Drivers of sharing economy [social, tech, environmental]

In the previous story we understood the impact of economics drivers to push forward the sharing economy, now let’s analyse other drivers.

1. Social

Two hundred years ago Adam Smith started to explain that the better way to reach a wealthier society is to have a more productive society. People will be able to work a lot motivated by their self-interest and this will be good for the society as a hole. Later everyone was encouraged to give up their free time and work more in order to consume more. But it arrived at the point where people do not have enough free time to enjoy the fruits of their labour. Nowadays, the new generations are more likely to be involved in charities and would like to come back at a more sharing economy and collaborative consumption. This generation now consume as much as others generation but use to purchase useful things, things that make sense. In fact, ownership was a marker of individual success in the past, the wealth was judged by the size of the house, car or other assets owned. Recently peoples started to understand that it is very expensive and not always useful to possess all these things which are often unused (car is parked 95% of its life, drill is used 15 min). With the sharing economy it is possible to use these assets when we want and pay for the amount of time we use it. Better than ownership because we don’t want the product we want the experience which will fulfil our need. For example we do not want the CD or the power drill, we want the music or the hole. Everyone is spending huge amount of money in things they do not really need. It has been quantified by an organism against the hyper consumption as 10 billion dollars every years just for the Australian peoples. This way of consuming and throwing away as soon as we would like another product is a characteristic of the capitalism, it is like an addiction to buy the latest iPhone even if the past version we have since a year is still working. This reduce the life cycle of the products. Renting can appear as a solution to these problem allowing the peers to benefit from the latest product without owning them and so at a lower cost.

Moreover, the peoples changed their way of thinking. Following several years of impersonal relationship between buyers and sellers, there is recently a back in time trend. In fact, people nowadays enjoy marketplaces with more interaction between peoples, customers want to know with whom they are transacting. This improve the transparency at different level: quality, partnership, supply. For these persons, it is more important to be part of a collaborative consumption than saving money according to a survey of the Helsinki institute.

The sharing economy contributes to increase the personal interactions between peoples, the more you communicate the better you are able to communicate with other peoples. It is not only sharing something with someone and wait for something in return, it is more than a chain and it will be someone else who will give you something back. It is a collaborative lifestyle. The platforms not only create a place to make the transaction but it goes further with giving the chance to share something between peers, for example with Airbnb where the owner will mostly take time to chat with the renter about the things to do in the city, giving advices, sharing hobbies for example (Botsman and Rogers 2011).

2. Technology

The third important driver contributing to the development of the peer-to-peer economy is the technological progress of the latest years.

Firstly the huge expansion of the mobile phones with gps devices, online payments, apps or social networks. Today, 65% of the people worldwide have a mobile phone and this goes up to 85% among the younger part of the population. This allowed a development of the sharing economy with a better availability for the customers to access digital applications linking them with others peers. In the past it was done through computer and the access wasn’t very easy. Thanks to mobile phones its more convenient and flexible which are the key advantages driving to the acceptation of the sharing economy.

The second thing which contribute to the development of this economical system is the online payment. Thanks to bank transfers or payment platform such as Paypal, it is nowadays very safe and easy to send money to someone else with many steps of ID checking. Furthermore it can avoids the personal meeting which could be a barrier to the transaction for some peoples.

Then, the increasing use of social networks has been another good things in order to increase the trust between peers by allowing people to have a look of other users profile and reputation as well as having a conversation with them before the transaction.

The notion of big data also starts to be a little bit more popular. Almost all the businesses within the sharing economy operates through an online platform. The big data is the analysis of all the information of the users (age, location, illness, preference) transiting through the platform. These results are stored in a database and can be filtered. This allow to provide better customer services by providing more targeted and accurate services, all these platform are based on the big data because it is the algorithm which are connecting a provider and a client (Nalder 2014).

As a conclusion on this point, there is an important correlation between the success of the sharing economy and the technological discoveries. The latest devices open a wide range of new business ideas and allows to exchange faster, in a more convenient way with more transparency. However peoples can be afraid to use new technologies because it is new things which are not always known from everyone. There is still a risk of fraud or scans during the transactions as well as hacking of the information.

3. Environmental

Finally, it is also for environmental reasons that the sharing economy know this development. Hyper consumption had really bad impact on the environment destroying it. Within a sharing system, assets are used more efficiently and limit the hyper consumption. This will then have consequence on the global production as well as the wastes. Even the designs of the products will have to be changed in order to be in line with these new practices. In fact, the efficient aspect will have to be more important than the aesthetic one to be more durable. Until now, the features and lifetime of a product are not the most important things. It aims to be more ecological and environmentally friendly. It is an ecological solution to, for example do not need to put in the bin stuff just redistribute it with people who wants it.

Thanks for reading this story, next time we will conclulde on the sharing economy with the role of trust, the limits and the study of the application within the finance field.