Saturday, 3 September 2016

The sharing economy and its significance

(picture: http://knowledge.ckgsb.edu.cn/2014/10/08/marketing/sharing-economy/)

In recent years, people's income have been rising, so as our demand for better goods and services. Higher incomes and, credit cards and the existence of banks have greatly increased our purchasing power. However, in the past when human beings had no access to such services, they involved in barter trade.

According to New Society Publishers, when a person barters, they trade something they have for something they need. Successful bartering depends on a "double coincidence of wants" - such a system is most favourable when both parties need what the other party has, at the same time.

The concept of the sharing economy has been implemented in more recent times, usually by the community. Such examples include public libraries, parks and open spaces. Local governments put in place such spaces to encourage a sense of community among people. However, individuals today are realising the high profits to be made from undervalued assets (PricewaterhouseCoopers, 2015).  Thus, the market for shared products arose - to allow people to consume products or services that would otherwise be unused.

With the boosting sharing economy today, what were people's initial reactions to this revolution?

In a survey conducted by PricewaterCoopers (PWC) in the United States (US), 86% of people agreed that the sharing economy makes life more affordable since the cost of goods are being shared by a larger group of people. 76% of people agreed it is better for the environment. However, since the sharing economy is still relatively new, 69% of people would not trust sharing economy companies until they are recommended by someone they trust.

In the aspect of shared living spaces, sharing economy companies like Airbnb allows people to open their doors to strangers. In some cases, hosts share their living space with their guests. Although there are still risks of criminal offences and misconduct in traditional business environments, these risks are exponentially higher in the sharing economy as it is "unclear who is accountable" since there is no clear boundary between the consumer and the service provider (Dang, 2016). However, users tend to prefer peer-to-peer lodging to traditional hotels as they not only usually cost less, but also because of the dynamic and difference experience from standard hotels (Folger, 2016).

Generally, people today are more open to the idea of a shared community because of the variety of services they provide and the usually low cost. It is likely that the concept of shared economy will be here to stay, given up to 85% of people agreeing that the shared economy makes life more convenient and efficient (PWC, 2015).


references:
https://www.pwc.com/us/en/technology/publications/assets/pwc-consumer-intelligence-series-the-sharing-economy.pdf
https://www.techinasia.com/talk/sharing-economy-testing-trust-people
http://www.investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp

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