What is sharing economy and why do customers love it?

Sharing economy is one of those things that everyone knows and has some experience with, but no one can really define off the bat. Sharing your rides or your home or your skills is nothing new, of course. Informally it has been going on from the beginning of times. What’s changed now is the technological infrastructure that allows people to do it in an organized manner and access a whole new circle of clients.

In the olden days, if you wanted to split gas money or rent out your place for the summer, you usually let the word out among your immediate circle of acquaintances. Today, such arrangements are booked through a website, app or other online platforms.

You can host someone who’s flying in from the other side of the world or offer a ride to people who you’d otherwise probably never met. This also distinguishes the main difference between “old” and new ways – the scale has grown so much bigger so rapidly, that the people – or the law – can’t keep up. 

Also, as many service sharing platforms were (at least initially) meant for sharing the goods people already had or didn’t use (rent out your empty room or pick up a ride on the way to the city), this limit has also shifted. More and more professional businesses are run on those platforms and many people don’t use them as a way to earn casual pocket money but as their main source of income. In many sectors, e.g. most notably the taxi or delivery business, they just don’t have a choice in the matter. The clients also prefer those platforms – either because of the price or for technological convenience.

It’s a complicated mix of shifting business practices and social challenges, that is bigger than any one sector or any single platform. But fearing and fighting change is futile. It’s better to embrace it, get to know it and, hopefully, harness it for the opportunities that lie ahead. Let’s start by finding out why the sharing economy is so popular, but also what are the main points of concern today regarding the matters of responsibility, income, and taxes.

3 reasons the consumers love sharing economy

As the service providers are embracing sharing platforms, the consumers are more than pleased with the changes. Maybe you’ve arrived in a new country, struggled to find a taxi and even after haggling over the price, left with feeling cheated or taken advantage of as a “stupid tourist”. These kinds of struggles are entirely eradicated by just pulling out your phone and ordering an Uber or a Bolt. This example also sums up the main reasons consumers have welcomed sharing platforms with open arms, phones, and wallets.

1. Efficiency – The sharing economy incentivizes people to offer services they otherwise would never have offered. It also reduces the hassle and expense related to just getting your service out there. This also cuts costs for both parties of the service – the provider AND the consumer.
2. Comfort – service sharing platforms concentrate all (or at least most) of the service providers in one place. It’s easier to find them, compare them and make a pick when their information and pricing are presented in the same way.
3. Universality – as service sharing platforms are conquering the world, you can use the same app both at home and while traveling. Even the different platforms themselves are similar to each other based on their business model. Consumers have become to expect certain standard solutions and don’t want to waste time or energy on getting to know some local clunky system, picking offers by hand or even downloading yet another app.

Sharing is caring in a variety of industries

Even though most people think about ride-sharing and accommodation in terms of sharing economy, it’s creeping into more and more industries. It’s changing the ways of many traditional business sectors from grocery shopping to coworking and even “serious” businesses such as law and medicine. Here are some examples of the services, that have already moved to platforms.

1. Parking – parking spaces, especially when left empty, are a huge waste of city space. Now you can rent out your empty parking spot and on platforms like JustPark to people who need them – and reduce the demand for building yet another parking lot in the vicinity.
2. Chores – day-to-day chores like grocery shopping, home cleaning, and laundry services can be outsourced from service platforms. This makes it both more convenient and flexible for the consumer and gives an equally flexible source of income for the people who wouldn’t want to do it full-time (e.g. students).
3. Lending and crowdfunding – sharing economy has opened up investment opportunities for small investors and small companies, that don’t require going through a traditional bank. Basically, technology makes it easier and safer for individuals who have money to find people who need money.
4. Coworking and meeting spaces – renting a desk at a public office can be both cheaper and spark synergy between the like-minded professionals. You can also find a conference room based on your current space requirement.
5. Professional services like law and medicine – many traditional services seem too “serious” to be suitable for the sharing platform model but are actually also picking up speed on the sharing economy lane. From anything to finding a lawyer on platforms like HUGO or sharing medical equipment on Cohealo, the new business models are making services more efficient for anyone on the market.