The State of the Sharing Economy
The financial hardships of the
Great Recession forced many people to start thinking outside the box. The “sharing
economy” gained popularity in the late 2000s because it provided more
affordable means to travel, maintain homes and access piecemeal work for small
businesses.
This was the beginning of Airbnb, Uber
and other community-based platforms that enable peers to share access to goods
and services.1 The concept is basically an economic personification
of “reduce, reuse and recycle,” as people can make money by renting out their
underused assets, such as parked cars and spare bedrooms.
The sharing platform offers positives
to retirees on both sides of the coin. Those living on a fixed income can
reduce expenses by vacationing in a low-cost Airbnb or eliminate the cost of car
ownership by using rideshare services. On the other hand, renting out a spare
room or becoming a rideshare driver can provide both a steady stream of
supplementary income as well as a few hours of human contact and entertainment.
If you’d like to explore ways to create
an income stream in retirement or consider areas where you may be able to cut
back expenses, come see us. We’d be happy to discuss your financial options
based on your unique situation.
Today, approximately 111 million
consumers utilize the sharing economy in one form or another to earn money,
save money, enjoy convenience and/or simplify their lives.2 However,
like all new business concepts, the sharing economy has experienced a variety
of challenges as it has matured in its business life cycle.3
One of those challenges revolves
around the idea of sharing your assets with strangers. The sharing economy is
built on trust, and the success of profitable entrepreneurs lies with earning a
trustworthy reputation.4
There are occasional reports of fraudulent listings posted
on online platforms, improper privacy abuses and visitors defacing private
homes. While most of the sharing economy is relatively unregulated, some
industry leaders have taken steps to institute verification credentials, review
processes and guarantees.5
It will be interesting to watch how young adults adapt to
the sharing economy, perhaps participating enough to never even need a full-time
“real job.” The generation of consumers who grew up with this economic platform
may never understand the value of owning a car or buying a second home. This
approach offers fewer opportunities to build equity but also fewer ways to
amass substantial debt.
The sharing economy also provides other cultural,
non-monetary benefits, such as social capital. This is the advantage of networking
with a variety of different people. Over time, a Lyft driver learns
transportation routes throughout their community, all while overhearing or
engaging in conversations about local businesses, restaurants and people. It’s
easy to see how the driver could become a de facto cultural ambassador and tour
guide for the area. Case studies have shown interactions in the small, intimate
space of a vehicle can also lead to new friendships, job leads, service
contractors (e.g., handyman) and other favorable outcomes.6
Content prepared by Kara Stefan
Communications.
1 Jim Chappelow. Investopedia. June 25, 2019. “Sharing
Economy.” https://www.investopedia.com/terms/s/sharing-economy.asp. Accessed Nov. 26, 2019.
2 PYMNTS.com. Nov. 26, 2019. “Lessons From Airbnb On
Solving The Sharing Economy Trust Issue.” https://www.pymnts.com/fraud-prevention/2019/lessons-from-airbnb-on-solving-the-sharing-economy-trust-issue/. Accessed Nov. 26, 2019.
3 Corporate Finance Institute. 2019. “Business Life
Cycle: The 5 stages of a business’ life.” https://corporatefinanceinstitute.com/resources/knowledge/finance/business-life-cycle/. Accessed Nov. 26, 2019.
4 Knowledge@Wharton. Oct. 31, 2019. “Has the Sharing
Economy Disrupted Marketing? Not Quite….” https://knowledge.wharton.upenn.edu/article/sharing-economy-marketing-strategy/. Accessed Nov. 26, 2019.
5 PYMNTS.com. Nov. 26, 2019. “Lessons From Airbnb On
Solving The Sharing Economy Trust Issue.” https://www.pymnts.com/fraud-prevention/2019/lessons-from-airbnb-on-solving-the-sharing-economy-trust-issue/. Accessed Nov. 26, 2019.
6 Knowledge@Wharton. Nov. 14, 2019. “Why Ridesharing
Reaps Unexpected Benefits.” https://knowledge.wharton.upenn.edu/article/ridesharing-culture-benefits/. Accessed Nov. 26, 2019.
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