The future of the sharing economy: boom, brand or bust

The future of the sharing economy: boom, brand or bust

Growing controversy and calls for greater legislation are creating fresh challenges for the sharing economy power players. This could spell disaster for some, but also opens up new brand opportunities within the sphere of collaborative consumption, says Rebecca Coleman.

The sharing economy is nothing new. We’ve been sharing skills and resources in exchange for something else of value since the early days of human existence. It seems intuitive to look to neighbours and friends for access to the things we need, but don’t own.

Sharing-economy companies are breaking down the distinction between businesses and consumers"

Jim Whyte Fitch

The digital revolution and rise of the ‘networked individual’ has led to a point at which the convenience of borrowing from a global web of ‘neighbours’ has driven the growth of a new economic model. Some think it has the potential to pave a path to a more Utopian society, others believe the opposite.

Either way, the Western world is now beginning to question how best to harness the power of access and define new paradigms for living, working and consuming.

"A growing number of people are placing access over ownership," explains Jim Whyte, head of trends at brand design consultancy Fitch. "This is leading to the rapid growth of peer-to-peer, sharing-economy companies like Airbnb or Zopa.

These companies are a response to consumer demand for efficiency, value and convenience and, in the process, are dramatically altering the business models of their industries. Perhaps most importantly of all, though, they are breaking down the distinction between businesses and consumers upon which traditional capitalism is built."

As we enter this period of transition from accepted capitalism to something new, people are beginning to question almost everything about this collaborative system and, specifically, the platforms that enable it.

Are they socially just? Are they legal? Who’s really winning? And how much does this matter to people who value the on-demand nature of the collaborative beast?

What are we willing to accept and what will we demand in exchange? As marketers, whether working for established brands or disruptive newcomers, the challenge is to tailor actions to the way in which contemporary and future consumers want to share and collaborate, without losing their trust or loyalty.

To achieve these objectives, we need to look at what is happening now and what this might mean for future consumers and brands.

What’s in a name?

There has been much debate about the naming of the sharing economy.

Is sharing the most accurate adjective for what the act of collaborative consumption has evolved into? Several critics of the current nomenclature object on the grounds that if an individual or organisation is making profit from granting access to products and services, then it is not technically sharing. While the word ‘economy’ has continued to pervade, its prefix has become central to debate. In response, various alternatives have been put forward.

One of the most prevalent is ‘on-demand’, describing the instantaneous nature of the leading apps within this sphere. These include Uber and Airbnb, which enable users to get a cab or somewhere to stay at a thumb tap.

But then we have the issue of where the boundaries of this description lie. For example, brands such as Netflix and – perhaps more controversially – Tinder can also be placed under this umbrella.

Another contender for the classificatory crown is ‘gig’. This has become synonymous with platforms such as TaskRabbit and even Uber, which connect freelance workers or those with a skill to share to those in need of a service.

This is becoming increasingly popular with employees. According to a recent study by Intuit, 87% of Britons see this way of working superseding the conventional nine-to-five approach in 10 years’ time.

Maybe what we need to get to grips with is the lack of an all-encompassing term for what is, in essence, a series of platforms that connects people and their resources in very different ways. And while they all signal a movement in a certain direction, toward a more network-driven future in which almost everything is digitised, they are all separate entities.

This has led some to define this economic shift to instantaneous access as "platform capitalism", referring to the metamorphosis from a system in which singular organisations vied for the admiration and custom of consumers, to a seemingly more democratic and inclusive model where people are able to connect directly with the service they require via a smart device.

However, there is still a middleman in the shape of the platform itself, and, at the moment, the competition isn’t great enough to create a fair system for all involved.

Warm and fuzzy to cold and prickly

The unseating of your business model is actually much easier than you believe

Richard Huntington
Saatchi & Saatchi

What started as a well-meaning, community-based movement toward a circular ecosystem of lending has developed into something a little less easy to love in its entirety.

Politicians and legal systems are just beginning to catch up. There have been legal questions, and some lawsuits, raised in almost every country or region in which Uber has started to operate. In Germany and Spain, there has been a partial ban.

It is a reflection of a wider trend toward suspicion of disruptive, monopolising tech brands, many of which sit within the sharing-economy bubble. It is perhaps natural in the progression from frontier to establishment, but Richard Huntington, Saatchi & Saatchi’s chief strategy officer, believes some of the initial community feelings are definitely being lost as we bed into the sharing economy.

"I’m annoyed by their reluctance to pay tax and employees a living wage," he says. "I always understood the internet to be born out of the West Coast counterculture, but I feel that the idealism is being lost as dust begins to settle on Google’s ‘do no evil’ motto."

