The sharing economy is one of the most important practice in the Internet era. The sharing behavior is a phenomenon as old as humankind(Belk,2014), and the natural behavior has become a transformative force in contemporary society as a new form of economy which has revolutionized how the consumers access to goods and services. This essay explores its historical evolution, economic implications, societal impacts, challenges, and future trends. This essay would work on a comprehensive exploration of the historical evolution of sharing economy and the development of sharing economy in the Internet era. In addition, the essay would examine the social impacts and future trends that would continue to mold this innovative economic landscape.
Evolution of the Sharing Economy
The sharing economy allows consumers and individuals to share or participate in the creation or use of products, goods, and services (Author,2021). This practice becomes common in commercial application since the digital 3.0 era, as the fast developing of technology increasing the information and commodity transfer capabilities is the foundation for sharing economy (Schor and Fitzmaurice, 2015). Sharing economy practice is common taking place across online communities and digital platforms. The sharing economy advocates owning less and living better. This economic model encourages people to rent, borrow or share rather than own. This economy model is a shift from traditional ownership-based consumption models that is redefining the way we live and consume. In this new economy model, leadership is more collaborative and distributed than ever before. Although the sharing economy has only started to gain popularity in the past few years, the concept has revolutionized our lives in many ways, from transportation to vacation rentals and even business models. It also changes our concept of leadership—from traditional hierarchical structures to collaborative, innovative networks. In this ecosystem, ideas rather than people become the source of value, and the emphasis is on acquisition rather than ownership: use what you need when you need it, then move on to the next task.
Case Studies and Real-world Examples
Grounding theoretical concepts discussed, there are many successful business case in real-world examples enriches the analysis. The selected examples includes globally and locally cases and would add a practical dimension to the discussion.
The first real-word example of sharing economy is Airbnb, which is the most global popular peer-to-peer (P2P) online accommodation provider that allow individual users publish their accommodation on the platform for profit.
The Figure shows the relationship of owner, seeker and platform for the P2P renting business model. Unlike the traditional renting practice, with the advent of the Internet, the P2P platforms increases the accessibility and connection between owners and seekers with their asset. The business model of Airbnb is also referred to as peer-to-peer (P2P) renting. Owner could more easily and flexible rent out their accommodation without the concern of lock up with fixed contracts or damages caused by tenants. The Airbnb platform provides insurance for both parties and owners could flexible adjust the accommodation availability. The platform only charges a service fee, and the platform does not own any properties.
Another real-life example is power bank sharing, which is very popular in China and the commercial model is expending to other Asian countries as well.
The figure above shows the sharing power bank devices placed in front of a restaurant. The power bank devices are from different companies, the business is growing very fast and become competitive. The power bank sharing business has one huge difference as compared to the Airbnb case. Platforms like Airbnb and Uber do not own properties and only provide service to better connect hosts and consumers, the power bank sharing platforms own the power banks and the portal allows users to easily rent portable chargers for short time. Users could use the power bank almost anytime and anywhere in the busy cities with a small cost instead of purchasing it. This business model is more suitable in densely populated countries, as the rate for rent power bank is very low, a huge traffic and using frequency is required to recoup investment and make profit. The power bank providers would not pay for the electric and rental cost, but they share the profits with the shop owners that placed their devices.
The sharing economy has important economic implications, transformed the traditional economic models and influencing many sectors of our daily life. This section delves into its economic dimensions, it is important to dissect its impact on established industries, as well as the employment pattern. The idea of sharing economy began to emerge around the time of the Great Recession, enabling the development of social technologies and a growing sense of urgency over global population growth and resource depletion(Stephany,2015).
The sharing economy is used in all aspects of people’s lives, several of which include transportation, accommodation, lifestyle . In the transportation sector, companies such as Uber have upended traditional taxi services. This has economic implications not only for established taxi companies, but also for the labour market. The gig economy, a hallmark of the sharing economy, introduces new forms of employment that often have flexibility but also lack the job security associated with traditional employment models. Users could register as driver and use their own vehicles and spare time to provide services to passengers to earn profit, but drivers are not provided with any working benefits or insurance by the platform. The image below shows Uber drivers are comparing their payment received with their friends, as they do now have a formal contract with the Uber company and are not protected by labour law, they would need to be responsible for their own rights.
In addition, the sharing economy contributes to economic growth by unlocking the potential value of underutilized assets. One of the most convincing examples is Airbnb, a platform that enables individuals to monetize their properties, turning them into income-generating assets. This economic decentralization challenges the traditional business models by distributing economic gains among a much more wider range of participants. Some property agencies offer buyers hosting services such as Airbnb, and estimate expected returns to spur more buyers to invest the properties.
On the other hand, the economic benefits of the sharing economy also bring some potential problems. These include regulatory issues, particularly those related to labor rights and taxes, which are a major concern for the public. Gig workers involved in the sharing economy, on the other hand, often lack the protections and benefits enjoyed by traditional employees, raising questions about the sustainability and ethics of the employment model created by sharing economy.
Technological Innovations and Future Trends
The sharing economy is intricately connected to technological advancements. One of the key innovations that is expected to play an important role in the evolution of the sharing economy is online payment technology. Most of the sharing economic platform require users to make payment through online payment methods including credit card or online banking. Only some application such as transportation related platform supports cash payment, and the popularizing rate of digital payment would significantly impact on the development of sharing economy platforms.
Another technological aspect that could impact on the future of sharing economy is the development Artificial intelligence. The AI technology is a useful tool for enhancing user experiences, personalization, and predictive analytics. As these technologies getting more mature, we can expect a more efficient and secure sharing ecosystem.
In conclusion, the sharing economy has fundamentally transformed the contemporary lifestyle and consumption habit, and the new economy model has created also huge impacts on the traditional economic model. This essay provides a detailed understanding of the sharing economy, and discusses the benefits and challenges of the economy model.
Unpacking the Dynamics of the Sharing Economy: A Comprehensive Exploration © 0 by Yu Han is licensed under CC BY-NC-ND 4.0
Author, S. (2021, November 11). What is the sharing economy?. The Balance. https://www.thebalancemoney.com/what-is-the-sharing-economy-5188892
Belk, R. (2014). You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67(8), 1595-1600. https://doi.org/10.1016/j.jbusres.2013.10.001
Cheng, M. (2016). Sharing economy: A review and agenda for future research. International Journal of Hospitality Management, 57, 60-70.
Mi, Z.; Coffman, D.M. The sharing economy promotes sustainable societies. Nat. Commun. 2019, 10, 1–3.
Stephany, A. (2015). The Business of Sharing: Making it in the New Sharing Economy. Palgrave Macmillan. ISBN 978-1137376176.