Long before the phrase “the sharing economy” was ever uttered, many businesses leveraged sharing. Bed-and-breakfast inns, timeshares and car pools are old ideas.

1. Sharing Economy
Blue Paper
December 1, 2015

2. Long before the phrase “the sharing economy” was ever uttered, many businesses
leveraged sharing. Bed-and-breakfast inns, timeshares and car pools are old ideas.
What’s different about the sharing economy is that technology has allowed
organizations to coordinate products and services on a much larger scale.[1],[2] It
used to be that you were limited to your own village for the stuff you could rent,
borrow or buy. Today, the village is global.
Collaborative consumption and the peer economy are also used to describe the
benefits of use without the hassle of ownership. Technology connects lenders and
borrowers, sellers and buyers, employers and contract employees.
Adoption of sharing services has grown at least 25 percent annually, and more than
110 million people in North America are part of the sharing economy.[3] As people
conduct more of their lives online, this business trend is likely to become more
ubiquitous.
Organizations can take advantage of business models and technology inspired by
collaborative consumption. The sharing economy is surging; and new and established
businesses can leverage its lessons to increase competitiveness and profitability.
Sharing economy 101
What is the sharing economy in a nutshell? In the sharing economy, people rent
(among other activities) from each other. Transactions are coordinated by Internet
technology.[4] Instead of only being able to reach out to your next-door neighbors for
help, you can reach out to anyone who’s online. The sharing economy helps
participants monetize their assets.
In the sharing economy, owners rent something they’re not using via a peer-to-peer
service. The service has a rating system so that owners and renters can learn about
each other and build trust.[5] Technology that enables this communication is what all
sharing economy organizations have in common.
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3. The sharing economy, however, is about more than the act of sharing. It’s a bucket
term for several types of peer-connection business services. In general, there are five
sharing economy activities:[6]
• Buying things
• Hiring people to do things
• Sharing things
• Borrowing things
• Swapping things
The posterchild of the sharing economy is Airbnb
®
, which helps travelers rent a place
to stay—from single rooms to whole castles—directly from people who live in their
destination. Other examples of sharing economy businesses include RelayRides
®
(peer-to-peer car rental) and Fon
℠
(global Wi-Fi network powered by people who
share part of their own Wi-Fi).[7] While their products and services may be different,
these organizations all rely on Internet technology to connect a community of users.
The appeal of sharing is growing. Research from Ericsson
®
, a global
telecommunications firm, found people were very interested or open to the idea of
using a smartphone app to:[8]
• Eat dinner in other people’s homes (46 percent)
• Rent other people’s household tools and appliances (51 percent)
• Rent rooms in other people’s homes (57 percent)
• Rent other people’s leisure equipment (58 percent)
How the sharing economy works—and why people love it
The sharing economy is growing, and companies that can leverage technology to
scale are winning. Uber
™
, the ride-finding app, is valued at $51 billion, and Airbnb is
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4. valued at $25 billion.[9], [10] There’s a lot of money to be made in the sharing
economy.
The combination of efficient technology and reliable product is critical to sharing-
business success. If technology defines the sharing economy, trust is its foundation.
For collaborative consumption businesses, trust is “the beginning, middle and end of
the story.”[11] User-to-user reviews, troubleshooting, photos and word of mouth can
build—or erode—trust in a sharing economy business.
In the sharing economy, customers love businesses whose products are trustworthy
and dependable. And these businesses are rewarded with patronage. At a higher
level, there are four main reasons why the sharing economy is beloved by consumers:
• Savings: Customers pay less than what they would have paid if they had
bought new or through a traditional seller.[12] What’s more, in the sharing
economy, saving money is more appealing than making money.[13] The
bottom line is that the bottom line matters.
• Access: Access to products and services is more important than
ownership.[14] Instead of the sharing economy, the phenomenon is
sometimes called the access economy.[15] Using something is more
important than calling it your own.
• Monetization: Sharing economy lenders make money on underused
assets.[16], [17] Instead of gathering dust, these perfectly functional
possessions become income machines.
• Conservation: Sharing benefits the environment by reducing waste and
manufacturing.[18] Research shows that saving resources, however, is less
important than removing the inconvenience of ownership.[19] Decreased
production, regardless of your motivation, is a byproduct of the sharing
economy.
Challenges in the sharing economy
Despite its growth and appeal, the sharing economy is not a utopia. Collaborative
consumption faces significant challenges:
• Customer demands: Relying on the goodness of human nature is not
enough to succeed in the sharing economy. Many outfits have gone
bust—Ecomodo, Crowd Rent, Share Some Sugar, Thingloop, OhSoWe and
SnapGoods, to name a few.[20] Customers demand efficiency, good
experiences and savings.
• High risk: Potential customers love the concept of the sharing economy, but
they’re slow to adopt.[21] For some, sharing big-ticket assets is too scary.[22]
Traditional options offer less risk.
• Regulations: Regulations are meant to protect customers and level the
playing field for all businesses. Some traditional businesses support choking
out sharing upstarts—which may be slow to follow the rules—with
regulations.[23]
• More than sharing: The act of sharing has given way to renting, and “the
gig economy” has been used to describe firms—including Uber and
TaskRabbit
®
—that use third-party contractors.[24], [25], [26] Because the
sharing economy includes non-sharing activities, potential customers may
greet so-called sharing businesses with skepticism.
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5. Opportunities inspired by the sharing economy
Regardless of whether they actually share, successful sharing economy organizations
have done three things exceptionally well:
1. Sharing economy activities (buying things, hiring people, etc.) are integral to
their business models.
2. They’ve reduced risk for their customers.
3. They’ve optimized their products and services.
This style of business is growing, and so is the technology around it. If you are
considering putting the sharing economy to work for you, first apply collaborative
consumption in a way that makes sense for your organization.
Create a profit center:
Conventional brands can use sharing economy activities as another profit center. The
Home Depot
®
rents tools, and Walmart
®
sponsors a marketplace for selling pre-
owned electronics.[27], [28] Rentals and peer-to-peer selling help traditional
businesses better serve customers and tap into the cachet of the sharing economy.
Go old school:
Borrow strategies and tactics from sharing brands. But successful sharing brands also
borrow from traditional brands as well:[29]
• Do your homework: Some now-shuttered peer-to-peer platforms
(SnapGoods and Share Some Sugar, for example) struggled with imbalance.
They had more lenders than borrowers (or vice versa). The rental market was
hot for certain items but cold for others. The solution is to research demand
and supply for various products and to double-down on what works.
• Execution matters: In the end, “the most successful ‘sharing economy’
startups ended up being those that made the process as efficient and
transactional as possible.”[30] Consumers want stuff quickly. Predictable and
fast delivery always is appreciated.
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6. Ways to reduce risk
Reducing risk increases participation and helps the reward outweigh the risk.
• Don’t be a stranger: Everyone wants to do business with someone they
know. Name recognition builds trust, and there’s security in buying from a
brand with whom you are familiar.[31] Established businesses can leverage
brand equity—an asset missing from the war chest of startups in the sharing
economy. If people know you, use it to your advantage.
• Be a good matchmaker: Successful peer-to-peer platforms know their
lenders and borrowers. Boat rental facilitator Sailo meets most boat owners in
person. This helps Sailo make the best matches with boat borrowers.[32]
Intimately understanding customer and supplier needs reduces the risk that
either party is disappointed.
• Provide assurance with insurance: Along with making the perfect match
between lenders and borrowers, Sailo also offers insurance—property damage
and liability—to reduce risk for its users.[33] Providing peace of mind with
insurance is another way the sharing economy builds trust. Make sure you
have a way to make users whole again.
• Live and die by reviews: Online communities and testimonials also can
reduce risk. For technology-driven sharing economy companies, the Web,
through user reviews, is the best place to build trust.[34] Candor about
experience attracts new users and weeds out bad users (because no one
wants to work with them).
