It seems as if everyone uses Uber to get somewhere or Facebook Marketplace to buy new toys or sell furniture. These are examples of the sharing economy, which since its beginning has pervaded lives and transformed consumer habits. Furthermore, it has made certain goods and services more accessible, while opening opportunities for millions to earn extra income.
The potential of the sharing economy is limitless with respect to revenue and market penetration. At its heart, this model reflects a societal desire to undermine existing business methods and practices. Sometimes, it values time over savings. Other times, it offers convenience for an additional fee.
The sharing economy has arrived at a pivotal stage largely due to the COVID-19 pandemic. This makes it a good time to re-evaluate where it’s heading and if consumers should go along for the ride. We need to ask ourselves if this way of life and style of consumerism will vanish, or will it continue to push more traditional businesses to the point of extinction?
Giants of the Sharing Economy
The sharing economy has too many companies to count, but only a few are considered true giants. These companies have reached impressive levels of revenue and brand recognition to the point that they are labelled “industry-disrupters.”
Uber is a prime example of the sharing economy’s principle that people will pay more for convenience and ease. Instead of standing on a corner desperately trying to hail a cab, you simply summon one with a few taps on the Uber app. Users agree to the fee beforehand and get real-time tracking as to when their driver will arrive and when they will reach their destination.
Uber Eats, SkipTheDishes and DoorDash—among others—allow you to order meals from a variety of restaurants. These restaurants can be independently owned or part of a chain, upscale or fast food, and everything in between. The model usually calls for customers to pay an additional service fee, and some menu items might be more expensive than if bought in-person.
TaskRabbit lets you hire tradespeople on a freelance basis. It pairs labourers with relevant jobs posted by users. Anyone who has hired movers or a carpenter knows it can be quite difficult and often requires a degree of blind trust. TaskRabbit eliminates the murkiness and lets users feel at ease with who they are hiring and what the cost will be.
These are just a few examples of companies that have catapulted the sharing economy to brave new heights. They’ve risen to the top by meeting the needs of demanding markets and offering services that simplify the lives of users.
Yet, their success might not give a clear indication of where this model is headed.
Growth by Technology
The sharing economy is almost completely enabled by technology. Despite there being human interaction, like with Uber or eBay, the logistics and transactions happen solely with the help of technology and occur exclusively on mobile or web applications.
Even a simple trading platform, like Bunz, relies on technology to connect users, encourage engagement, and facilitate transactions. This economy is fuelled by tech companies that seem to be expanding exponentially by the week. There is simply no way to remove technology from the equation.
This model illustrates the power of technology to influence the economy, and it’s not remotely close to peaking.
Potential for Greater Success
No economy is impervious to failure, but the pandemic has made people more invested in using the app-based sharing economy to make money or to purchase goods and services.
The current reality is that most local businesses can have only a limited number of customers—or none—inside their establishments. This might continue for another year or more. The benefits of apps and the sharing economy (whether it be staffing, operations, marketing or sales) have helped businesses stay afloat or even expand to meet the evolving needs of consumers.
The value of the sharing economy resides in the potential benefits it offers to the working class. This demographic stands to gain much from this model. Theoretically, it can help students, the unemployed, families and immigrants who are looking for resources to establish themselves financially and professionally.
Another aspect of the sharing economy that could experience a significant boost is talent sharing. As more companies go remote and virtual, talent sharing can play an important role in organizational growth and professional development. For instance, if a business needs a worker in a pinch to fill a certain role, they could find the necessary support by partnering with another business to share staff or to provide opportunity for those laid off or furloughed.
One reason to believe in this model’s continued success is because its tentacles extend into most industries—hospitality, transportation, consumer goods, and healthcare, to name a few—and most businesses can utilize it in some way.
Will it Fail?
While many companies playing in this world are experiencing growth or heading toward an initial public offering (IPO), many are struggling. As more competitors fill the market, it’s morphed into something of an arms race.
One element that can’t be overlooked is the reliance on humans to be the service providers. It’s no secret that companies like Uber have experienced pushback from their workforce, governments, and the public for their lack of oversight and low wages. If people feel they can earn more in other full- or part-time jobs, then they may not see Uber as a viable employer.
Perception will also have a hand in determining future success or failure. If the overall perception shifts and people start to approach these companies with trepidation, they will be quick to leave if red flags consistently emerge.
COVID-19 has helped the sharing economy gain popularity and importance at an impressive rate. As Canadians stay home and rely on apps and digital services to keep their households and lives moving, the industry is discovering immense growth potential that could outlast the pandemic.
A Healthy Dose of Skepticism
There’s little denying the success of the sharing economy in its current iteration. Its presence can be felt in most corners of our world.
We should continue to enjoy what it offers, but remember that, as employees and consumers, we hold the keys to where it will go next. Our role will be to hold these companies accountable to more than just shareholders. They must operate in a way that is economically feasible and in the best interest of the people they serve.
Rob Shapiro | Contributing Writer