The growth of widespread digital technology has changed the way we spend and earn money. The ‘on demand’ culture of online retail has given rise to a surge of new platforms specialising in taking familiar services and using the online network to turn them into a peer-to-peer commercial exchange.
[easy-tweet tweet=”The growth of #digital technology has changed the way we spend and earn money ” hashtags=”SharingEconomy”]
Whilst giving a ride, running an errand or borrowing an outfit were once something shared between people in an immediate social circle, the growth of websites and apps connecting people online has made it possible for these services to now be exchanged with strangers for a fee. The platforms facilitating this change are driving the rise of what has become known as the ‘Sharing Economy’, a system that relies on ease of use, low prices and brand trust of the technologies behind it.
Take our first example, giving a ride. French company BlaBlaCar matches passengers who need to travel with drivers who have empty seats. Bookings are made quickly and securely, with payment upfront, and drivers who would previously have been making the journey at their own expense are now covering costs or even earning as they go. By ensuring that all users are identity checked and profiles moderated, BlaBlaCar has built up trust in its service and adds value to the transaction by insuring each journey and offering further safety options such as a ladies only service.
A key part of the brand integrity BlaBlaCar has earned comes from the integration of social profiles such as Facebook to their service. Alongside reminding users that they are dealing with real people, the social capital carried by social network users has transformed the review and recommendation process for customers. Users are much more likely to trust an opinion or feel safe traveling if a friend in their network has responded positively to their own experience. The fact that the BlaBlaCar lift sharing network now transports more people per year than America’s rail network Amtrak, despite not having any concrete investment, is proof in itself that a large proportion of consumers see this peer-to-peer exchange as a preferable alternative to purchasing through the more traditional market.
Website and app TaskRabbit also uses a similar trust model build confidence in its brand. By aggregating a wide range of ‘taskers’ who can fulfil odd jobs and errands, TaskRabbit matches people who have the time and/or skill to complete tasks with people who need them doing. The platform provides transparent pricing and online payment options, eliminating the need to ask for quotes or pay in cash.
However, the most revolutionary aspect of the platform is the collation of trusted traders all in one place, removing the need to ‘shop around’ and that feeling that you might have got a better deal if you’d looked elsewhere. The effect this service has on the economy is huge. We see spending increase as users are given more options to buy tasks they may have done themselves, or previously put off due to the hassle of sourcing labour. TaskRabbit markets it as ‘buying time’ and it’s working, not just for the customers but for the traders as well as ‘taskers’ are able to work flexibly, selecting the jobs they wish to take on so the workload can fit around their lifestyle.
This flexibility is another important part of the Sharing Economy as it gives the trader and the customer more control. Companies like Rent the Runway are offering consumers flexibility in their purchase options by encouraging a move towards low commitment, lower cost rental options. Rent the Runway provides a high-end fashion rental service, allowing users to hire clothes for special occasions that for most buyers would otherwise be unaffordable purchased as a one-off. Whilst their partner retailers would previously have relied on a limited customer-base paying high prices, Rent the Runway provides a service where customers are paying lower amounts, to rent out outfits more frequently. The company partners with stores and designers to offer a wide range of choices, provide styling advice and clothing insurance during the rental period, using the brand capital of the designers integrated with the social capital of user feedback and ‘real life’ examples of customers wearing the clothes to build customer loyalty. Frequent users of the service have the option to commit slightly more and pay a one off monthly fee to select three items of clothing to keep for up to six months.
Many of the tech platforms mentioned above are well on their way to becoming household names, but as they become more established in the Sharing Market, what are the next generation of technologies driving crowd-based capitalism and what are they doing differently?
Look out for names like OpenBazaar – a platform for traders and consumers to connect directly without the facilitation of a third party. This and other platforms like Lazooz, where users can offer lifts in their empty car seats, sound familiar to BlaBlaCar and eBay, but the difference is that apps and websites like these are pioneering the concept of a decentralised market, where the consumers and providers participating in the market are also running it. In these examples, the technology allows users to connect with each other through the network and conduct transactions between themselves with no centralised infrastructure to bump up fees. The crowd is not only the source of the labour but also provides unregulated information and money.
[easy-tweet tweet=”Flexibility is another important part of the #SharingEconomy as it gives the trader and customer more control”]
How far we move towards this peer-controlled market model and reject the brand trust for a system based entirely on social trust is as yet unknown, but it is clear that our growing access to tech like smartphones, digital ID verification and the ‘social capital’ of Facebook has shifted economic activity away from traditional institutions towards the peer-to-peer marketplace and this will only increase as the technology improves.