Why the sharing economy will continue growingIn a world of Netflix, Uber and AirBnB, people seem increasingly happy to rent instead of buy. Here's why it won't stop.Article by Norma Young - 30 April 2020 - Read Time: 3 min
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The speed with which sharing-economy giants Uber and AirBnB outgrew their baby shoes shows that collaborative consumption is an idea whose time has come. Around the world people are embracing the idea that you don’t have to own something to enjoy it.

Why now?

The practice of renting a house at the beach for your annual holiday is not new. What is new, is the tech behind the process which is making all the difference, says Rachel Botsman, a lecturer at Oxford University’s Saïd Business School who designed the world’s first MBA collaborative economy. She defines collaborative consumption as ‘the reinvention of traditional market behaviours – renting, lending, swapping, sharing, bartering, gifting – through technology, taking place in ways and on a scale not possible before the internet’.

In her TedTalk, The Case for Collaborative Consumption, Botsman listed the four reasons why businesses built on this shared consumption resonate with consumers: ‘One, a renewed belief in the importance of community, and a very redefinition of what friend and neighbour really means; [two] a torrent of peer-to-peer social networks and real-time technologies, fundamentally changing the way we behave; three, pressing unresolved environmental concerns and, four, a global recession that has fundamentally shocked consumer behaviours.’ Together, these four drivers are, to her thinking, behind the shift from the the hyper-consumption of the 20th century to collaborative consumption in the 21st century.

In 2017, a Juniper Research study forecast that by 2022, the sharing economy sector will be generating more than $40 billion in revenue. This is more than double the $18.6 billion it was valued at in 2017. To put things into perspective, when minor Uber rival Lyft listed on Nasdaq on 29 March 2019, it had an IPO of $20 billion.

Johannesburg-based researcher and trendspotter at Flux Trends, Khumo Theko, agrees with Botsman and says, ‘There is a tipping point that consumers have come to understand; that we don’t have to own something to experience it.’ Consumers have come to realise that they can not only save money by renting instead of buying something but also that they can make money from something that often stands idle or unused.

SA businesses built on sharing

Rent My Bay: Capetonians who have registered on the site can rent out their parking bays whenever their cars won’t be parked there. It could be between 8am and 6pm while they are at work or for days or weeks while they are on holiday.

Smart Toy Club: As any parent knows, children outgrow toys almost as quickly as their clothes. For a monthly subscription fee of around R250, you will receive ‘new’ toys every month to be swopped at the end of the month, either in person or via their courier service.

Digs Connect: By applying the AirBnB concept to a perennial South African problem – a lack of student accommodation – Digs Connect connects landlords with students and students with potential housemates. Since launching in January 2018, it has grown to having 50 000 beds in 11 locations in South Africa on their site and secured investment capital of R12 million in March 2019.

Who is set to drive the sharing economy?

According to a World Economic Forum post by April Rinne, the sharing economy’s growth will be driven by these three groups:

The middle class

Rinner, who advises governments and companies on the future of commerce and community, says that the sharing economy enables people to access things they might not otherwise be able to afford, providing an ‘onramp to greater economic participation’. The Brookings Institute calculated that the number of middle-class households passed the number of poor households in the world in September 2018 and puts the global middle class at 3.8 billion people. It is projected to reach 5.2 billion people by 2029, each of whom earns enough to have discretionary spending power.

Women

Women, who already are responsible for a large share of consumer spending, ‘are expected to be responsible for two-thirds of the rise in all disposable income’. Combined with social media and the internet that allow us to build trusted communities and closed groups where information and services are shared, Rinner predicts that the growth of the ‘she-conomy’ is likely to further boost women’s participation in the sharing economy. The US-based Rent the Runway already has nine million members – women – who rents designers outfits when they need one.

The elderly

It is hoped that the sharing economy will allow retirees to earn an extra income and stay in their homes for longer. Zaarly allows skilled artisans or even gardeners and bakers to offer their services that range from fixing a leaky tap to baking a homemade pie. Although such services are not available in South Africa, Uber has entered a partnership with AARP, the US organisation for over-50s’ to recruit more older drivers to increase their number of elderly drivers, which was around 25% in 2015.

Norma Young
A Johannesburg-based freelance writer with experience in print and broadcast media.

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