I’m frequently asked to define the Sharing Economy to my home country especially after having series of discussion with Dr Cai Li I decided it was high time to pen the definitive answer. A clear definition is needed not only for purposes of clarity and to enable meaningful discussion, but also to provide a precise aim and direction to those working to enable, foster and create a Sharing Economy in Pakistan.
The sharing economy is a socio-economic ecosystem built around the sharing of human, physical and intellectual resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organizations.
Whilst the sharing economy is currently in its infancy, known most notably as a series of services and start-ups which enable peer to peer exchanges through technology, this is only the beginning: in its entirety and potential it is a new and alternative socio-economic system which embeds sharing and collaboration at its heart-across all aspects of social and economic life.
The sharing in the sharing economy refers to the use and access of shared physical or human resources or assets, rather than the fact that there is no monetary exchange. A sharing economy enables different forms of value exchange and is a hybrid economy. It encompasses the following aspects: swapping, exchanging, collective purchasing, collaborative consumption, shared ownership, shared value, co-operatives, co-creation, recycling, up cycling, re-distribution, trading used goods, renting, borrowing, lending, subscription based models, peer-to-peer,, collaborative economy, circular economy, on-demand economy, gig economy, crowd economy, pay as you use economy, peer to peer lending, micro financing, micro entrepreneurship, social media, the Mesh, social enterprise, futurology, crowd funding, crowdsourcing, cradle to cradle, open source, open data, user generated content and public services.
An emerging, highly flexible economic network known as the sharing economy allows people to share resources – such as equipment, services, and skills – with one another, often at significantly lower cost than traditional retail or employment arrangements. You can now get a loan directly from your peers, share the same office space with dozens of different companies, and stay at a stranger’s house instead of a hotel when you’re traveling out of town.
By making it easier to share resources on demand, the sharing economy (also called the “collaborative economy,” “collaborative consumption,” or the “peer-to-peer economy”) increases efficiency. In certain circumstances, it allows participants to get by without owning valuable items, such as cars, while creating opportunities for others to extract value from idle possessions or talents. But it wouldn’t be possible without technology, as virtually all forms of collaborative consumption use the Internet to connect providers with customers, whether they’re renting a house through Airbnb, or looking for a place to board their dogs.
Anyone can participate in the sharing economy. In fact, whether you realize it or not, you probably already do. The sharing economy is estimated to grow from $14 billion in 2014 to $335 billion by 2025. This estimate is based on the rapid growth of Uber and Airbnb as indicative. Data shows that private vehicles go unused for 95 per cent of their lifetime. Together with the fact that there are fewer requirements to drive for Lyft, Ola and Uber than for a taxi company mean greater supply of rides. Moreover, prices of shared services are also falling as indicated by Airbnb rates that are between 30 and 60 per cent cheaper than hotel rates around the world. Furthermore, information shared on an online platform can lead to greater trust between users, but it can also lead to racial and gender bias. Sharing economy companies must work to combat bias on their platforms, both in their algorithms and their users. It will remove some identifying information from profiles lowers risk of bias. Indeed, with the unstoppable rise of collaborative economy it is difficult for any one company to form a monopoly since the cost for customers to switch between sharing economy services is quite low.
As the sharing economy grows, it will continue to divide and, as it does, I believe the need to understand and hold true to what it is really is will become greater. The sharing economy is uniquely placed to reflect our desire as human beings to connect directly and to feel a part of community larger than our individual selves, which serves a purpose far higher than simply the trading of stuff, space and talents. As more we share more we will have. It is emerging trend globally and Pakistan should also appreciate the idea and effectively become part of shared based economy.