#What Is the Sharing Economy?
The sharing economy is one of the fastest growing business trends in history, with investors dumping more than $23 billion in venture capital funding since 2010 into startups operating with a share-based model. Because many of these businesses are private, it’s impossible to know the actual size of the sharing economy.
However, there are several clues to indicate its massive impact on our society.
- Airbnb ($31 million) and Uber ($72 billion) have a combined $103 billion market cap which would rank them as the 38th wealthiest country in the world.
- In 2016, 44.8 million U.S. adults used the sharing economy, and it’s expected to grow to 86.5 million U.S. users by 2021.
- McKinsey estimates that in the U.S. and Europe alone, 162 million people or 20-30 percent of the workforce are providers on sharing platforms.
Trying to define exactly what the sharing economy is would not do the term justice. The sharing economy is an economic principle that is constantly evolving. In the very simplest terms, it’s the use of technology to facilitate the exchanged access of goods or services between two or more parties.
It’s derived from the notion that mutual parties can share value from an under-utilized skill or asset. This value exchange occurs through a shared marketplace, collaborative platform, or peer-to-peer application.
The sharing model isn’t a new concept—as many rural communities thrived off the same idea via bartering. However, thanks to the accessibility of the internet and mobile technology, managing share-based transactions has never been easier.
The sharing economy has a history of disrupting traditional business sectors. The lack of overhead and inventory help share-based businesses run lean. The increased efficiencies allow these brands to pass-through value to their customers and supply chain partners.
Traditional industries are being affected by the sharing economy—and many traditional brands will struggle if they do not adapt to the changing landscape.
#What Is Next for the Sharing Economy?
Technology has helped the sharing economy advance to where it is today—and, the trend should only continue as we become more connected digitally. While we’ve seen how dominant collaborative consumption can be in industries like transportation, consumer goods, and services, many other traditional sectors will soon experience changes because of the sharing economy.
BY DEREK MILLER