Sharing economy is also called a peer economy, as it is based on the peer-to-peer principle which grants a common access to the online offered goods and services. Sharing business allows anyone from any place in the world to order absolutely any product or service, starting from borrowing a pen to renting a house. Besides that, this new type of economy permits any person to become a retailer, and later an entrepreneur. Mostly, sharing economy is popular for the products which are expensive to be purchased, but are highly demanded, like accommodation or vehicles (“The rise of the sharing economy”, 2013).
People always want something they may not afford themselves, like driving a car, staying in a new city for a couple of days or a weekend on a yacht. Not saying about the unexpectedly emerged needs, as borrowing a vehicle to get to the destination point once your car is accidentally broken or run out of fuel. Clearly, sharing economy is the best option to satisfy the aforementioned needs, it will provide both a customer and a retailer with obvious benefits. Furthermore, peer-to-peer business is much cheaper than a regular one, as it does not require paying wages for full time employees, nor a rent for a warehouse or a shop, no major advertisement is needed. A well designed and organized web site and an access to the Internet is mainly the only thing that is needed for the sharing business. With a help of rapidly developing modern technologies, one may simply search for the car or apartment available nearby just with a help of his smartphone or tablet.
Some economists consider such “collaborative consumption” to be effective and even better than a usual commercial type of business. First of all, because asset holders earn from underused assets, while borrowers pay much less than if they would buy the item. Secondly, people, who do not use the item fully have an option to earn extra and compensate the depreciation. Thirdly, resources both financial and natural are saved through the sharing economy, as people borrow from each other rather than purchase new goods (“The rise of the sharing economy”, 2013). On the other hand, opponents of the peer economy list a number of disadvantages of this type of business.
Steven Hill in his book “Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers” discusses the negative influence of the sharing economy. He claims that innovations designed in the Silicon Valley boosted the development of the technology businesses, thus creating a fertile field for the peer based businesses. Hill (2015, p.39) states that “all of the sharing economy companies have the same dominant feature: an innovative use of Web- and app-based platforms to connect buyers and sellers”. What is different from the regular business, all payments and transactions are treated as peer-to-peer, or basically person to person, but not a person to business. Most of the services are arranged and ordered with no or limited contact with real people, which causes an unemployment rate increase. On the one side, decreased expenses provide more opportunities for small businesses. But on the other side, largely decreased transaction costs short taxes paid to the national budget; thus, less social payouts may be covered.
The other negative aspect of the sharing economy, which was mentioned by Steven Hill is that peer-to-peer businesses are “impersonal and faceless” (2015, p.40). Instead of delivering good services through the communication and establishing good relations with the customer, on-line marketers prefer to rate their service, their customers and rank their operations. This type of running the business allows to decentralize it and diminish market risks. Although, once every housekeeper, cleaning manager or a vehicle owner is considered as an entrepreneur, equal to the CEO of the large company, an economy may face numerous challenges caused by unprofessional behavior and irrational financial decisions.
The Airbnb company was shown as a sample of the sharing economy. The firm aimed to personify the peer economy so that to show their personal approach to each of the customers and create an image of the home, as “house is just a space, but a home is where you belong” (Hill, 2015, p.41). Once started, as any peer business Airbnb was a small hospitality company, and the vision of “belonging” was successful and applicable to attract more customers to feel like at home. However, one of the negative aspects of the sharing economy, is once started as a small local business it has to change its vision after it becomes large enough. As it happened with the Airbnb, the vision of “belonging” is no more relevant as working with a wide variety of customers requires to deliver different sorts of services, but not to make them all in the same way.
References
Hill, S. (2015) Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers. Macmillan:256. Available at: https://books.google.com/books?id=jf-5BwAAQBAJ&dq=Raw+Deal,+by+Steven+Hill&hl=uk&source=gbs_navlinks_s
The rise of the sharing economy. (Mar 9th, 2013) The Economist. Available at: http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy
