Sharing economy: what does it mean and how does it work? How the shared economy was born, its objectives and the challenges to face.
The sharing economy is a phenomenon that is now rooted in society and that has over time revolutionized the way of conceiving the sale and use of goods and services.
To realize how widespread the culture and practice of the sharing economy are in today’s social fabric - which is based precisely on specific values that are opposed to the traditional way of conceiving the possession and sale of goods - just reflect on some daily habits: if I am using a bike in the city with the bike sharing service or if I use a coworking space to work, I am benefiting from the shared economy.
So, what is the sharing economy specifically and how does it work? The definition of the shared economy, examples and objectives.
What is sharing economy: meaning and definition
Sharing economy means Collaborative economy, which consists in sharing resources of space, time, goods and services, especially through the use of digital platforms.
A similar meaning of sharing economy is offered by the Cambridge Dictionary:
an economic system based on the sharing of goods and services between people, free of charge or for a fee, usually using the Internet
In short, sharing economy refers to a new concept that is different from that of traditional business - based on the concept of selling goods and services that one owns - and consumption as we usually understand it. In order to practice sharing economy, in fact, it is necessary to:
- make available to others goods or services that are under-used;
- promote access to a good or service to citizens of the same community;
- facilitate economic savings in the use of those goods and services;
- ensure that a good does not become the property for the exclusive use of another, but is available for constant use by multiple people.
As explained by the literature and studies that have followed the evolution of the sharing economy over the years, with it we move from the concept of possession to that of access.
The now textbook examples for explaining the shared economy are those of Uber and Airbnb, both born from the idea of sharing a car with multiple people (without wasting empty spaces) or an empty house for those looking for short-term rentals through the offer of simple private citizens.
The sharing economy, therefore, is such because it creates a peer-to-peer exchange. Compared to the capitalist model, individuals interact to buy or sell goods and services directly with each other, without the intermediation of a third party, or without the use of a company.
Its widespread development as it is today, moreover, has been possible thanks to the evolution of the Internet. Another peculiarity of the shared economy, in fact, is precisely the widespread use of digital platforms through which an enormous quantity of goods and services can be shared between peers and in real time.
How the sharing economy works
The sharing economy works with this basic mechanism: a product or service that would otherwise be little used is made available to others and in this way it regains value.
In essence, with the shared economy you do not buy a good that changes ownership, but you benefit from an object (for example a car, a bicycle, an apartment or a single room) for the necessary time. Then, you leave it available to others.
Digital platforms enable practical sharing, fast, easy to use for any type of user. In practice, a website or an app dedicated to the shared service or product act as an intermediary between those who provide the good and those who use it.
For example, by connecting to the Airbnb website I can directly access the homes put online by the owners. There is no company that sells the service.
Obviously, the sharing economy is also a financial “engine”: shared services and goods may be paid for, but they allow users to save money.
What are the types of sharing economy?
Born mainly in the mobility sector, with the experiment of the French Blablacar considered a pioneer in the sector, over the years the sharing economy has expanded into various areas.
Today we can identify various types of this economic phenomenon and among these:
- sharing mobility: sharing means of transport for urban mobility;
- home sharing: sharing an unused house, with rooms to rent for short-term accommodation;
- coworking: sharing a single space for workers who rent an office station:
- sale/exchange of objects: online platforms in which to sell or exchange objects of all kinds;
- food sharing: redistribution of excess food that would otherwise be thrown away.
These are just some of the types of sharing economy known and followed by society. However, the shared economy has extended its field of action so much that today many other examples of this revolution in the consumption and use of goods, services, resources can be found.
In urban areas, it is not so rare to find a physical space used by several people who take care of it and can share its fruits: these are shared vegetable gardens. Or, there are online platforms where you can make your professionalism available (e.g. plumbers, copywriters, lawyers, doctors...) directly to users.
Objectives and challenges of the sharing economy
The sharing economy was born and developed over time with specific objectives:
- promote more conscious consumption;
- encourage rationalization in the use of objects and services;
- increase environmental sustainability;
- network between people.
Not only that. Through the many good practices of the sharing economy, users are able to save money and those who offer goods or services can obtain a source of income. All this, without following the traditional sales/purchase business scheme which in fact consists of the transfer of ownership of an object through payment. Here, instead, there is the facilitation of access to goods or services, without anyone taking possession of them by paying.
The real sharing economy boom has however also highlighted open challenges that must be faced. To understand what type of phenomenon we are talking about, just turn a spotlight on the numbers.
Globally, according to Statista data, the total value of the global sharing economy is expected to increase to US$794 billion by 2031, up from US$150 billion in 2023. This has translated into a compound annual growth rate of about 32%.
In essence, the sharing economy exists today in many sectors, often with start-ups that operate platforms that have become widespread and profitable. However, sharing economy companies often escape industry regulations.
The two most common examples of this are the sharing of private vehicles through apps such as Uber and Airbnb, which has made its mark globally. Short-term rentals are now impacting the entire real estate market, revolutionizing the physiognomy of cities and hindering the search for a first home.
At the same time, rules on insurance, worker protection, transparency, and guaranteed privacy are more necessary than ever. The great challenge, therefore, is to create a regulatory network for a phenomenon that is now unstoppable and increasingly a protagonist of the global economy.
Examples of sharing economy
We have already mentioned that among the examples of sharing economy most appreciated by the public are those of shared mobility. But they are not the only ones that have developed and established themselves over the years.
Below, the platforms and apps that have marked the history - and continue to do so - of the shared economy.
Blablacar
Blablacar was born in France in 2013 from the intuition of three young people who had noticed how many people traveled alone in their cars, wasting empty seats that could be shared to travel the same stretch of road.
From this simple idea was born the platform that is now a world leader in the sector, offering means of travel in 22 countries around the world and with an infinite network of routes, even by bus.
Uber
The idea of the Uber platform was born in the USA and the aim is to directly connect drivers and passengers for car transportation.
Faced with problems in finding an available taxi on particularly crowded days, the Uber car booking service, launched through an app that can be conveniently managed from a smartphone, has revolutionized the transportation service.
Today Uber is present all over the world and also in Italy, where however the legal tug of war between the company and the Government continues. A reform of the on-call driver service, which also involves Uber, is in the app’s sights.
Aribnb
Aibnb is the famous online site for connecting those looking for accommodation for a short-term rental and those offering a house or a room for this purpose.
Founded in 2007, today the company is even listed on the stock exchange, demonstrating its widespread diffusion throughout the world. Today, the home rental business managed by Airbnb is among the main suspects in the process of touristification of entire city neighborhoods, in addition to being accused of a wild use of accommodation for short-term rentals that is disrupting the entire real estate sector.
WeWork
The coworking giant was born in 2010 with the aim of revolutionizing the idea of work space and, therefore, the way of working itself.
Creating shared areas to be used as offices for professionals of all kinds, it has expanded around the world with the idea of renting workstations in shared offices.
However, WeWork’s history is controversial. In 2023, it declared bankruptcy, also due to the post-Covid which has accentuated remote working and decreased the need to move to an office. Today, the coworking network is reorganizing its structure, also in Italy.
Original article published on Money.it Italy. Original title: Cos’è la sharing economy e come funziona l’economia condivisa
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