Shareconomy has been spurred by the logic that if an item lies idle & it can be rented out, then there will be a viable & huge base of people who would prefer renting the product/service for a limited period of time rather than having full ownership. By enabling the rental of the item multiple times to people across a city, state or even countries through an online platform shareconomy concepts are a win-win for both consumer and provider. Another example of shared economy is the concept of collaborative workspaces like BHIVE Workspace where Startups, Companies, Freelancers, etc. work out of common office space and share office resources. Some claim that in 1995 when Ebay launched a platform for people to buy/sell/bid for goods – old or new, the seeds for sharing economy were sown. The platform model proved that when people on the other side of town, state, country or even planet were instantly connected with one another, they were open to bartering for goods/services. The old world constraint of the limited target audience was instantly removed. Then in 2008, when Apple launched the 3G enabled iPhones & the App Store – a mechanism, for people to use sophisticated mapping, computing & communication technology was born. TaskRabbit, one of the early shareconomy startups, launched in the same year allowed people with free time to volunteer for odd jobs in their neighbourhood or vicinity. Shareconomy continued to spread its tentacles and has now grown to include a variety of domains like transportation, living quarters, pet care, finances, household appliances, clothes, human resources, etc. Investor interest has also been growing in this space. Estimates indicate that while $4.1 Bn was invested in Shareconomy startups in 2014, in the following year that number more than quadrupled to $17.9 Bn. UBER, as per some estimates, has raised somewhere between $10-15 Bn in multiple rounds. Airbnb in its latest round was valued at over $30 Bn having raised around $850 Mn to date.

As mentioned earlier, there are a number of shareconomy concepts that are now in existence across the world. Let’s take a look at few of the hottest Shareconomy concepts in existence currently:

1.) Shared Economy Vacation Stays: Here people who live in a house (be it landlords/tenants) can offer individual rooms or the entire house to people looking for vacation stays or short term rentals. This has led to many of these startups being pitted against & competing with Hotels across the globe. This has also resulted in the hotel lobby complaining that while they are made to pay licence fees; clear safety & regulatory stipulations; etc, many startups in this space are exempt from such requirements. A few municipal bodies across the globe are initiating actions countering some of the loopholes through which platforms like Airbnb operate.

 

The developments will be interesting to observe and see how the sector shapes up. Another noteworthy problem has been the misuse of properties by the customers of the site. For eg., one Airbnb user rented a place out to host an orgy, while some Airbnb hosts complained of their units being vandalised by the guests. To counter this Airbnb now offers a Host Guarantee in a select set of countries (predominantly OECD). The controversies and hindrances notwithstanding, the rapid growth of Airbnb (currently valued at $30 Bn) has made them one of the poster boys of Shareconomy. Case in point being, while Hilton took 93 years to build and amass an inventory of 610,000 rooms across 88 countries, Airbnb in a span of 4 years had an inventory of 650,000 rooms across 192 countries on its platform, without owning a single room. While Airbnb, HomeAway & Indian startups like Stayzilla, Safron Stays, TripVillas are pure-play vacation or short term rental portals, Home Exchange allows guests to swap homes. A user can reside for a few days in another person’s house in exchange for allowing the person hosting him to reside in his house for the same amount of time without either of the two hosts paying any amount. There is a yearly subscription fee of $150 to register and list one’s property on the site. 

2.) Shared Economy Living Quarters There have been a few Indian startups that have reinvented the old age renting model for residential properties and introduced sharing economy with a twist. Nestaway, Ziffy Homes, CoHo, Fella Homes, Grabhouse, GetSetHome, Homigo are some of the players in this space. These startups allow bachelors/family members to rent out a single bed / full room in a fully furnished house. For a monthly fee charged either on a per bed or a per room basis, the tenants are assured of savings on expenses like utilities (Wifi, electricity, gas, water, etc) and furniture (beds, wardrobes, TVs, Washing Machine, etc.). The only drawback is that outside of the bed or the room a person pays for, all other access areas (living room, kitchen, washing machine room, bathrooms, etc) are common and shared with other like-minded tenants on the platform.

It’s a plug and play experience, which means a person moving into such accommodations can hit the ground running from day one without wasting any time and(or) even money in setting up his/her room. The tenants pay a security deposit ranging from 2-3 times the monthly payment fees (refundable) and some companies have a lock-in period. This kind of a new age flexible stay, pay and leave concept resonates with the highly mobile & young age millennial.

