Technology has really changed in the way we buy, sell, and connect these days! “The sharing economy” is a catchy phrase you may have heard lately — but what exactly does it mean?
Essentially, this term describes the way we provide or purchase goods and services on community-driven platforms, mostly on mobile apps and the web. While experts think this is a trend that will stick around, many wonder why have people started to do this. What has changed, and is this a positive development for consumers? Estimates by Mckinsey state that 20-30% of the workforce in America and Europe is actually involved with such platforms. It cannot be denied that this number represents a stunning transformation in the structure of business compared to just ten years ago! Let’s take a look at some of the most dynamic players and trends in the market right now.
Most people have at least heard about Uber by now, but let’s talk about its definition and business model. The basics: Uber is a handy app that lets you order a private taxi service outside of the typical yellow car. Your driver might be another person just like you using their own vehicle for extra cash on their way to work!
Many say the impact for consumers has been positive, with more competition for their shuttling dollar than ever before. But as always, there are two sides to every story. This innovation has impacted the traditional taxi business, and they are not happy about it! In NYC, there are more than four times the number of Uber drivers than cabs. Perhaps it can be described as a mixed bag of tradeoffs, like most things — but Uber has spurred the creation of a number of other companies trying out the same idea, and they have seen massive growth. Didi is currently worth $50 billion, and Lyft has climbed to $11 billion in just a few short years! While these apps might be a great way to make extra money on the side, full time drivers do not seem to make enough to give up their regular jobs. It will be interesting to watch if drivers eventually leave the service for evolving freelance opportunities we don’t know about yet.
The 21st Century Bed and Breakfast
The sharing trend continues with users offering their homes for rent on Airbnb, a bed and breakfast traveler-centered app that is currently valued at $38 billion! While most startups fail, this one really found a niche in the market that users craved. Hotels are not cheap for those with a case of chronic wanderlust, and many people in major cities feel like their rent money is going straight into the garbage! Never fear, because Airbnb actually found a solution to both ends of this problem.
In London, there were rentals numbering in the hundreds around the year 2012. After the introduction of this app, the number has grown to nearly 480,000! Everyday people can start planning trips they thought were over their budgets, and they can pick and choose between lots of interesting experiences with superhosts — renters that volunteer to show them the city! Criticism of this development occasionally comes from locals, who discover that too many apartments in their city have been designated for travelers! It can be tricky to sign a lease with so many restricted units. One study showed that Airbnb had actually removed thousands of options from the housing market in NYC, an urban area already strapped for space. It will be interesting to see how city policies evolve over time to address the conflicting desire for increased tourism dollars and affordable housing for tax paying residents!
While freelancing has always been around as a real way to independently live and work, the tech industry has dramatically changed the way people operate in this sphere on both sides of the business transaction.
Platforms like Upwork and TaskRabbit have offered the chance for freelancers to advertise unique skills at a price of their choosing, and buyers to browse through thousands of options with a quick click or swipe. These direct provider to seller apps mean that freelancers no longer have to spend much of their money on local advertising. Why? The whole world market has opened up to find their target customers, and this is great news for those with very niche skill sets who don’t see much demand in their city. And of course, buyers can find far better prices by browsing through the competition. So is this a win-win? Maybe, maybe not. The flood of freelancers into this innovative platform has driven down wages because of the undeniable explosion of choices. It will be interesting to see how this phenomenon balances out over time! Would you consider hiring someone you’ve never met on an app from across the world?
Office Space Redefined
Coworking is an interesting trend in many big cities that have reliably high rental prices for office space. The good news: A small person just starting out no longer needs to be trapped inside their studio apartment to get some peace and quiet for their productive hours. Nor do they need to live their lives buying coffee and pastries all day to justify coffee shop table space! Companies like WeWork and MindSpace have revolutionized this area, and many copycats pop up all the time. Let’s explore this trend a bit more, shall we?
Individuals can purchase a membership to use the space as needed while their freelance work or startups evolve. And typically, these are gorgeous buildings! The interiors are stunningly stylish and modern, and wifi, private rooms for meetings, and kitchens with coffee and snacks are part of the luxury office experience. Best of all, these spaces serve as great networking hubs! A community of innovators in the middle of the city is something that people really are ready and willing to pay to be a part of, it seems. New coworking locations are currently being established in cities across the world. Who knew this would become so popular? Now that it’s here, it’s pretty easy to see why.
Peer-to-Peer Lending Trends
Access to resources and financial capital is a struggle for many people, and new platforms now address these gaps for millions. One interesting venture is Le Tote, which offer users the chance to borrow cool clothing — and then return it! The idea has been humorously described as a Netflix subscription for your closet, and it is easy to imagine why people would be wowed by this shopping alternative. An upgraded version of the idea is Rent the Runway, which lets women pay other users to wear their designer gowns when special events arise. Few people these days really want to spend $1,000 on a clothing item they will wear for a matter of hours, and then never again!
Other sites have popped up for similar arrangements with household tools and cooking appliances, and it is conceivable that this will spread to other categories of goods we use everyday. And finally: In terms of cold hard cash, sites like Lending Club allow users to lend each other money at interest rates lower than banks and credit cards. This is definitely an area to watch in the future! Would you try any of these Peer-to-Peer lending ideas yourself?