Our grandparents knew all about it and now the sharing economy, based on sharing resources like cars, accommodation, office space and skills, is booming once again, enabled by the Internet. Find out how your business can respond to this new sector.
According to Pricewaterhouse Coopers, the sharing economy is set to explode. In August 2014, it released research projecting that five ‘sharing economy’ sectors — peer-to-peer accommodation; car sharing; peer-to-peer finance; music, TV and video streaming; and online staffing — could potentially generate global revenues of more than NZ$18 billion by 2025, up from NZ$1 billion in 2014.
Based on rating or review systems which build trust, the sharing economy takes things like cars and spare rooms and rents them out to other users. This reduces costs and allows people to use objects only when required, reducing the need to buy new versions. Sixty eight per cent of us globally have indicated we would happily share or rent our items and two thirds would use others’ services or products.
The model is a key enabler of a more circular economy as it looks to reduce the waste created by underutilisation of assets and in turn reduces the need for purchasing new ones.
Victoria Carter, CEO of CityHop, says that the sharing economy is nothing new. “We just forgot how our grandparents used to live! They weren’t part of the ‘consumer’ generation where we all had to have our ‘things’ like a mower, tractor, hedge cutter – they shared with their neighbours.”
She says that CityHop, which allows users to share cars and reduce their business’ work fleet by hiring cars by the hour, is having a big impact in terms of sustainability. “The more we share the less we need to individually own. It makes better use of resources, means we can live in smaller spaces (more sustainable!), but better still, it creates community, something we have been losing in big cities.”
“Every car-share car takes 15 privately owned cars off the road and car-share users walk and bike more and drive fewer kilometres than car owners – that illustrates the impact of the sustainability of car sharing.”
She says people are getting more used to the concept of sharing a car and she expects the sharing economy model to grow in New Zealand. “People are starting to think in a more open and co-operative away about what they have and whether it can be used more efficiently and effectively. If other cities are anything to go by we will be sharing a lot more of our ‘stuff’ in five years.”
Victoria also says the sharing economy is a no-brainer for businesses. “Anyone focussed on the bottom line should learn how the sharing economy could benefit their business, whether it’s their staff sharing an office remotely or sharing desks or cars. There is so much to be gained by businesses understanding the sharing economy.”
YourDrive is a website that enables people to rent out their vehicles when they don’t need them. Managing Director Oscar Ellison says it makes use of an asset that would otherwise be idle, since most cars are only used for one hour of the day. “Car owners have control over the price, when their vehicle is rented and to whom,” he says.
While private vehicle ownership is entrenched in our culture, Oscar believes a shift is starting to take place with a trend towards greater public transport use, active modes of transport like walking and cycling, and car sharing.
“Older generations typically see assets like cars and houses as providing a sense of freedom, but to the millennial generation they are viewed more as a liability. They want access to those assets rather than ownership.”
He believes that the sharing economy works particularly well with higher value assets, such as cars and houses, where there is a greater reward for both parties.
“One of the biggest obstacles to accelerating the sharing economy is trust. We’ve made it a focus, so YourDrive users and owners are fully protected through a system incorporating rating, vetting of users and background checks, for example on drivers’ licenses.”
Uber is a ride-sharing service that uses an app to connect people needing a lift with registered drivers who can deliver a reliable and safe ride at the click of a button.
AJ Tills, Marketing Manager at Uber, says it’s a great example of the sharing economy, which is focused on better utilising existing resources. “Uber connects drivers on the road with riders looking for rides in a safe, reliable and accountable way, in order to fill empty seats and drastically lower costs of transport.
“New Zealand has one of the highest rates of car ownership in the world and we believe that ridesharing can dramatically reduce this number, as well as providing economic opportunities for thousands of everyday Kiwis. It’s a win-win that will see a clean, green New Zealand in the years to come.”
Uber is a global service that is currently available in Auckland and Wellington in New Zealand. It is currently offering SBN members their first ride for free – click here to find out more about this Member Offer.
MyCarYourRental.com, which is in the start-up phase, is a peer to peer rental platform that connects car owners who want to turn their idling vehicle into profit with local residents who need a rental vehicle.
The platform lets both the car owner and the renter decide all criteria for the rental, including the price – which can even be zero if a car owner simply wants to help a neighbour out. In this case the site is simply used to control who uses the vehicle and when.
“The more a vehicle is utilised, the better for the environment as we don’t need to produce more cars to do the same job,” says founder Henrik Stovring.
“That’s why the peer to peer concept – or the sharing economy – benefits not only the local community but also the global environment.”
Based on experience from Europe, Henrik believes this type of market model will grow fast, not only in the larger cities in New Zealand, but also in rural places where car rental usually is hard to find.
Three tips for businesses interested in the sharing economy:
- Look at your organisation’s current assets like vehicle fleets, office space or warehouse space and understand how much underutilised capacity they represent. Consider if this could be of value to others via a sharing model.
- Consider the ‘tools’ you use for doing business – such as IT services, cars and desk space – and see if providing access to them for your staff via a sharing model rather than ownership would be more beneficial.
- Think about how your customers use your products. Do the products have spare capacity that could be shared? Do your customers even need to ‘own’ the products? Would sharing or renting be a better solution? Investigate taking a proactive stance via partnering with an existing sharing platform or even consider creating one if it doesn’t exist in New Zealand yet.
For example, Patagonia partnered with eBay to create a redistribution market for its pre-owned outdoors apparel. Patagonia customers can sell their second hand clothing on eBay, under Patagonia’s brand. By expanding its product offerings into pre-owned goods, Patagonia effectively expanded its market, reached more consumers, and encouraged more economic transactions around its products.
Find out more about the sharing economy here.
The sharing economy is helping to accelerate the Circular Economy – find out more about the Sustainable Business Network’s work in this area here.