![\"Sharing\"](\"https:\/\/www.retailprophet.com\/wp-content\/uploads\/2013\/11\/Sharing.jpg\")
<\/p>\nBy Doug Stephens<\/p>\n
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Believe it or not, the average power drill is used for a total of 15 minutes over the course of its lifetime.\u00a0 And that\u2019s not unusual.\u00a0 Our cars, many household items and even our homes spend much of their time idle, empty or unused.\u00a0 It all adds up to incalculable amounts of unused capacity, utility and value.<\/p>\n
But what if that same power drill could be shared between four households? What if one car could provide transportation for a dozen people instead of just one?\u00a0 What if a home could be shared so that it\u2019s almost always occupied?<\/p>\n
What I\u2019m describing is what is now commonly being referred to as \u201cthe sharing economy\u201d and it has the potential to significantly reshape our entire concept of consumption and ownership.<\/p>\n
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Rachel Botsman, author of What\u2019s Mine Is Yours: The Rise of Collaborative Consumption<\/a><\/strong>, describes the sharing economy as an economic model based on sharing under-utilized assets from spaces to skills to stuff for monetary or non-monetary benefits.\u00a0 And as her book title suggests, the sharing trend is finding root in almost all aspects of the consumer market.<\/p>\n Lyft<\/a><\/strong>, RelayRides<\/a><\/strong> and Sidecar<\/a><\/strong> connect people who need a ride with people who have cars and are willing to drive them.<\/p>\n Neighborgoods<\/a><\/strong> connects people living within a neighborhood to share, sell and rent household items.<\/p>\n JumpSeat<\/a><\/strong> sells trips on otherwise empty private jets.<\/p>\n TaskRabbit<\/a><\/strong> lets people hire others to run errands and complete everyday tasks for a fee, thus turning peoples\u2019 idle time into a source of income.<\/p>\n Airbnb<\/a><\/strong> is a fast-growing network that allows users to share vacant living spaces (and incidentally, now books more nights globally than the Hilton Hotel chain).<\/p>\n <\/p>\n First, there is no doubt that the financial collapse of 2008 caused many of us to reconsider our attitudes toward acquisition and ownership. In fact, many post-recession studies<\/a><\/strong> found a strong desire among consumers to shed much of the \u201cstuff\u201d in their lives, to simplify and diminish their material load. Ownership, once regarded as the hallmark of independence is increasingly being eschewed as a burden compared to the relative ease and lightness of sharing.<\/p>\n Secondly, the sluggish global economy and tepid labor markets have put many in a position where they can simply no longer afford to own their cars, homes or other assets without reclaiming some of their value through sharing. The average Airbnb host in San Francisco for example, rents out their home an average of 58 nights per year, providing them with $9,300.00 in incremental income.\u00a0 Car owners using RelayRides make an average of $250.00 per month \u2013 a monthly lease payment for some.<\/p>\n Lastly, the pervasiveness of online networks, communities and platforms have made self-organization of sharing networks easy and scalable.\u00a0 The ability to not only connect two parties looking to share, but also facilitate communication, collaboration and payment has never been easier.<\/p>\n <\/p>\n So, what are the impacts of this new mode of commerce on the economy?\u00a0 Who benefits and who stands to lose by it?<\/p>\n First the financial impact; 2013 estimates for sharing economy transactions suggest approximately 3.5 billion will change hands with growth projected to \u00a0$110 billion over the next few years, compounding at the astonishing rate upwards of up to 20% per year.<\/p>\n Second, and perhaps more important is the steady disintermediation of large institutions whose revenue models have been based on centralizing and redistributing a supply of shared assets.\u00a0 For example, all that car rental companies such as Avis, Hertz and Budget really did was organize and systematize the sharing of vehicles for short-term use. They brought order to what would have otherwise been chaos in renting a car.\u00a0 There was inherent value in this model of systemization 30 years ago because that was not something that we, as consumers, could manage ourselves.\u00a0 Now, however, we can. Power that once resided with the large corporation is now being redistributed across networks.\u00a0 With it, the revenue that was once apportioned to the middle-man (Avis, Budget, and Hertz) can now be retained and split between the parties directly owning and sharing the asset \u2013 both in in the forms of income and cost savings off conventional rental rates.\u00a0 What used to be a huge markup in the middle, is now often no more than a nominal transaction fee taken by the sharing network.<\/p>\n <\/p>\n And so it goes; this pattern of disintermediation is repeating itself across different product and service categories.\u00a0 Hotel chains are no longer vital to organizing short-term accommodation, banks are no longer essential to brokering short-term loans, transit commissions are no longer mandatory for systematizing short-term transportation. And the profit given up by these entities can now be redistributed between the sharing parties.<\/p>\n For many manufacturers and retailers the sharing economy is a frightening prospect.\u00a0 It\u2019s reasonable to assume that the more sharing that takes place, the less new product we actually need to meet demand, resulting in fewer dollars changing hands at retail. Others would argue that some or more of that lost wholesale and retail value is simply reallocated to the owner of the item, who <\/p>\n <\/p>\nWhy is this happening now? Why is it happening at all?<\/b><\/h2>\n
Who it helps and who it hurts?<\/b><\/h2>\n
From Corporations to Networks<\/h2>\n
![\"Get](\"https:\/\/www.retailprophet.com\/wp-content\/uploads\/2013\/03\/Get-My-Book.001.jpg\")
<\/a>rents it to others and those renters, who having saved money, can spend the surplus on other goods and services.\u00a0 In other words, the equivalent value to the economy of 2 units of an item may now be derived over the long-term from one. Thus, sharing also presents a strong case for sustainability.\u00a0 Maximizing the capacity of the assets we have versus simply creating ever-more assets offers the potential to significantly reduce our impact on the planet. While there may indeed be some victims of the sharing economy, many experts see no valid reason for an overall economic contraction, merely a reshaping.<\/p>\nWe can’t un-see the future<\/h2>\n