on the sharing of underutilised assets, monetised or not, in ways that improve efficiency, sustainability and community”. A more accessible definition comes from Sharing Economy UK, which says: “The sharing economy uses digital technologies to connect groups of people, enabling them to share assets, information and services, and reducing the need for ‘ownership’. Sharing economy businesses help individuals to better utilise their assets, helping make downtime uptime.”
Put simply, the sharing economy is essentially all about individuals renting from each other. It’s about connecting people who have something they’re not using much with people who need that something, but who perhaps can’t afford their own, or don’t need their own. Businesses can make money by providing the platforms that allow them to do so (Airbnb is the classic example). Let’s take a look at some of the enterprising new businesses that have sprung up thanks to the sharing economy.
From carpooling to borrowing a dog
Businesses in the sharing economy typically work by connecting people who want to share or rent things in a peer-to-peer rental system. Car-sharing is a great example of this kind of set-up. Take Bla Bla Car, for instance. This carpooling platform allows drivers to offer their spare seats to people who need lifts but don’t have access to a car. This means drivers can spread the cost of running a car and buying petrol, while passengers get where they need to go without the expense of owning a car themselves. Passengers book and pay online, presumably allowing the company to take a percentage of the fee while the rest goes to the driver.
And when it comes to modes of transport, it doesn’t stop at cars. We’re all familiar with the idea of bike share schemes (London’s so-called ‘Boris Bikes’ being a well-known example), which typically have numerous self-serve drop-off points around big towns and cities. Going a step further, major cities such as Oxford are rolling out dockless bike share schemes that uses a smartphone app to show you where the nearest bike is locked up.
There’s even a platform called Wingly, which has the same premise but for private pilots who want to find passengers who’ll help them cover the cost of flying light aircraft. This is particularly useful for people who need to travel longer distances, as journey times are typically far shorter by plane than by road.
Of course, journeys aren’t the only commodities to be making businesses money in the sharing economy. Believe it or not, as we mentioned earlier, there’s a company called UmbraCity that allows people to borrow an umbrella. Meanwhile, BorrowMyDoggy lets dog owners find people who are short of some canine company who are willing to look after their dogs while they’re at work or away on holiday.
Then there’s the concept of house sitting, as seen in companies such as Under the Doormat, which allows homeowners to earn money from their houses while they’re away. Trusted Housesitters is similar, but allows you to stay in someone’s house in return for looking after their pets while they’re away. You can even find people to share a meal with using platforms such as Eat With and Meal Sharing.
What can SMEs learn?
Finally, to the crux of the matter: as a business owner, what does this trend towards sharing mean for you? Are there any ways in which you could exploit the sharing economy to help your own business grow? While the idea of peer-to-peer rental may not be relevant to every business, the principle behind it could have advantages. You could look into increasing your partnerships with other businesses, for example, pooling resources so that you all benefit. After all, the sharing economy has proven to be a great way for individuals to save money and make better use of assets – so there’s no reason that this idea can’t apply to businesses as well.