Sharing Economy Definition: 3 Sharing Economy Examples

The sharing economy refers to a wide array of digital platforms people can utilize to turn their physical assets into shared resources. Think of the rise in shareable workspaces, homes that have become private hotels, and personal cars that have become taxis. The definition of the sharing economy shifts whenever someone finds a new way to encourage this type of collaborative consumption in a new field.

Small businesses, nonprofits, and tech startups have grown into sharing economy behemoths largely because of the widespread adoption of internet technologies.

The rise of the sharing economy correlated with the advent of powerful algorithms, big data, and massive online connectivity for consumers. These technologies allowed individuals to connect with one another more than ever before at the same time they empowered companies to target consumers in hitherto unimaginable ways.

Especially with the arrival of mobile phones, tapping into the sharing economy is now possible at any place and at any time. Additionally, sharing economy companies are often capable of offering cheaper goods than more traditional industries due to their reliance on independent contractors or lack of regulation. These are just a few reasons why valuations for companies like these have skyrocketed.

As an economic system, collaborative consumption has powered growth and given rise to many opportunities. Consider these net positives of the sharing economy:

• Cheaper costs for consumers: Sharing economy companies can often pass on lower prices to consumers due to the lessened regulatory burden and ability to rely on private vendors and independent contractors. Especially in comparison to more established industries, the sharing economy often proves more cost-effective.
• Increased opportunities: In this economic model, anyone can turn their personal assets into an on-demand product or service simply by engaging with an online platform. This also creates greater amount of options for consumers to consider when trying to find what works best for them.
• More flexibility for workers: The sharing or collaborative economy is also innately a gig economy. Those who participate in it as workers or vendors can do so of their own free will whenever and wherever they want. This differs from traditional employment wherein you must report for duty at specified times and places outside of your control.

The sharing economy comes with its share of downsides, too. Keep these disadvantages in mind as you form your own opinions about the peer-to-peer economy:

• Destabilization of traditional industries: As new businesses and sharing economy platforms emerge, they destabilize more traditional industries along the way. As these providers create new jobs, they also cause people to lose their old ones. Many critics assert these new jobs are also more tenuous and insecure than their previous corollaries in older industries.
• Lack of regulation: Some consumer protection advocates, policymakers, and economists decry what they see as the under-regulation of the sharing economy. They assert this can lead to a greater amount of risk for vendors, workers, and consumers than would be possible in industries that authorities regulate more heavily.
• Potential mistreatment of employees: Part-time and full-time employees have more legal rights than freelancers and independent contractors. Sharing economy detractors insist this entire mode of doing business needs an overhaul, pointing out examples in which workers underwent mistreatment.

Creative entrepreneurs keep thinking of new ways to turn personal assets into shareable resources. Here are three prominent examples of sharing economy businesses:

1. 1. Financial transactions: Private lenders might utilize certain services in both a business-to-business or peer-to-peer setting to make small loans to borrowers. For that matter, certain mobile apps allow you to rapidly transfer money to friends as you split the bill for a night out. Crowdfunding platforms work along a similar track.
2. 2. Ridesharing services: The sharing economy business model has led to an extensive amount of car-sharing throughout many parts of the world. Certain companies—staffed by independent drivers and their personal cars—have supplemented or even outright supplanted many traditional taxi services in dense urban centers like New York City and San Francisco. The same goes for food delivery. These practices have expanded beyond big cities into suburbs and even rural areas.
3. 3. Shared spaces: In the sharing economy, you can turn your house or even just a single room into a moneymaker. Through the advent of couch-surfing platforms, renters can choose an unoccupied abode as a form of temporary housing. Coworking spaces do the same for companies keen to cut down on maintaining their own private office as well.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by the world’s best, including Paul Krugman, Doris Kearns Goodwin, Ron Finley, Jane Goodall, and more.