Some of the most familiar examples of the online sharing economy started small. Consider Airbnb, which started from three airbeds and became AirBed and Breakfast in 2008. As of 2016, 70 million guests have stayed in a stranger's home via Airbnb. The internet-based platform connects people who have a resource not used to capacity—excess space—with others who can use it and provides a means for them to establish trust. It's a perfect example of the sharing business model.
In an earlier article, I introduced the principles behind businesses based on social connection, drawing from the book The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan. I will discuss several examples of the sharing business model in this article.
A market for connections
According to Sundararajan, the economic fundamentals of crowd-based capitalism are superior to the current profit-based business model because the raw materials for this economy—space, time, items, and skills—are in excess. Because they already exist, they don't create additional costs to offer them. You could consider it a form of improved resource use conservation, environmental protection or the sustainability economy.
Human relations are a significant value component of the sharing economy. For example, some ride-sharing operators want passengers to sit in the front seat to generate conversation and interaction. The service is about social connection as well as ride-sharing. Since many drivers work part-time as a small side job, the interaction may be just as valuable to them as the fee received.
Here are two weaknesses of traditional taxi services:
- Poor hospitality
- Poor occupancy (utilization) rates because of the business structure (vehicle ownership by driver or company)
Crowd-based, public-private ownership using digital technology apps can tap into decentralized excess capacity that friendly people have rather than single company-owned centralized systems. Hospitality improves, and there is no additional up-front investment. There are sites to outsource the buying and delivery of your groceries, an app to help valet parking services locate cars and parking spaces with GPS, a mail pickup service, laundry pickup, dog walking, and much more.
How platforms build trust
eBay started in 1995 by moving the neighborhood garage sale online and offering isolated booksellers and thrift shop owners a way to expand their market reach outside their local community. The eBay system has many safeguards that protect both buyers and sellers through the transaction processes, so eBay maintains trading partner trust even with great geographic distance between buyers and sellers. For services offered in the sharing economy, location is more important. Peer-to-peer service markets may be more suitable for densely populated urban areas.
Building provider and user trust is an essential factor in making the sharing economy successful. To determine whether or not to place trust in a provider, consumers must consider the vetting process of each platform. What is the quality of their rating system? Some organizations use Facebook friendships as testimonials to confirm trustworthy people. Some platforms completely control the payment system, so payment is assured, but others don't.
Frederic Mazzella, a cofounder of BlaBlaCar, believes trust is central to his company's business and is passionate about its importance. BlaBlaCar's corporate headquarters has a life-sized cardboard cutout of Trust Man, a cape-wearing superhero with a "T" emblazoned on his jumpsuit. Mazzella's conception of trust is based on what he calls the D.R.E.A.M.S. framework: Declared, Rated, Engaged, Activity-based, Moderated, and Social. The company is constantly working on deepening its understanding of trusted exchange.
Collaboration and community building
The organization OuiShare coordinates activities to foster collaboration. In June 2021, they gathered more than 600 people over the three days of OuiShare Fest, which included conferences, workshops, performances, and shows. With this event, OuiShare aspired to create social connections, projects, and collaborations by bringing together people from different backgrounds. Participants explored what they have an excess of and what might be needed and shared. The group started in France and now exists in 20 countries in Europe, where it provides a shared platform for experimentation that gives connectors and members access to a commons of knowledge, tools, and an international network of people from whom to learn and draw inspiration. You could call it transparency of the underused.
Service platforms offer the spare time of people with knowledge, skills, or talent. For example, some platforms provide teachers with specific knowledge and skills in exchange for other knowledge or excess material goods, but not money.
This article is part of a series on the sharing economy. In the first article, I explained the sharing business model and its value. In this article, I gave many examples of platforms in operation now. In a future article, I will explore how the sharing business model will evolve.