The ‘sharing economy’ has seen businesses such as Uber overhaul traditional capitalist models and disrupt whole industries. But as peer-to-peer companies call on the EU to support this burgeoning economy, we ask: is collaborative consumption here to stay and, if so, what part can established brands play?
From a young age it is drilled into us that ‘sharing is caring’. Perhaps that’s why, when the ‘sharing economy’ model first emerged, it seemed like such an inspired, no-brainer innovation. After all, what could be better than a power-to-the-people, sustainable business model that celebrates collaborative consumption for the common good?
However, apart from industry disruptor darlings Uber and Airbnb (who have this week called on the European Union to support the collaborative economy), the new economy has largely failed to live up to the hype and predictions that it would change life as we know it.
That doesn’t mean that the hype has died down (you can be sure that the resolution to ‘Uberise the market’ topped many an ambitious entrepreneur’s to-do list at the start of 2016) but rumblings of discontent about peer-to-peer business models are getting louder.
Saatchi & Saatchi London used this hunch as the central hook in its new ad for holiday home rental company HomeAway (pictured). Painting an ugly picture of the reality of sharing a holiday, it features smelly breakfast buffets, overcrowded pools, toenail clippings in communal spaces and hairy bars of soap.
Chief marketing officer Mariano Dima explains that there is a place for the sharing economy, but it’s not as massive as “oversized valuations” suggest.
“It’s not going to save the world or create a new way of living. We wanted to balance the hype around ‘sharing everything is good’. We think that is in need of reflection. Sharing is good, but it’s about sharing the right things, the right moments, with the people you really love, not as a forced philosophy where you try and impose that behaviour on different people.”
Unsurprisingly, industry advocates like Love Home Swap chief executive Debbie Wosskow, also chair of Sharing Economy UK, baulk at the suggestion of a backlash. “What’s happening is not a backlash,” she says. “It’s a pre-lash. The growing sharing economy is not in the interests of companies like HomeAway so, of course, they will challenge it at every turn.”
Wosskow disputes the suggestion that the market is over-hyped, citing research about its growth (see page 25). “Being successful in this market takes a lot of grit,” she says. “It’s not a quick win. I would contend that any failures are not to do with the sharing economy model but more to do with the ability of startups to match supply with demand. Like in any market, there are winners and losers.”
What is striking about the startup founders in this market is their passion and sense of community and purpose; traits increasingly ascribed to next-generation entrepreneurs.
Take Camille Rumani who co-founded VizEat, where people can book to dine in others’ homes for a particular style of meal. Her advice to anyone eyeing the sector is to “really care about and trust the sharing economy, to love the community, to love authentic experiences”. Or the creator of peer-to-peer delivery network Postio, Martin Congerton, who claims his business is all about “changing the world”, particularly for the 75 per cent of people in the world who don’t have an address.
The problem, says Congerton, is that businesses start with a social conscience, which then gets “diluted” by the need for funding and the subsequent pressures from investors to deliver profits. In his opinion, this is what has “taken the shine off” Uber and led to exploitative practices that aren’t good for the community or the economic model.
Investors also don’t respond well to the ‘love’ sales pitch, as Postio has found, which is why Congerton picked smaller Mancunian venture capitalists who “didn’t shoot us down for saying it’s all about the love and wanting to change the world”. Many others laughed in his face, including Royal Mail who he took the idea to in the early stages.
But Dax Lovegrove, director of sustainability and innovation at Kingfisher, owner of DIY brand B&Q, cautions brands against arrogance and writing these businesses off. “Airbnb and Uber have achieved major disruptions. Every sector needs to be wary and mindful that they could unexpectedly be up-ended.”
Kingfisher has dipped its toe into the emerging economy with ventures like B&Q’s tool sharing Streetclub, but Lovegrove admits to “stepping back” recently due to “teething problems” in the sector, with sharing businesses struggling to get scale.
“We tried to do it all at once with a national roll out but found that doesn’t work. As the sector matures we’re starting to understand what will work in future. I think it’s about starting with clusters where there is already a sharing community because you need a density of users. With Streetclub we’re now looking at various stepping stones into the sharing economy so that we aren’t jumping too far ahead too quickly.”
What Kingfisher has found is that while the values of the sharing economy are undoubtedly admirable – community, sustainability, social equality – the one that swings it for the consumer, and moves them to act above all else, is convenience. Unless your service is super easy to use, Lovegrove says, forget it.
One “stepping stone” that Kingfisher and other big brands are considering is partnerships with startups already making headway in their sectors. The benefit is mutual: the brand can learn how the sharing economy works and the startup gets help scaling up.
This is exactly what Wyndham Worldwide, parent company of Travelodge and Ramada, did by investing £7.5m in Love Home Swap last year. Similarly, Hyatt has bought a stake in One Fine Stay and Postio says it has struck a deal with a ‘household name’ courier company.
“The sharing economy offers traditional brands opportunities to re-think how they do business and collaborate. We can help Wyndham innovate and disrupt and bring it new audiences, but it can help us with business planning,” says Wosskow.
Rather than write off or fear the sharing economy, savvy brands are embracing it and, so, growing the entire market. In travel, for instance, Wosskow claims that sharing models have led to people travelling more often, bringing tourism to new areas that hotels often don’t serve anyway. For her the message is clear: the sharing economy doesn’t have to mean disruption in terms of destruction – it can co-exist with and complement the traditional capitalist model. She predicts the model will move out of obvious areas like travel and transport and start to pervade every industry. “It’s already happening,” she says, referring to the type of new members joining her trade body.
According to Eve Poole, the economist and author of Capitalism’s Toxic Assumptions, the sharing economy is likely to remain small and only of interest to brands when the successful few achieve scale, at which point “they get viable and they get bought”.
However, that’s not to say that pioneers like Postio and VizEat won’t achieve their dream of making the world a better place. There are signs that we are on the brink of a new socially conscious world where, for a growing proportion of business people, it’s not just about the money or the price tag. For them, the main driver might be finding a new type of business model that simultaneously sustains them and empowers others, rather than a quick, lucrative win.
“The ‘sharing economy’ sounds fluffy, but it’s actually pretty bad-ass economics about sweating lazy assets,” says Poole. “It’s about efficiency and the responsible use of finite resources.”
As Poole says, it’s hard for big brands to access or monetise many of these opportunities, but the sharing model highlights where the gaps are; they often exist where brands aren’t serving customers well.
“These days business is as much about values as it is about products and services,” she adds. “The sharing economy is feedback – feedback that brands would do well to heed. If your customers want a richer relationship with the planet in future, aren’t their favourite brands best placed to lead them there?”
This article was first published in The Drum's 10 February issue.