3.) Shared Economy Office Space: Extending the concept from living to professional workspaces, new age startups have launched collaborative workspaces which offer a plug & play experience with Utilities (Internet, Electricity, Water, etc); Desks; Cabinets; Ergonomic Chairs; Conference Rooms; Whiteboards; Recreational Areas; Cafeteria; Concierge Services; etc all set up and ready to use for any person / company. This value proposition has resonated with a  number of entities – Startups, Freelancers, Small & Medium Enterprises and even some huge MNCs (Microsoft among the latest) have started working out of Co-work spaces. The Investor Community as well seems very excited by this space and have put their money where their mouth is by investing in this upcoming sector. In India the players in the space like 91Springboard, Innov8 have raised undisclosed amount of money from a few angel investors. BHIVE Workspace, India’s fastest growing & Voted World’s Coolest Workspace has raised $1 Million from VC biggie Blume Ventures in May 2016.

The interest and buzz is driven by the fact that collaborative workspaces are being viewed as the way forward for startups & many other companies. As opposed to renting their own place out, Co-working spaces allow flexible expansion/contraction (pay per seat basis); huge savings (no expenditure on fit out costs, rent advances, equipment & utilities); vibrant community; collaboration; better employee engagement; recreation; etc. There is a clear Win-Win for both parties. The space is one to watch and offers a lot of promise.

4.) Shared Economy Transportation: UBER along with Airbnb is often considered one of the other poster boys of the Shared Economy Movement worldwide. Both started around the same time and have reached sky-high valuations and impacted millions. Shared Economy for transport involves a vehicle owner enrolling on a platform to offer users a ride from point A to B, when that person along with his/her vehicle is available. Most of these ride-hailing apps use the latest in GPS mapping technology to provide location detection & routing algorithms.

Other than UBER, some notable names around the world include Ola, Didi Chuxing, Go-Jek, Lyft, etc. It hasn’t been smooth sailing for Companies like UBER though, as their existence has affected traditional Taxi operators all across the globe. Taxi Unions across all major cities in Europe, Australia, London, Sao Paulo, have often hit the streets demanding that their Governments block UBER and declare them to be illegal. There have been lawsuits that UBER has had to contend with constantly and recently was trying to settle a major lawsuit in USA (UBER’s country of origin, itself).

Another variant of this segment is self-drive vehicles that are made available on a platform to users. Companies like RelayRides, Getaround in USA, allows vehicle owners to list their idle/unused vehicles for self-drive hire. In India, Zoomcar provides self-hire options, albeit that majority of the vehicles on the platform are owned by the Company. Recently, however, Zoomcar launched the Zoomcar Associate Program, (ZAP), a true Peer-to-Peer car lending scheme. In the Zap scheme, a person who wishes to buy a new car / upgrade their old car can do so in partnership with Zoomcar. ZAP enables the participants to register their new car on the Zoomcar platform whenever they want and solicit bookings from the customer base of Zoomcar. Zoomcar also installs onboard diagnostic monitoring tools and has an innovative locking mechanism using smartphones, eliminating the need for physical keys. Zoomcar has a fleet of 2600 cars spread across 14 cities  and is expanding rapidly across the country.

5.) Shared Economy Finance: Peer to Peer Lending has revolutionised the fin-tech space. Zopa in 2005, was the first in the world to launch a P2P lending model. Companies operating in this space offer a matchmaking stage for potential lenders and borrowers. These loans are unsecured loans meaning that no collateral is offered for obtaining the loan. Since the entire process is online, there are lower cost overheads – the benefits of which can get passed on to the end users. While the lender tends to earn a higher rate of interest compared to the interest rate in banks, the borrower tends to secure a loan at a lower rate compared to securing it from a bank. Thus the system ends up being mutually beneficial for both borrowers and lenders.

The lender can choose to disburse the money based on the interest rate set by the intermediary (decided by a borrower’s credit rating which the intermediary has to investigate & determine) or based on a  competitive reverse auction model. For the new age borrowers, especially in India, this model of finance is a stark difference to securing their loans through banks or unauthorised money lenders, which usually involves pledging of personal collateral like jewellery, property, etc. Some of the prominent names in the space include LendingClub, Faircent, i2iLending, LenDenClub, Lendbox, etc. The risk with this model of lending is that the safety net that exists with bank deposits vanishes, and a lender is exposed to default risks of an unknown borrower.

