No, Sharing economy isn’t the end of the era of ownership.

Kenneth Cheung
Aug 26, 2017 · 3 min read

If you’ve been looking at the whole ‘sharing economy’ craze sweeping china first with Mobike, then ofo, then basketballs, umbrellas, stools, strollers and even air conditioners, you’d know just how ridiculous this whole charade is, and when you read an article like this one, your eyes will do back filps with this whole utopian view of the future.

First, its isn’t a “sharing economy”, its a “rental economy”, yes, even Uber and Airbnb… fundamentally you are renting item X to person Y for Z amount of time for a certain price. The Variable is, who own’s X? which is related to what is the cost of X.

The reason the cost of X is so critical is because its the fundamental variable in the evaluation of the concept of ownership vs rental. Following on from this, its logically the determinate in the viability of a rental model, or if you really insist, a sharing economy model.

Lets consider aspects of X other than the cost, many things affect a persons desire for X which may affect their willingness to rent rather than own. But these are generally weighed up against the cost of X, the need for X and the frequency of use of X.

So, if X was underpant — the cost would be very low, the need pretty high, an the frequency of use pretty high — aside from the obvious grossness of sharing used undies, buying underpants is generally a cost one is willing to part with.

Take a step up, what about an H&M dress? its more expensive than a pair of undies, you’ll use it a bit less, but it costs a bit more, at the same time however, next season, you probably won’t want to wear it. — so in this case the probability of a rental/sharing model working increases.

What about a Wedding Dress? extremely high cost, extremely low usage (once), very high personalisation needs — so rental works as a model, so long as the cost of refitting is built in, so the renter needs to own the dresses. this is identical to tuxedo and fancy dress rental as well, which we already know is a legit business type.

what about an air conditioner (this is actually based on a southern china business that actually exists), the deposit is 3000RMB (around 300 GBP) with a usage fee of 1RMB per hour. before we even look at it properly you can tell its a little idiotic (certainly for domestic consumer usage), but look closer, events actually do this all the time, so whilst the model is retarded for someones own home, for a commercial venture it’s reasonable. cost is high, but usage is high, lifetime of product is also high, so spreading the cost over several years it makes sense to own an aircon if you own the property, though you might want to rent an aircon if you’re renting a property right?

What about an umbrella — again this is based on a real china business, where in the first iteration all the umbrellas were stolen. low cost, but also very on-demand in need, so great idea, but hard to track/control so not great for the renter but, for users its arguably more convenient, on the other hand, if the availability of umbrellas to buy was greater would people really be bothered about renting? — at this point it comes down to the question of the cost of X.

What it really comes down do is that the sharing/rental economy has always existed, technology really disrupted the supply side, rather than the demand side. — hotels used to have a monopoly on renting rooms, Taxis used to have a monopoly on car rides. Tech has allowed people to provide the supply and break the monopoly. But in the case of umbrellas or bike or basketballs, sure there’s some kind of a market but its less monopolised and the prices less extreme, therefore, the opportunity less impressive.

so what could be the next opportunity for this sharing/rental economy? I can’t guess, but i can suggest the factors to look at -

  • base cost of owning versus renting
  • durability of the product
  • utilitarian need of the product and commoditisation of the product
  • frequency of use by user
  • Convenience of ownership by user
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Kenneth Cheung

Written by

I like solving hard problems. Product Guy, Investor, Mentor, CrossFitter. Ad Tech professional with a focus on China, Media, and Social.

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