In relatively recent years, the Internet has given birth to a new innovation called the sharing economy. Today, with mere smartphones, consumers can rent something as small as a power tool or as big as a home or hire help for a few hours or an entire day, and resultingly, the sharing economy is slowly, but steadily, transforming the modern marketplace.
The latest generation of consumers value experiences over possessions. For example, instead of buying a car and assuming a plethora of financial and mechanical responsibilities, many of today’s young adults prefer to simply hail an Uber or Lyft ride when they need to go somewhere. Additionally, vacation home purchases are going the way of the dodo bird as today’s young vacationers opt to rent Airbnb residences at will rather than make a lifetime real property commitment.
Around the world, innovative enterprises are connecting with consumers via their smart devices and freely available apps. In effect, the sharing economy is giving businesses a new level of freedom to operate. In the process, these firms have gained access to an enormous amount of complex and in-depth consumer data. Meanwhile, consumers are benefiting from the cost savings and efficiency of sharing goods and services. Globally, there are nearly 10,000 sharing firms doing business in nearly 150 nations spanning 25 industries that range from technology to finance to food and beverages, and in the United States, more than 70-percent of citizens has used sharing services, half of the population has purchased repurposed items and 15-percent has used ride-hailing services.
New Sustainable Measures
The sharing economy has placed a new emphasis on sustainability, a feature that young generations treasure. Will it last though? Laws and controversy surrounding sharing services place the future of the industry at risk. Operating a sharing enterprise has grown into a balance between providing sustainable goods and services while not harming industries that already exist. Meanwhile, the government is working to ensure fairness for all stakeholders. The sharing economy has also proven to be a perilous balancing act between creating legislation that's fair for both sharing firms, existing companies and consumers. In New York City, for instance, livery drivers pay a 50-cent surcharge that subsidizes the city’s subway system. However, ridesharing drivers are not subject to this tax. Because of this, many longtime taxi drivers are extremely displeased, especially in light of the fact that they must purchase expensive medallions to ply their trade.
This scenario demonstrates the kind of politics and ongoing conflicts taking place between government regulators, private sector enterprises, the businesses of the sharing economy and consumers. Some executives, however, believe that sharing economy stakeholders can coexist peacefully, and despite legal industry challenges, economists forecast that a bright future lies ahead for the industry.
A New Culture of Trust and Collaboration
In the sharing economy, trust is a commodity; unequivocally, the sharing economy is built on trust. Consumers will not rent a house or purchase a good or service without at least some iota of trust, and some sharing firms are completely dependent on their reputation, like services that take responsibility for watching children.
Nothing creates trust more than real-life interaction. Furthermore, the more that sharing services give consumers control over their experiences, the more trust that the firms earn.
Trust building is essential for long-term success in the sharing economy. By predicting consumer needs and making it easy for them to share their positive experiences, sharing enterprises show consumers that they respect them and earn the right to ask for their trust. Once this happens, sharing enterprises need only to continue providing quality service to secure long-time repeat business.
Is the Sharing Economy Here to Stay?
For now, the sharing economy is troubled by a lack of regulation. Airbnb owners, for example, are not required to comply with commercial fire codes, a long-time requisite for hotels and landlords. Additionally, legislators are having difficulty creating laws to manage activities in an increasingly digital world -- let alone a sharing economy.
Some forward-thinking legislators are recognizing that this new industry requires an innovative approach. Lawmakers are slowly starting to realize that they will have to share responsibility for regulation with private enterprises to maintain order.
Like many businesses, sharing enterprises maximize their leverage of big data. With complex and in-depth studies, sharing firms learn how to predict demand. The key, it seems, in the sharing marketplace is to predict consumer needs, but make the buyer feel in control. For now, it's uncertain how the future of the sharing economy will play out, but as long as consumers enjoy the benefits provided by the industry, the sharing economy will continue to thrive.