6.) Shared Economy Appliance Rentals: These platforms allow people to rent out common household items – like TVs, Washing Machines, Dryers, Vacuum Cleaners,  Beds, Furniture Items, etc. without owning them. This scheme works out when a person moves to a new town/city and intends to stay for a short duration or are undecided on how long they will be in that place. Some companies (GuaRented, Rentomojo, Furlenco, etc) own all the items in the platforms inventory while some companies  (Zilok, Neighborgood, Rentsher, etc) allow people to upload unused items they have lying around with them and enable them to rent it out on their platform, taking a small percentage of the rental amount as a platform fee.

7.) Shared Economy Clothing: Extending the same shareconomy logic, some startups have started allowing people to rent out / borrow a wardrobe. The startups in this space have been built on the premise that instead of buying costly designer clothes, some people would prefer renting out designer clothes. This enables the young millennials to sport flashy designer way, without owning the big labels. The way things work is that a user can login to the website / app, browse through the catalogue of products and choose the product for a minimum 3 day rental. 

Prominent startups in this space include Rent the Runway, Stage 3, StyleBank, Flont, Swishlist, Rent A Closet – which provides clothes on rental exclusively for women. CandidKnots & HiFlame14 provide clothes on rental both for men & women. The space has been quite tough & competitive. Rentique, DressBank were among the few which have shuttered operations. Blinge has recently decided to pivot as they have stated that they did not find the fashion rental market lucrative enough. Other startups like Klosetedit, Coutloot, Zapyle, Elanic, Spoyl have a different strategy of allowing people to Buy / Sell Pre-Owned Garments & Fashion Accessories.

8.) Shared Economy Odd Jobs: TaskRabbit is one of the oldest in the shareconomy space launched in 2008 and some feel that it was the precursor for the revolution in the shareconomy space. The startups in this space, allow people to make themselves available for jobs that other people may need help with. These jobs could be everyday tasks, like cleaning, lawn-mowing, moving in, painting, delivery, handyman work, etc. This is usually for the odd blue collar/household chores that people in the neighbourhood or nearby vicinity need help with.

People usually list themselves after a vetting process done by the company. The closest thing to this in India, in this form is DriveU albeit only for hiring of drivers. Other sites like Freelancer; E-Lancer; Taskr allow freelancers to list themselves or bid for projects that are more technical in nature or white collared like coding, graphic design, tax or business consulting, marketing. These freelancers are usually hired by small businesses for the odd white collared job. Many of these platforms help the end consumer save costs while freelancers benefit from having flexible work projects which they get to pick as compared to a regular corporate job.

9.) Shared Economy Domestic Animal Carers: These platforms allow pet owners to list themselves on a site to enable connecting with vacationing pet owners. For a fee, they offer to host & take care of the pets while their owners are away on vacation/work. While kennels exist, these startups feel that there is a sizeable segment of pet owners who want more care and attention given to their pets. So imagine if you will an Airbnb for Pets. The service providers usually are vetted before allowing to post their pictures, their location, availability, description and the fee they charge. Some names in this space include DogVacay (USA); DogHuggy & inDog (Japan); and Waggle (India)

10.) Shared Economy Flights & Charter Jets: Another space where shareconomy has made its presence felt is air travel. In the yesteryears, air travel was a luxury restricted to the well-heeled. But as with other things, necessity is the mother of invention. Few startups like JetSetGo & BookMyCharters allow people to book charter flights on their website platform. On these platforms HNIs list their unused private jets so that people can book & charter flights between airports in India. While JetSetGo seems to be more on lead generation side, BookMyCharter is more end to end. While the prices are out of reach for most of the general public, for those who can afford it, it works our cheaper than buying a private jet. On the converse side, for those owning the jet, they stand a chance of making a decent profit on their otherwise unused jet.

Conclusion:

To conclude it is fair to say that the Sharing Economy Trends have inspired the millennials to postpone or even avoid ownership of an item that in prior times could be used only after purchase. Shareconomics has effectively enabled usage sans ownership, whilst being mutually beneficial for both Lessors and Lessees. While Lessors earn more from a product that lies unused, Lessees get to use the product without having to burn huge capital for a product/service they would use very sparingly. It is the perfect balance of monetary benefits & usage planning that allows both parties – Lessor and Lessee to agree for the trade-offs in this exchange.