However, he also believes it is important to make a distinction between those apps and platforms that are making profit from the networked world and those that are more purely embracing peer-to-peer interactions and genuine sharing. One such example of the latter is carpooling app Liftshare, which aims to connect drivers with spare seats to passengers seeking a ride.

"Liftshare’s founder, Ali Clabburn, created the app because he genuinely saw an oppor­tunity to make the world a better place," explains Fern Miller, chief strategy and insights officer at marketing and technology agency DigitasLBi, which partnered Liftshare earlier this year. "We are going to have to make better use of the resources we have – like spare seats in cars – and that’s very different from apps that replace employers. I think that’s quite an important distinction."

Ownership’s future: flexibility rules

As well as reducing the number of cars on the road, Liftshare also taps into a shifting consumer attitude toward car ownership.

Buying and driving one’s own car, once seen as a rite of passage, has become much less appealing to younger generations of cash-strapped urbanites. This is something that the automotive industry is beginning to come to terms with.

BMW has responded by launching its own on-demand car-rental service called DriveNow. BMW marketing director Paul Ferraiolo believes that the future of car ownership lies in tailored flexibility.

"Some customers want to own their car outright," he says. "Others want to be able to access a variety of mobility solutions as and when they need. With the launch of the BMW i3 electric vehicle, for example, we offered customers the ability to access other vehicles in the range on an on-demand basis.

The idea being that you can use a purely electric vehicle for your daily urban commute, but still have access to a larger combustion engine car for your annual ski holiday. It’s all about efficiency and flexibility." Ferraiolo believes that the days of brands being solely product manufacturers or retailers is over, and therefore every brand should be considering what it must do to transform itself into a service provider.

"Customers are no longer simply buying a product," he adds. "They are buying a premium service and every aspect of that experience must therefore be premium, convenient and tailored to the customer’s needs."

In brands we trust

It’s all about efficiency and flexibility. Customers are no longer simply buying a product

Paul Ferraiolo BMW

With trust in some sharing apps waning, as an established and well-liked brand, BMW is in a good position to enter the sharing-economy arena. Huntington believes this is an area in which more brands should be developing.

He explains: "I would rather that those interventions were made by brands that I trust and are regulated and have a track record of positive corporate behaviour, rather than VC-funded start-ups that have no interest in my community, my culture or society." Huntington cites Santander’s sponsorship of Transport for London’s cycle-hire scheme as a good example of big-brand involvement.

"It’s doing that for positive reasons, not trying to screw somebody in the transport industry." He believes that, like Santander, brands need to start thinking well beyond their cat­egory and conventional silos when innovating in this space.

"The unseating of your business model is actually much easier than you believe," he says. "It’s our job as marketers to understand our brands in order that we can be expansive about what they should be, the businesses they should go into and the services they should be providing."

Santander chief marketing officer Keith Moor says doing something "un-bank-like" was a major consideration in its partnership with the cycle scheme. "The benefit for us is that it’s a different way for people to engage with us," he explains. "Something not so mundane and day-to-day. This is why we’re being really active in doing new things, such as guided tours of London Zoo and the Science Museum where people can cycle round."

Co-operative futures

Santander’s interest in this area doesn’t end there, however.

Moor says the bank is looking at other ways in which it can act as a conduit to connect people to each other and the services they need. "People value experiences and their time more than anything else now," he says. This is why the bank has launched Kitti, an app that allows users to save money as a group via their smartphones. 

With Kitti, Santander is acting as a platform for a network of people with a shared interest, much in the same way as businesses that started life as community- and sharing-economy-based projects – think Kickstarter.

In the future, brands may well have to think about how they can connect consumers to each other and even be willing to hand over control and management to collaborative networks. This more co-operative model should help to allay the concerns relating to trust and transparency. 

The ease of a one-tap app, mixed with a human tone of voice, will also appeal to a new audience of young consumers. This is something Macmillan Cancer Support has found with its Team Up app, which connects cancer patients to volunteers in their local area. 

"Due to the flexibility of the model, it offers an opportunity for people to lend a hand who perhaps would not have signed up for more conventional volunteering," says Macmillan’s head of digital, Amanda Neylon.

"Team Up has attracted people with busy lives and a younger demographic, providing volunteering opportunities to a wider audience of Macmillan supporters than before."

The potential impact of the IoT

For consumers interested in the sharing economy, any perceived barriers could soon be broken down by the expansion of the internet of things (IoT). As objects become connected, identifying and accessing available things to share will become even more straightforward. 

In IBM’s recent white paper, ‘Device Democracy – Saving the Future of the Internet of Things’, it says: "The IoT is expected to make the physical world every bit as easy to search, utilise and engage with as the virtual world… the IoT can liquify industries, squeezing greater productivity and profitability out of them than anyone ever imagined possible." 

For savvy marketers looking to appeal to future connected consumers, this could be the place to start innovating

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