We have all heard of the ‘sharing economy.’ But how big a part will it play on our lives? And is it a sure-fire way to make your fortune?
Last year Rob and Lottie, the owners of my favourite coffee shop, came up with a great idea. If you wanted to take your latte or flat white into the nearby park, you could borrow a rug. Send them a tweet, contact them through WhatsApp, turn up in ten minutes and coffee and rug were waiting. If only my wife had been on time…
‘Borrow a rug’ is a very small, very simple example of the sharing economy. We have all heard the phrase – but what does the ‘sharing economy’ really mean?
The sharing economy is a broad term, but it is generally used to describe economic (and social) activity using transactions that are done online or via an app. It originated in the open-source community and first referred to peer-to-peer sharing of goods and services. Now the term has broadened to describe any transactions done via online market places, and some commentators even use it to cover business-to-business transactions.
The numbers are impressive
At the moment some people feel uneasy with the sharing economy – but as trust and familiarity with services from the sharing economy continue to grow, so too will the number of users. According to eMarketer’s latest estimates, 26% of US adult internet users – that is 56.5m people – will use a sharing economy service at least once in 2017. That figure is up on previous expectations as people become more used to ride- and home-sharing services like Uber and Airbnb.
For now, trust remains the biggest barrier to further growth: an April 2017 survey from Maru/Matchbox found that 31% of US consumers did not consider Airbnb to be safe – while 28% said the same about ride-sharing services.
China’s sharing economy – backed by a surge of investments from angel investors and venture capital firms – is expected to grow 40% this year to 4.83tn yuan. That is equivalent to around £540bn, with suggestions that it could account for 10% of China’s GDP by 2020.
Some of the companies in the sharing economy are now household names worth millions or billions of dollars – Airbnb (if you want somewhere to stay), Getaround (if you want to borrow a car), Lyft (if you have fallen out with Uber), and Dogvacay (if you just cannot face putting Roger in kennels…)
As the figures above suggest, the two biggest economies in the world, America and China, are the ones that have most eagerly embraced the sharing economy and spawned the biggest number of start-ups. So is a sharing economy start-up a sure fire way to make a million – sorry, billion?
Sadly not – but some of the companies that have been started give an interesting insight into what we might soon be seeing far more of in the UK.
One of the most successful sectors of the sharing economy in China has been bike-sharing: companies like Mobike have become extremely popular and they have just launched in Manchester.
If you are not cycling in China, the chances are that you are walking. But walking is a risky business. It could rain: you could get wet. So what better than an umbrella-sharing business?
Sharing E Umbrella was rolled out across 11 cities in China, with chief executive Zhao Shuping saying that he had been inspired by the success of bike-sharing schemes and “realising that everything on the street can now be shared.”
What a fantastic idea!
No pot of gold at the end of the rainbow…
Customers use an app on their smartphone to pay a 19 yuan deposit (just over £2) for the umbrella, which then costs 50 jiao (just over 50p) for every half hour of use.
With 43” of rain a year in Shanghai (around 10” more than rainy Manchester) Zhao Shuping was surely on to a winner. Almost a ‘sure thing’ you might say…
Sadly not. Only a few weeks after launching, Sharing E Umbrella has been forced to announce that it has ‘lost’ almost all of its 300,000 umbrellas. A ‘brolly bad show’ as the Guardian put it.
It would appear that many people ‘forgot’ to return the umbrellas – something that is rather more difficult to do with a bicycle. Zhao decided that the safest place to store the umbrella would be at a customer’s home, where it would be safe and undamaged. Sadly, all too often the sun came out the next day and that irritating final step of returning the brolly was overlooked. Undeterred, Zhao promises to release another 30 million umbrellas by the end of the year: as they cost 60 yuan each to replace that is a total investment of 1.8bn yuan – equal to over £200m. (Yes, I had to check the calculation.) Either Mr Zhao is remarkably persuasive or the venture capitalists who back sharing economy start-ups in China have a lot of faith in people’s honesty.
But it is not just umbrellas and bikes which you can share in China. A host of other companies has taken advantage of the country’s craze for the sharing economy. Foreign giants like Uber and Airbnb obviously have a presence in China, but their respective Chinese rivals – Didi Chuxing and Tujia have done even better. Even basketballs and cell phone chargers have become part of the sharing economy.
So does that mean we will see a similar explosion in the UK? Almost certainly. Zhao Shuping may have been wrong about people’s propensity to keep the umbrella they had just ‘shared’ but when he said, “Everything on the street can now be shared” he was right. There is a downside, however: we have written many times about the plight of the high street and this is – inevitably – another stake driven through the heart of retail. Why buy a basketball when you can share it?
…And, of course, the sharing economy has to solve the ‘umbrella problem’ and make sure people do not translate ‘sharing’ into ‘keeping.’
Maybe 40 winks is the answer…
Well, one company in China has come up what seems like a fool proof answer: shared services which cannot be moved and cater to clients who are asleep. Many Chinese office workers apparently like a nap in the middle of the day. Now – for just 10 yuan (£1.10) they can book half an hour in a ‘space pod’ in a ‘capsule hotel.’ “It is meeting a significant demand,” said Han Yue, operations manager at Xiangshui Space, which launched in Beijing in May and has since opened in Shanghai and Chengdu. Unlike Japan’s capsule hotels – which cater for clients who want to spend a night – Xiangshui Space’s is catering specifically to the ‘quickie’ market (no, not that sort of ‘quickie’) with the rate dropping to 60p for half an hour at off-peak times.
It seems an ideal solution – especially when you are exhausted from all that cycling and basketball. Not to mention running home to show the wife your new umbrella…