The Issue With The Sharing Economy

The sharing economy isn’t based on sharing yet this is the social stance many disruptive technology companies tout in their marketing.

Uber, Airbnb, Deliveroo. Some of the world’s largest businesses are part of the so-called sharing economy. The term ‘sharing economy’ conjures up visions of cooperation, fairness and trust: it would seem that in 2016 people are willing to welcome strangers into their homes and get into strangers’ cars, and are monetising their underused assets by doing so.

However, whilst companies such as Airbnb are quick to market themselves as communities of sharers, the sharing economy isn’t based on sharing at all. This is just the first in many perceptions about the industry.

The part of the ‘sharing economy’ that is based on people monetising underutilised assets (a guest room that’s always empty, a car that they never drive) is shrinking. The industry is filling with Airbnb landlords who own multiple properties and drivers purchasing cars expressly to use as Uber vehicles.

And it’s unclear where sharing comes into restaurant delivery app Deliveroo, often cited as one of the industry’s success stories, unless we absurdly count drivers using their own bikes and scooters as some sort of sharing.

In fact, the majority of companies that make up the sharing economy don’t involve any real sharing. Just Park’s interactive map of the sharing economy shows that hiring someone is the second most popular branch of the sharing economy. However, sharing skills or labour isn’t real sharing: you just got your cleaner, who you pay, from an app.

Rather than sharing, the uniting factor in all these companies is that they consist of a marketplace of peer-to-peer transactions enabled by mobile technology and bigger companies. This structure allows them to undercut the traditional economy by creating a lean company structure. However, it’s important to note that a bigger company structure always has a role to play because this reveals that people are not trusting each other. Rather, they are trusting the platform to step in if anything goes wrong. At the core of these companies, rather than trust and community, is price and convenience.

This insight should inform how the sharing economy markets itself. Rather than focusing on sharing, successful ‘sharing’ business should – and do – emphasise ease and low costs. The industry’s most successful players know this: Uber and Deliveroo’s brand prepositions have always focused on convenience.

However, some, such as Airbnb, still place community at the heart of their brand. This is completely illogical. Studies by PWC and The Harvard Business Review have revealed that consumers see the key benefits of the sharing economy as making life more affordable, efficient and convenient. You’d think these insights would have all brands scrambling to adopt the ‘convenience’ name tag.

Yet the industry as a whole is still more than happy to be labelled the ‘sharing’ economy. Why is this? Possibly to avoid inadvertently exposing its dark side. The industry is plagued by accusations of driving up rents, underpaying workers and displacing secure jobs with unpredictable work. If consumers realised their on-demand dinner came with a side of social injustice, they may not be rushing back for seconds.

The take out for marketers?  ‘Sharing’ companies that market themselves based on low prices and convenience will do better than those marketed on community. However, the sharing economy is sector ripe for scandal, so brands must be careful to avoid associating consumer convenience with worker mistreatment. Brands that tread this tightrope will do well.

What do you think? Should ‘sharing’ brands play up their community credentials? Or should they focus on cold hard, cash?  Tweet me @AgostinelliAldo.

(Image by Hofnungsschimmer on a Creative Commons License.)

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