The Growing Popularity of India’s Sharing Economy
Sharing isn’t new. And, sharing unused, underutilized resources or exchanging accessibility to these resources for money is timeless. Sharing comes readily to humans, it is rather innate.
Traditional businesses function on linear model: manufacturers do manufacturing, distributors distribute, and customers/consumers buy the products, becoming owners. However, in the last decade, it has been noted that consumers have started to prefer a different type of consumption, which involves no actual ownership, but temporary access to goods and services is availed. This epiphenomenon is sharing economy, suitably defined as a transaction or economic activity taking place over digital platforms where users are given evanescent access to a business owner’s/ service provider’s otherwise under-utilized and underused assets. This involves no change in the ownership of the asset, but for additional access to the customers.
Instead of owning things, a good many young Indians are choosing to rent them – apartments, cars, furniture or even wedding trousseau. Sharing rather than owning makes for a compelling proposition. Why buy a house or a car, or furniture or even luxurious clothes when you can just rent them instead?
There are several drivers for the growing popularity of the sharing economy in India such as an increasingly mobile young workforce that is always on the go and thus does not want to burden itself with immovable assets or the growing interests in travel and tourism among the millennials who lead an uncertain professional life and thus are not keen on given responsibilities of major capital assets which would be hard to liquidate. For example, WeWork is a company providing coworking spaces in big cities around the world. freelancers, entrepreneurs and telecommuters can rent a desk or an office without the overhead cost of renting an entire building or suite.
Similarly, sites like Poshmark and ThreadUp allow individuals to sell gently used clothing, while services like Le Tote offer subscribers the ability to borrow clothes and return them like a Netflix subscription for your closet.
The younger generation also has different preferences that they see as requirements. Being a “two-car family” (or even three or four cars) was once a mark of status, whereas today many consider better social status in being a one-car or even zero-car family and making use of services like Uber, Lyft, CarGo. There is also a trend towards minimalism and efficiency feeding off a growing awareness about climate change and the environment which is also contributing towards a shift in such consumption behavior among the youth.
Companies that are offering services within India’s sharing economy don’t just represent a new way of thinking or new products, but a new way of using data effectively in order to provide better services to people. Many of their business models depend on harnessing technology – AirBnB, Uber, Ola, Furlenco– all depend heavily on their digital platforms to conduct business.
However, one must keep in mind is that there are several issues associated with this new sharing model, some that have sparked widespread controversies. One of the major problems is that sharing platforms blur the lines between personal and professional lives, creating undefined areas and spaces in which business owners, consumers and governments interact. This comes with its obvious limitations in terms of legality and regulation. For instance, popular app-based taxi services Ola and Uber still charge surge prices regardless of the price cap set by the Delhi government on the taxi fares. A peer-to-peer sharing economy has tremendous potential but besides self-regulation there must be some comprehensive regulatory framework employed for it to realize its full potential.
Nonetheless, what’s truly encouraging and yet worrying about a sharing economy is that despite any amount of regulation, it is always going to be fundamentally based on peer-to-peer interaction. Companies involved are not service providers rather they are facilitators responsible for making transactions possible. The trust and reputation of the facilitator is based on how easy and safe these transactions are for both the provider and the user. In turn, users and providers are judged by one another, often through reviews in apps and surveys and the feedback loop this creates is potentially good for service and quality assurance – so long as the inherent loopholes are not exploited.
Although one hopes for better regulation, but it seems for now that the future of India’s sharing economy, like it or not, is based on mutual trust and cooperation.