The sharing economy has expanded in recent years, says Karin Bradley, a researcher in urban planning and environment. (Photo: Peter Larsson)

Sharing economy surges forward

Published Dec 15, 2014

The holiday shopping season breaks records year after year. Consumer spending this year is expected to total 7.2 billion globally – a 2.5 percent increase over last year, according retail analyst HUI. But an even stronger trend is underway. The “sharing economy” is growing rapidly and is changing the conditions for holiday retail business and consumption in general.

According to PricewaterhouseCoopers (PwC), the sharing economy today contributes about USD 15 billion to the global economy, a figure that will increase to about USD 335 billion by 2025.

Then add the recent report  that the sharing economy constitutes one-sixth of the total US economy. Collaborative consumption is just here to stay: it is growing fast.

“The sharing economy is a way for people to rent, share, trade or borrow things from each other,” says Karin Bradley, assistant professor in the Department of Urban Planning and Environment. “The sharing economy has been around for a while, but in recent years it has really expanded.”

Bradley is researching the topic and says that the internet and various digital platforms have facilitated the sharing area economy’s growth. She takes service Airbnb, for example.

“Previously, you divided resources in smaller circuits and local contexts,” she says. “Nowadays you can share large scale. People used to rent out their apartments when they worked abroad for a few months. But now with Air BnB, it’s easy to rent out your home if you will be gone for a few days.

“All that is needed is a few photographs of the home,” he says.

Urban bike hire schemes are increasing in popularity worldwide.

The world has grown with the internet, yet it has also shrunk. Bradley says that when accommodation rentals are paired with services such as Google Street View and Facebook, customers can check up on the people owner and even inspect the neighborhood.

Company-operated car sharing has been around for a while, but now individual citizens also rent out their vehicles. RelayRides is one such service.

The sharing economy is increasing in scope due to the economic crisis in southern Europe and the United States, Bradley says. Classic employment no longer provides financial security, because one can suddenly lose their job and then everything that is linked to their income follows. The realization that they have to be creative to earn money – and that you cannot put all your eggs in one basket – has spawned a wave of micro entrepreneurship.  

For many, the sharing economy is about establishing and maintaining ways to cope even on a tighter budget.

“The shared culture of the internet has also contributed to the success of the sharing economy,” she says. “There’s a long history of sharing texts, software and images. People open up more of what used to be considered personal and private. It used to be more important to have actual ownership of physical discs and movies; but today people use Spotify and Netflix to stream their entertainment.  

“Behavior changes.”

An electric drill serves as an example. What is relevant is the hole that the machine makes, not the machine. It’s about access to gadgets only when you need them. Today it is sometimes easier to buy a cheap drill. But in the future it may be easier to rent one when you really need it, and perhaps even have it home delivered.

It's the hole that people value, not the drill.

It has long been possible to rent more expensive items such as automobiles, carpet cleaners and skis. But the sharing economy makes it possible in many more areas and in different ways.

“I have also studied a tool pool run by an ironmonger in Malmö, Swedem, where customers can borrow tools completely free of charge,” Bradley says. “The owner invests money in that instead of advertising. The benefits for him are that he has many happy customers, and they buy goods while in his shop. There is also an ideological side, in that the quality has been important for the ironmonger. It all has gone so far that people actually donate tools to the pool.”

Whether for cars, housing or other products and services, people can drive such a pool in many ways – as a company, as a group of volunteers, or as a public service. There are also many reasons for wanting to be a part of collaborative consumption.

“The sharing economy is already interesting for those who think it is socially, environmentally and ideologically relevant,” she says. "Sharing is changing the conditions of consumerism.”

So are we headed toward a rental society? "Yes, if you only have access to a product when you need it, then servicification of a product is taking place," she says.

She says that the shared economy is best suited for things with a high static factor, such as cars. “A car in Sweden stands entirely still for 23 hours per day. Other rare items such as ladders and party rental chairs are also included. Robust things, quite simply, as well as gadgets that do not have a personal connection to the owner. A computer one would not lend out, for example.”

Is the future a rental society? (Photo: Basil D. Soufi)

It is easy to wonder why a product manufacturer would participate in the sharing economy. At the same time, the music industry’s initial resistance to MP3s and streaming gradually gave way to embracing the technology.

“Companies have recognized that the sharing economy is something that is growing. You have to keep up with it or you’re going to be ousted. General Motors, for example, bought Zipcar car share in 2011. They know that people do not always want a car, or will buy a car they seldom use.”

GM realized that they had to develop transport too, that they had to walk away from a fairly linear business model to be competitive, Bradley says.

But it's not just businesses that are coming to this realisation - politicians are getting on board too. The British Ministry of Industry has issued the report "Unlocking the sharing economy" , which goes in-depth into how laws and regulations should be changed to facilitate the sharing economy.

“This is a sign that politicians take the sharing economy seriously.”

Peter Larsson

For more information, contact Karin Bradley at 070-918 60 88 or karin.bradley@abe.kth.se

The sharing area economy is also called, among other things, mesh, peer-to-peer economy, collaborative consumption or collaborative economy.

  • It can be said to be a subset of the circular economy. For example, Philips now offers a rental service where you can, in essence, subscribe to light. You do not have to buy the LED lamps or fluorescent tubes. Instead, Philips is responsible for the lights. But there are also forms where the two economies are included.
  • In cities like Malmö, Gothenburg and Uppsala, so-called “klädotek” has emerged. It is simply about "common closets" which make it possible for people to share clothes rather than buy them.
  • According to Bradley the sharing economy places greater demand on product quality. It should be related to products that can today vary greatly with respect to quality.
  • There are plenty of products and companies that are part of the sharing economy. Examples include Uber and UberPop, as well as bicycle hire systems in most major cities in Sweden, as well as in Paris, New York and London.
  • A new trend that Bradley notices is that people in certain countries are increasingly engaged in home restaurants. A prerequisite for this is that it has function legally.
  • Second hand sales are usually included in the sharing economy. For example, strollers might be owned for a few years before being sold. The owner has thus access to it during the time it is needed. Services such as Craigslist and Sweden’s Blocket have done a lot for collaborative consumption, especially regarding things that are not life investments.