In elementary school we’re taught to share with our friends. Millennials are breathing new life into that value to generate income in the marketplace and improve our well-being.
Technology is making it easier for strangers to share goods and services that once were things we purchased for ourselves in what is known as the sharing society. The mantra is “access is the new ownership,” and it is not just a fad but a shift in consumer behavior.
The names we all know are Uber, Lyft and Airbnb but they are just the beginning. All represent innovations that disrupt current industries. Dining, dating, and entertainment companies have sprung up as new members of the sharing economy. A new study by PriceWaterhouseCoopers estimates that these companies rake in as much as $15 billion today, but projects that they will grow to as much as $335 billion in global revenue by 2025.
This is different from the current model of buying, consuming, and trashing or selling. Our parents and grandparents saved until they could purchase a car or buy a home. When they outgrew those things they sold them and upgraded or expanded to accommodate more kids and more usage. Eventually, they downsize their possessions and sell them off. Ownership is the consistent goal.
Research suggests Millennials are doing things a little differently from previous generations. We’re more interested in experiences than owning things—meaning we want to live the moment without all of the responsibilities. In part, this is because the costs of ownership are high, storage and living spaces are limited in urban areas where the sharing economy is big, and we enjoy the freedom. According to the research young adults, 18 to 24, who are more interested in having experiences than owning things, are "most excited" about the sharing economy because it makes life more affordable (86 percent) and more convenient (83 percent).
The sharing economy runs on trust based on online ratings – not in a company, brand or even an individual, but in the opinions of other consumers. Yet another market shift in consumer behavior.
The Washington Post reports:
PwC does point out one trend in the report that's a little more revelatory: We're witnessing the rise of companies predicated on trust among strangers at the same time as general trust in society is actually falling. Only 29 percent of consumers PwC surveyed said they trust people more today than they did in the past. And 62 percent said they trust brands less today.
So, what gives? Why are hundreds of thousands of people letting strangers rent their bedrooms or drive their cars if society is growing more cynical? Why would you trust a company that ships you a dress worn by another woman last week if you don't actually trust people all that much? How is the economy suddenly creating billion-dollar businesses around the idea of communal consumption at a time when we're not feeling communitarian at all?
Here is PwC's smart answer: "If trust in individuals and institutions is waning or at best holding steady, faith in the aggregate is growing."
In other words, I don't trust you, Random Guy Giving Me a Ride Home, but I do trust the 4.9-star average rating of all the people who've been in your car before. Maybe I don't have all that much trust in one woman renting her home on Airbnb, but I do trust the aggregated input of the 24 people who've given her high marks.
Ride-sharing companies like Uber and Lyft have been under attack by traditional taxicab and transportation companies that don’t like new competition. Using lobbying dollars, they’ve managed to get legislators at the state and local level to buy into their campaigns against innovation. That’s why we see police officers conducting stings to catch Uber and Lyft drivers then impounding their vehicles in some instances or giving five-figure tickets to discourage these entrepreneurs.
Young people like innovation and technology. Instead of government getting on the side of the status quo, it should be stepping aside and letting new services compete with old ones for a market share.
The argument is made that sharing economy companies are unsafe for society. This is a consideration, but one the consumer has a choice about—you don’t have to use any of these sharing economy services. And there is the ratings-based trust system to help consumers who want to participate in the sharing economy.
ill the sharing economy take-over our national economy? It’s possible but highly doubtful. Nonetheless, it’s here to stay unless old businesses can use government regulations to kill competition. Government needs to get out of the way and let consumers decide.