Many products purchased by consumers and businesses are not used constantly. A product which is not used most of the time is a waste of the Earth’s resources. If it could be shared with other potential users, fewer new products would need to be manufactured. A sharing model or sharing platform is a circular business model in which a business encourages owners of products to increase the usage and value derived from them by sharing them with others.
Sharing platform businesses aim to connect the things people own that are underutilised with other people who are willing to pay to use them. It is important to understand that the sharing platform business does not actually make or own any of these underutilised products. It simply creates the opportunity for consumers to take advantage of the unused potential of products.
Examples of business initiatives which use the sharing model are:
• Ridesharing or car sharing instead of owning a car or relying on public transport. Uber is a well-known example.
• Coworking. Individuals or businesses share an office with people or businesses that need more space, and they each pay a proportion of the expenses such as rent, utilities, office support and office supplies.
• Couchsurfing allows individuals who have houses or apartments to give travellers somewhere to sleep such as in unused rooms or even just on a couch.
• Peer to peer lending provides a means whereby individuals who need to raise finance can be put in touch with those
having surplus funds. This allows those with underused resources to put them to an effective use.
Benefits of sharing models:
• Owners of goods: homeowners, car owners or owners of surplus office space gain from sharing platforms because they receive payment for allowing others to use their goods or products when they are not using them.
• The sharers but not owners of goods: people sharing the assets and resources of others benefit because they can make use of them without the fixed cost of buying and owning them. This encourages small business start-ups by cutting overhead costs and the responsibilities of owning assets.
• Sharing platform companies: they receive a fee for connecting owners and sharers. They do not need to own or produce the products they sell.
Limitations of sharing models:
• The sharing platform can make substantial fees (Airbnb is an example) which may leave the asset owner will limited returns.
• Some consumers see a potential safety risk with car sharing, and privacy issues remain a problem with online sharing platforms.
• There tends to be less government control and regulation of the ‘sharing economy’ than the traditional forms of purchase, and this adds to the risks for both asset owners and those sharing them.