The sharing economy is one of the most exciting markets to have emerged from the growth of Britain’s digital economy. From travel to pet ownership — it is reaching into many parts of our lives.
As I write this, sitting in Tech City UK’s shared office space called RunWay East, two brown eyes are gazing up at me from beneath the chair. His name is Elvis, and we met three days ago.
Being closely monitored by a furry pooch is not a sensation I’m used to. But it’s all part of a new experience my kids hounded me into when we first came across BorrowmyDoggy.com. The site, launched two years ago in London, hooks up canine-lovers with dog-owners for short periods of time in a neat quid pro quo that perfectly exemplifies the sharing economy in action.
You have what I want, so we’ll connect online via a low-cost website and make a transaction.
It’s not the first time I’ve turned to the sharing economy to sort out my life. Trips to New York and Barcelona have become easier, cheaper and more fun over the years, thanks to One Fine Stay, House Trip, and AirBnB. Why pay over the odds for an anonymous hotel room when you can live like a local for half the price? Likewise, Zipcar is my default when we head out of London for the weekend.
The business model may be simple, but the potential of this budgeoning marketplace is staggering. PwC has calculated that on a global basis, the sharing economy is set to rise to £230bn by 2025, from £9bn today. The same piece of research details how five subsectors of the sharing economy in the UK are worth around £500m – and this may rise to £9bn a year by 2025.
The big question, of course, is how far the sharing economy can go. As we recalibrate our trust-levels, I suspect the answer is: as far as we can imagine.
I anticipate a day when most of us will be making all of our rentable assets pay when we’re not using them. The shift is already well underway.
Driveway sitting empty? Rent it out by the hour on Justpark.com. Need a power drill to finally put those shelves up? Find out if your neighbours have one at Streetbank.com. Looking to borrow money at low interest? Zopa’s peer-to-peer lending cuts out traditional banks. Need a lift to Glastonbury? Try Liftshare.com.
Cost and efficiency may be the drivers. But the sharing economy could have much deeper ramifications. It may turn us into better people. The business model relies on trust between strangers. And that trust is built by a new kind of digital currency—reputation.
In the case of the canine, owners and borrowers can read testimonials about their online match before meeting up for a “welcome woof”. The lure of saving on kennels for that two-week holiday outweighs fear of the unknown.
As author Rachel Botsman told a TED audience, “Virtual trust will transform the way we trust one another face to face.” Her book, ‘What’s Mine is Yours’ makes the point that in the sharing economy, a reputation for trustworthiness becomes a precious valuable digital asset, comparable in its way to physical money in the offline world.
In the sharing economy, networks become more dynamic than centralised systems. And reputation becomes a powerful new asset. As these networks grow, offering an ever-increasing stream of customers and suppliers, so too does the consumer’s power to access goods and services hitherto out of their reach.
Could it be that a new kind of social contract is emerging; instead of just the individual and the state, is it the individual and the network as well? But this doesn’t just have potential value in social currency; the sharing economy should also be seen as a huge opportunity for the UK economy.
The recent Government’s independent Sharing Economy Review Report, led by Debbie Wosskow, CEO of Love Home Swap gives a detailed exploration of these new firms. Over 1,000 people submitted evidence to the review and Debbie met with more than 100 people, including representatives from the TUC, the British Hospitality Association, the B&B Association as well as sharing economy companies such as Hassle.com and Grub Club.
The report outlines what the UK can achieve and also explores the growing opportunity for big businesses looking to embrace the sharing economy. The message is clear: the sector is growing fast and the time to get involved is now.
Gerard Grech is CEO of Tech City UK @gerardgrech