• Make things right: The community around a sharing economy business
becomes an asset—or a liability. Negative user experiences damage a sharing
brand more than a conventional brand.[35] Addressing subpar experiences
mitigates brand damage.
Ways to optimize products and services
If you want to offer product in the sharing economy, choose or develop something
that’s made for sharing.
• Find a good fit: Peer-to-peer rental works best for assets that are expensive
and not fully used.[36] This being the case, it’s easy to see why Airbnb has
caught on. You pay for all the square footage of your home, whether it’s in
use or not.
• Get personal: In the sharing economy, customers embrace products that
can be customized and used in whatever quantity they please. Businesses
such as Etsy
®
and TaskRabbit follow this best practice.[37] Delighting
customers is made easier when you deliver tailor-made wares.
• Ask for help: You can increase interest in your goods by talking about them
in the right way. In collaborative consumption, requesting help is more
powerful than announcing you can help. Requests are more shareable on
social media.[38] Consider reframing your product messages with this I-need-
assistance mindset to improve amplification.
• Deliver it now … The technology that powers the sharing economy drives
yet another nickname: the on-demand economy.[39] Customers use apps to
get what they want, when they want it. The on-demand economy is
“changing what customers expect from all businesses.”[40] Consumers have
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7. adopted the new technology of the on-demand economy and will abandon
organizations that insist on doing things the old way.
• … Or deliver what an app can’t: We’re all consumers who crave the
immediacy promised by the on-demand economy. The technology that makes
this possible, however, may be detaching us from the communities in which
we live.[41] Out of this comes an opportunity for the local businesses. In-
person service in a convenient location may stand up against on-demand but
virtual customer service.
Influence of the sharing economy
No matter what you call it—the sharing economy, collaborative consumption,
etc.—the experience of using peer-to-peer platforms and the technology that makes
communication possible are shaping consumer demands for all businesses.
Endnotes:
[1]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper, 09
Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[2]Kessler, Sarah. “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company.
Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[3]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[4]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper, 09
Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[5]”Airbnb, SnapGoods and 12 More Pioneers Of The ‘Share Economy’.” Forbes.
Forbes Magazine, n.d. Web. 05 Oct. 2015. <http://www.forbes.com/pictures/
eeji45emgkh/airbnb-snapgoods-and-12-more-pioneers-of-the-share-economy/>.
[6]”The Most Popular Ideas in the Sharing Economy.” JustPark. JustPark, n.d. Web.
05 Oct. 2015. <https://www.justpark.com/creative/sharing-economy-index/>.
[7]”Airbnb, SnapGoods and 12 More Pioneers Of The ‘Share Economy’.” Forbes.
Forbes Magazine, n.d. Web. 05 Oct. 2015. <http://www.forbes.com/pictures/
eeji45emgkh/airbnb-snapgoods-and-12-more-pioneers-of-the-share-economy/>.
[8]”10 Hot Consumer Trends 2015.” Ericsson ConsumerLab (n.d.): n. pag. 10 Dec.
2014. Web. 2 Oct. 2015. <http://www.ericsson.com/res/docs/2014/consumerlab/
ericsson-consumerlab-10-hot-consumer-trends-2015.pdf>.
[9]Roberts, Daniel, and Andrew Nusca. “The Unicorn List.” Fortune. Time Inc., 25
Aug. 2015. Web. 22 Oct. 2015. <http://fortune.com/unicorns/uber-1/>.
Sharing Economy Page 7 of 10 info.4imprint.com

8. [10]O’Brien, Sara Ashley. “‘Crazy Money’ – Airbnb Valued at over $25 Billion.”
CNNMoney. Cable News Network, 27 June 2015. Web. 22 Oct. 2015.
<http://money.cnn.com/2015/06/27/technology/airbnb-funding-valuation-update/>.
[11]Clifford, Catherine. “What a Sharing Economy Startup Does to Build Trust in Its
Community.” Entrepreneur. Entrepreneur Media, Inc., 27 Aug. 2015. Web. 05 Oct.
2015. <http://www.entrepreneur.com/video/249690>.
[12]Kessler, Sarah. “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company.
Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[13]”10 Hot Consumer Trends 2015.” Ericsson ConsumerLab (n.d.): n. pag. 10 Dec.
2014. Web. 2 Oct. 2015. <http://www.ericsson.com/res/docs/2014/consumerlab/
ericsson-consumerlab-10-hot-consumer-trends-2015.pdf>.
[14]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[15]Kessler, Sarah. “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company.
Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[16]Hern, Alex. “Why the Term ‘Sharing Economy’ Needs to Die.” The Guardian. The
Guardian News and Media Limited, 5 Oct. 2015. Web. 5 Oct. 2015.
<http://www.theguardian.com/technology/2015/oct/05/why-the-term-sharing-
economy-needs-to-die>.
[17]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[18]Hern, Alex. “Why the Term ‘Sharing Economy’ Needs to Die.” The Guardian. The
Guardian News and Media Limited, 5 Oct. 2015. Web. 5 Oct. 2015.
<http://www.theguardian.com/technology/2015/oct/05/why-the-term-sharing-
economy-needs-to-die>.
[19]”10 Hot Consumer Trends 2015.” Ericsson ConsumerLab (n.d.): n. pag. 10 Dec.
2014. Web. 2 Oct. 2015. <http://www.ericsson.com/res/docs/2014/consumerlab/
ericsson-consumerlab-10-hot-consumer-trends-2015.pdf>.
[20]Kessler, Sarah. “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company.
Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[21]Ibid.
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9. [22]Bjerga, Alan. “The Sharing Economy Comes to the Farm.” Bloomberg. Bloomberg,
27 Aug. 2015. Web. 02 Oct. 2015. <http://www.bloomberg.com/news/articles/
2015-08-27/the-sharing-economy-comes-to-the-farm>.
[23]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[24]Hern, Alex. “Why the Term ‘Sharing Economy’ Needs to Die.” The Guardian. The
Guardian News and Media Limited, 5 Oct. 2015. Web. 5 Oct. 2015.
<http://www.theguardian.com/technology/2015/oct/05/why-the-term-sharing-
economy-needs-to-die>.
[25]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[26]Hern, Alex. “Why the Term ‘Sharing Economy’ Needs to Die.” The Guardian. The
Guardian News and Media Limited, 5 Oct. 2015. Web. 5 Oct. 2015.
<http://www.theguardian.com/technology/2015/oct/05/why-the-term-sharing-
economy-needs-to-die>.
[27]Samuel, Alexandra. “What Customers Want from the Collaborative Economy.”
Harvard Business Review. Harvard Business Publishing, 08 Oct. 2015. Web. 14 Oct.
2015. <https://hbr.org/2015/10/what-customers-want-from-the-collaborative-
economy>.
[28]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[29]Kessler, Sarah. “The “Sharing Economy” Is Dead, And We Killed It.” Fast
Company. Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[30]Ibid.
[31]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[32]Clifford, Catherine. “What a Sharing Economy Startup Does to Build Trust in Its
Community.” Entrepreneur. Entreprenuer Media, Inc., 27 Aug. 2015. Web. 05 Oct.
2015. <http://www.entrepreneur.com/video/249690>.
[33]Ibid.
[34]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
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10. [35]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[36]”The Rise of the Sharing Economy.” The Economist. The Economist Newspaper,
09 Mar. 2013. Web. 05 Oct. 2015. <http://www.economist.com/news/leaders/
21573104-internet-everything-hire-rise-sharing-economy>.
[37]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[38]Kessler, Sarah. “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company.
Fast Company Magazine, 14 Sept. 2015. Web. 06 Oct. 2015.
<http://www.fastcompany.com/3050775/the-sharing-economy-is-dead-and-we-killed-
it>.
[39]Yeung, Ken. “3 Ways Brands Can Compete with the Sharing Economy.”
VentureBeat. VentureBeat, 5 Oct. 2015. Web. 05 Oct. 2015. <http://venturebeat.com/
2015/10/05/3-ways-brands-can-compete-with-the-sharing-economy/>.
[40]Ibid.
[41]Ibid.
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