What Is the Sharing Economy?

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Posted by The Savvy Retiree on August 1, 2017 in Online Income

Andy Fleming writing on the sharing economy…

Ever used Uber or Lyft as a cheap alternative to a taxi? Or rented a room on AirBnB for an affordable vacation? Or bought something on eBay or Etsy? If the answer is yes, you’re part of the sharing economy…a new way of doing business that cuts out the middle man. Whether you’re looking for something or providing something, you can meet your supplier or customer on the internet.

Really, the mechanisms that drive the sharing economy aren’t unique or novel in any way. Ten years ago, you might throw a friend or relative 20 bucks to borrow their car or bike for the weekend. Renting a car or bike through the sharing economy is pretty much the same thing, except transactions are handled through a sharing platform…like a website or app.

It might seem weird to have a business handle these kind of friendly, informal transactions, but it means they’re always available to you, and that both parties are held accountable should anything go wrong. It would be great to have friends all over the world, ready to lend you their vehicles or apartments at low cost; but, unless you’re incredibly popular and well traveled, this probably isn’t the case.

The Global Sharing Economy

Instead, services like AirBnB and RelayRides are set up to allow you to rent or share items with others regardless of where you are and when you need them. They also usually have insurance policies in place so that you can rent items to or from strangers without worry.

The sharing economy has risen out of the need for affordable goods and services. We’ve gotten to a point with our particular brand of capitalism where so many things – from room rentals, to pet-sitting, to house cleaning – are luxuries only affordable by those with six digit salaries. The sharing economy often simply removes the “middle man” and puts those willing to provide a service in direct contact with their customers.

You no longer need a special license and a specific car to drive a taxi if you want to make some extra cash on the weekends, nor do you have to commit a certain number of hours to become an official employee of a taxi company. All you need is a decent car and a smart phone to become a driver for a ride-sharing company. Plus, you get a bigger cut of the rider’s fare and the flexibility to work whenever you desire.

Sure, there are some big businesses attached to these kinds of services, but they’ve adopted models that are much more friendly to both the worker and the client. Uber employs over 150,000 Americans, but doesn’t require a single one of them to report to work at a certain time or on a certain day. Don’t want to work on Christmas? No problem. Only interested in picking up a customer or two on your way home from work? Fine by Uber. You won’t ever run the risk of getting fired or laid off and the amount of money you can earn is in your direct control.

The Second-Hand Sharing Economy

Often, sharing economy websites and apps simply allow you to run your own side-business much more easily. There’s a website called Poshmark which allows you to sell used clothing the same way you would at a thrift store or yard sale. However, unlike a thrift store, you have direct control over your prices and you don’t have to spend a weekend setting up signs and sitting in front of your house like you would with a traditional yard sale.

This also lends itself to a much more sustainable economy that encourages trading and re-using consumer goods. Instead of buying a shop-vac or power washer you only need for one big cleaning job, you can borrow one from someone down the street. It’s cheaper, and you end up with a lot less unnecessary “stuff” that ends up gathering dust in an attic or basement.

The sharing economy doesn’t just save us money, it also allows for a better quality service. Instead of kenneling your dogs when you go on vacation, you can find a sitter through a site like DogVacay. It’s cheaper, and they’ll be staying in a nice home with someone who will properly care for them, instead of being locked in a crate until it’s time for their scheduled walk.

At the end of the day, the sharing economy is really just a way of using technology to place customers in contact with people willing to provide or share goods and services. What’s more, companies are starting to learn that the public is fed up with being taken advantage of, and that working alongside their employees (instead of taking advantage of them) is a better way to earn a profit.

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Image: ©iStock.com/GoodLifeStudio