The world of technology has greatly changed the ways in which we share as a world. The slashing of costs in regards to information sharing has opened up new opportunities in the market for different businesses. The Sharing Economy is built around a principle of “What’s mine is yours, for a fee”. Companies like Uber, Lyft, and Airbnb have stepped up to fill the major roles in this market. Through simple user interfaces, cheap pricing, and community trust, these three companies have grown from incumbents in difficult business circles to leading industry giants.
The technological aspect is something we regularly see businesses fail at. It seems that developing good apps and websites is a daunting task for many well established companies, and this often results in losing customers. Uber, Lyft, and Airbnb have created an intuitive user experience that keeps from excluding less technologically savvy customers. Many of the sharing economy participant are younger, in the age range of 18-24 (in numbers well above those of the traditional rental sector), and these users are all too happy to engage with the technological aspects of the business. By engaging users who might not have the income to otherwise own assets as expensive as cars or vacation hotel listings, the sharing economy encourages market participation and grows swiftly.
Another advantage for the sharing economy can also be a disadvantage: the shocking lack of regulations. Taxi services and established hotels deal with huge amounts of red tape in the form of certifications, inspections, and city planning. These raise both the economic cost and opportunity cost of entering these markets, but the sharing economy is exempt by virtue of being a young market. Uber and Lyft are much cheaper than any taxi service thanks to this lack of regulation, and users enjoy the fruits of cheap transport. The lack of regulations can be concerning: they exist with similar sectors for a reason. Safety is a huge concern for regulatory agencies, and most expect for some form of restrictions to be handed down in the near future.
The center of any sharing economy is, in essence, the building of a community. This can be a huge challenge when trying to engage complete strangers via on technology, especially when the assets being lent are so valuable. However, selfies, reviews, and other recommendations help to build trust. When users were recommended a service by someone they know and trust, they are much more likely to use that service. All of the major players in the sharing economy have made it a primary focus to create a community through tools like these. With trust growth backed up by a technological footprint (which guarantees bad users can be tracked down and punished), the anonymity factor has actually not impeded growth by much.
Michael O’Malley is a Business Administration/Theatre Double major sophomore at USC. He enjoys long walks on the beach, screaming into the abyss, and dancing with friends. He grew up in Birmingham, Alabama and does know how to read.