Common worries about the sharing economy — and why they’re not so bad when you’re with Daggle
Trying new things can be scary. We’ve all been there: situations where you hesitate or feel reluctant to do something different. It could be anything from buying a new brand that’s come on the market to throwing yourself down a scary chute at a waterpark. It’s tense, often stressful, and can lead to paralysis or avoiding new things altogether.
When it comes to the sharing economy, and in particular borrowing things from other people or lending out your own things to strangers, people have a lot of questions and very little experience, so naturally they have a lot of concerns.
From talking to many, many people, here are the most common ones that cause people to hesitate before taking the leap into the sharing economy and our answers on why you shouldn’t worry and should give it a go.
1) What if my stuff gets broken, lost, or stolen?
Almost the first question every time — and a very good one. The answer actually has a number of layers, which should be reassuring for first-time users.
The first layer is insurance. A basic insurance cover is provided for all items up to a certain cap. This is standard practice across most startups providing a marketplace platform for people to borrow and lend things. Here at Daggle, our intention is to provide the basic insurance cover, and for items that are more valuable users can opt-in to a higher coverage by paying a small premium.
The second layer is real-time payments. At Daggle, because you pay for the thing you borrow by the second, that means money is moving from your account to the lender’s account in real-time while the item is being borrowed. This creates a strong incentive for you to bring it back! Otherwise your funds will just keep going to the lender. We also have backstops in place, such as having a credit card on file, should borrowers run out of funds. For expensive items, users won’t be able to borrow them unless they have a minimum amount in their accounts.
The third layer is vetting. All users (on Daggle at least) have to prove who they are. It’s a basic function of the fact that we hold user funds and so must comply with AML (anti-money laundering) and KYC (know your customer) regulations. The benefit is that every user knows that every other user has been vetted and that they are who they say they are. The end result is people are highly unlikely to walk off with your stuff because we know who they are and would just call the police!
The fourth layer is social capital. Just like on Uber, after each transaction both the borrower and lender get to rate each other. If the person you lent your bike to was rude and didn’t treat it properly, you give them 2 stars. Or if the person you borrowed the BBQ from was mean and the BBQ was rusty and falling apart, you can give both a low score. This makes it in the interest of users to treat each other with respect, as well as the items they borrow, or else people won’t borrow their things or lend things to them.
2) What are the cost implications?
The entire purpose of a marketplace where people can borrow things is to save money. It is often a lot cheaper to borrow things under certain situations than to buy them, even second hand.
But is there a cost for using the platform itself? That depends on the platform. Quite a few charge transaction fees that ultimately make the end price higher for the borrower and the net income lower for the lender. These can get as high as 20–25%, which on low-value items is quite a big chunk of change and highly disincentivising.
At Daggle we have a different model. Whenever you borrow something we never charge. It will always be free to use and you will only ever pay the lender what they charge you. As a lender, we don’t take a cut of your transactions as we have zero transaction fees. Instead we work on a dynamic subscription plan. Each month, depending on what you earn, we will charge you a flat fee.
To explain this, let’s look at a hypothetical scenario.
If you are in the lowest bracket in January, say earning $0–20 that month, we won’t charge you anything: the subscription fee is $0.
If in February things pick up and you earn $21–50 then we’ll charge you a flat fee of $4.
And then in March things get even better and you earn $51–100 then we’ll charge you $10.
But in April things drop off a bit because you go on vacation and you only earn $0–20 that month. For that month the fee is $0 again.
This setup has two important implications. The first is you will never be in the red because of Daggle. You only pay when you earn. That leads to the second implication: Daggle and users are 100% aligned. It is in our interest to make sure you earn as much as possible!
3) Is it really that more convenient?
Convenience is often as major a decision factor in the minds of customers as costs when it comes down to it. The rise of Amazon and internet shopping has proven that convenience is king.
The amazing thing about online marketplace platforms for borrowing and lending things is that they can be even more convenient! How is this possible?
The first way is that these marketplaces are built around local communities. It is easier to borrow something from the family upstairs and get what you want right away than it is to wait 1–2 days for your Amazon order to arrive.
The second is that — on Daggle at least — lenders have the option to make their items more competitive by offering to deliver to your door (or wherever you need it). No need for you to even cross the street as they’ll pop on over and drop it off for you!
The third is — and this is on the Daggle roadmap — that these marketplaces can provide delivery services should what you need not be available in your local community. The driver can pick it up from another neighbourhood and drop it off to you free of charge. Since the item is locally sourced not only is the delivery time a lot quicker, but the environmental impact is also less. Double win!
4) How can I trust the items I get are good quality?
Thankfully, this worry is not too difficult to overcome. Online marketplaces for purchasing things — everything from eBay to Etsy — have been around for a long time. There are tried and tested systems in place to make sure that customers are getting good quality products.
The first one is back to the star rating system. If you lend out shoddy items, you’re going to get bad scores and reviews. That provides greater market information to help other users decide whether to borrow from you or not.
The second is marketplace pruning, where we as Daggle would regularly remove underperforming lenders and their items to keep the overall average quality of items high. This is commonly done by sites such as Airbnb, Uber, and others.
The third is to have solid, customer-friendly policies for refunds that allow for people to get their money back if they were not satisfied. This ensures that even if you do have a bad experience, you are at least not out of pocket.
5) Is it safe and secure?
Safety and security have to be paramount, and at Daggle we will always work to protect our users. Again, the sharing economy industry — led by the giants Careem, Airbnb, and others — have made great strides to embed safety and security into their products. Daggle learns from them and builds upon it based on what our users need.
The first step is in educating our users on best practices. We will be building out advice and guidance for borrowers and lenders to make sure they stay safe and don’t put themselves in any unnecessary risk.
The second is multi-factor authentication. Your funds can never be spent or withdrawn without you verifying the transaction through a secondary verification process. This could be an SMS to your registered phone with a code, or getting a code from an app such as Google Authenticator. For withdrawals, extra security considerations will be put in place, including confirmation emails that also require code verification.
The third is vetting and social capital. As mentioned above, because we are required to verify every user and every user can rate others, this discourages bad behaviour. If someone was overtly threatening, not only can you give them a low score and bad review, but you can put in a formal complaint to Daggle that could end with them being removed from the marketplace.
In the end, thousands of people a day are exploring and benefiting from this new part of the economy. Whether it’s realizing there are lots of reasons to borrow instead of buy or understanding the value of lending out your things, the upsides really do outweigh the downside worries. The best way to figure out if it’s for you is to give it a try. It’s basically free to use, can save you money, and is really, really convenient. So don’t worry, just get sharing!
