Challenges Facing the Sharing Economy
Trust Matters Beyond Users
Sharing economy enterprises and markets face trust issues first. Customers must trust the individual installing shelves in their home or their host. As more people use the services and get used to sharing, many companies anticipate that will diminish.
New companies entering the market with new businesses built around people sharing and trusting each other may threaten the industry. Consumers hear more about shared company failures than achievements. If one firm fails, the space could suffer.
“They have to maintain a particular level,” says RateSetter CMO Ian Cruickshank. “This is one of our biggest anxieties as a firm, as much as we stick to standards, there’s the risk that companies will come in that don’t stick to standards and will tear down the industry’s reputation by doing the wrong thing.”
Sharing economy enterprises face this issue also. Valve founder Gabe Newell has warned that a bad VR headset that causes motion sickness might put the industry back to the 1990s. Sharing economy enterprises must uphold strict standards to protect users’ money and safety.
Is It Durable?
Any new industry must prove it can survive early-adopter enthusiasm and become a mainstream industry. Sharing parking spaces or tool kits is more efficient and sustainable, but the sharing economy and marketplace industry is young and subject to customer shift. Here’s what consumers say they need right now, and what sharing companies want right now:
- “We Are Pop Up. CEO Nicholas Russell finds it amusing that Asia’s developing economies don’t want Airbnb.
- They want the Intercontinental and to spend.
- I want to travel cheaply in the post-crisis West.
- These tech platforms satisfy a variety of customer dynamics.
- Crisis-prone Airbnb.
- I listed my house online to keep my mortgage since folks need a somewhere to stay.
- Will that scale post-crisis?
- Will these companies grow?
- Would Uber grow if London cabs set prices?”
Airbnb is aware of this, moving to offer a more real travel experience. While more companies are launching markets and sharing platforms. Cruickshank doubts all will endure industrial turmoil. Cruickshank predicts a sector blowout and widespread consolidation. “Certainly in the UK as you start to see any new sector expand there’s a world of enterprises at the outset that finally reduces down to four or five. We’ve had a wonderful hockey stick ride so far, but something will go wrong.”
As It Grows, Disaster Risk Increases
So what could go wrong? As more businesses get comfortable transacting with strangers online, the stakes will climb. Russell warns of the risks of huge B2B transactions: “We’ve had roughly 1,000 placements over three years, we’ve had one or two go sour. One was worth GBP150 (USD220) and the other GBP800 (USD1,100). How huge is an Airbnb transaction that goes wrong? But, this is spreading into B2B and these numbers are rising, causing a bigger boom. Unlike P2P, your reputation doesn’t follow you online. It’s efficient, but what if they utilize it for a USD5m or USD10m transaction?
Tomorrow’s Workforce Challenges
As the sharing economy and marketplace company models grow, so do their jobs. There are concerns about drivers’ and cleaners’ job stability and benefits as many of these organizations, which offer individuals the chance to make money, emphasize their role as connecting platforms rather than employers.
Jackie Grech, legal and policy director for the British Hospitality Association, says, “The sharing economy does provide people the option to work for themselves, but I also think that the government must encourage diversity and supporting women.” From a woman’s standpoint, it’s harder to enter. We must give up maternity leave to join the sharing economy. Self-employment and maternity leave are incompatible, therefore many young women can’t afford to quit.
To ensure diversity, the government must intervene.”
Alex Depledge, Hassle.com’s CEO, insists that the platform’s cleaners enjoy a great quality of life and social mobility previously unavailable. The marketplace company’s stringent policy of paying cleaners the London living wage supports this, and the startup says it wants to end labor exploitation in illegal marketplaces. As internet platforms for self-employment become more prevalent, governments may need to intervene to protect workers like Hassle.com’s cleaners.