Is the “Sharing Economy” already dead?

It seemsBosch-18V-DDB181-Drill-Driver that the idea of sharing a household item that you do not need that often, say a power drill, a power washer or a ladder with your neighbor is something that everyone intuitively understands and want’s, but unlike sucesses like Uber and Airbnb,  businesses based on this type of sharing has a hard time taking off.  In an article on Fastcompany.com, writer Sarah Kessler provides an interesting analysis .  One key reason is probably  the fierce competition on the web by vendors of equipment and the hazzle to physically retrieve the gear :  “For a drill, which by the way now costs $30, and you can get it on Amazon Now …, is it really worth your time to trek potentially 25 minutes to go get something that you spent $15 to use for the day, and then have to trek back? For most people on the sharing platforms, the answer was no.

Time is obviously money also for the private person.

About Jens Zander

Professor Jens Zander is professor in Radio Communication Systems at the Royal Institute of Technology, Stockholm, Sweden. He has been among the few in Swedens Ny Teknik magazine's annual list of influential people in ICT that have been given the epithet “Mobile Guru”. He is one of the leading researchers in mobile communication and is the Scientific director of the industry/academia collaboration center Wireless@KTH. His research group focuses on three main areas – the efficient and scalable use of the radio frequency spectrum, economic aspects of mobile systems and application and energy efficiency in future wireless infrastructures.
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1 Response to Is the “Sharing Economy” already dead?

  1. Petri Mähönen says:

    This is a good point to raise Jens, thanks. I tend to agree with Sarah and you. A big part of “Sharing Economy” probably is already dead or at least dying. Obviously time is money even for a private person, and economically speaking as so many devices are ver low cost thanks to Internet (say that power drill) the effort comes an issue. Note also that it is not only the effort for borrower, it is also effort (“time wasted”) for the lender combined with a risk of not getting power drill back. We already know from experimental economics and cognitive psychology that mental cost for losing (say $30) is higher than gaining the same $30. When this is also combined with the other possibilities, like buying that $30 drill for a project and then selling that over eBay to get $15 (thus you have even less benefit from the sharing economy). One issue is also the transaction complexity on agreeing when to pick up a drill, when to give it back etc. which will not only cause effort, and slow down to process of getting the drill (instead of ordering it from Amazon and get it by DHL next morning to your hand).

    More technically speaking I think that we are seeing a classical “transaction cost” issue of economics hitting many of sharing economy scenarios. Only if the transaction costs do not dominate over the possible benefit the sharing makes a sense (the example being Airnb). This could have also some indications towards some other hot issues like IoT, but that would be an issue for another posting.

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