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How the sharing economy concept works

The sharing economy – or “economy of shared usage” or “shared consumption” – is transforming the whole system of economic relations in society. How is this? Bilderlings sets out to grasp the essence of the sharing economy phenomenon.

The sharing economy is what used to simply be called “mutual assistance” and now has become a fashionable trend. Several years ago, Time magazine wrote that the sharing economy would completely transform the world in the near future. The essence of the sharing economy is extremely simple: to exchange and share something with others – something either you have in abundance or you don’t need anymore, at least for the foreseeable future.

Mutual assistance on a global scale

The idea of exchanging items (or services, ideas and so on) is common to all societies and has existed since time immemorial. But it started to take shape “according to the laws of the market” in the US and Europe more actively during the economic crisis of 2008-09. Back in 2011, PwC, a British consulting company, predicted that by 2025, the profits of online resources participating in the “sharing” system could exceed 335 billion dollars.

At the heart of the sharing economy is the idea of reducing costs to the consumer and bringing additional profit to those who are willing to share this something. For example, to rent something out for a symbolic fee or to exchange vacant space in a home or car, construction tools or clothes. So it started and the business, as they say, very soon got rolling.

Not only in the larger EU countries, but also in Eastern Europe, where the 2008 crisis hit particularly hard, a certain variety of internet page or advertisements on popular portals began to appear. “You help make repairs in the apartment, and your teeth are “repaired” in the dental clinic in exchange.” Moreover, the repair work could be done not for the director of this clinic, but, say, in the home of the owner of a car service center, who had his own relations and mutual settlements with the medical organization.

The principle of “sharing” or “barter exchange” has always existed – both in cities and in rural areas (where the word combination “sharing economy” has never been heard). So, in the small countries of Eastern Europe, during the crisis and in the first years following it, everything was built, as a rule, on the basis of personal relations between owners of small and medium-sized enterprises. But in larger countries, everything was happening on a much larger scale – and had already grown into a real business – the sharing economy.

You have a surplus – help somebody

Today the worldwide volume of the sharing economy is estimated at 15 billion dollars – and it is growing quickly. As we said above, in six years the figure should increase by more than 22 times. The sharing economy system breaks the traditional consumption model and helps save money.

Guillermo Beltra, head of the London Department of Economics and Law of the European Consumer Organization BEUC said:

“The sharing economy system is changing our ways of buying many products and services. For European consumers, it can offer numerous benefits. For example, such a system allows you to rent a house for a summer holiday, hire an architect or a lawyer — and often at the lowest prices. New online platforms help consumers share products and services. It is now very easy to share the cost of a joint trip with someone you don’t even know. Or borrow repair tools from a neighbour with whom you did not even communicate before. This system allows people and organizations to offer their property, for example, an apartment or a car, and in exchange to get something that, say, will make it possible to increase profits in the future, or not to lose existing profits.”

Empty space in the car, on the mattress and in the warehouse 

An excellent example is online search services for travel companions, such as the French BlaBlaCar. A driver finds people who are going in the same direction for long distances, they pay for fuel together – and as a result, they save on public transport tickets. The Russian analogue of BlaBlaCar — “Dovezu!” (“I give you a ride”) — turned out to be even more profitable than the French sevice. In turn, the British service JustPark offers the option of sharing your parking spot or garage.

The sharing economy began, according to many, with Brian Chesky, Joe Gebbia and Nathan Blecharczyk, who founded Airbnb in California. In 2007, they did not have enough money to cover the rent at their apartment. To earn money, they decided to rent out an inflatable mattress in their rented apartment, and the received money they put toward their own rent. The package of services included not only a mattress, but also a breakfast: “Airbnb” is an abbreviation for “AirBed & Breakfast” (as in: “air mattress and breakfast”). Then the pioneers of this simple business declared it a startup and received more than a million dollars in investment capital. Today, Airbnb is valued at more than the Hilton and Marriot networks combined.

There are a lot of examples of the sharing economy system around the world – when it comes to joint trips, finding cheap housing, a place to park in the city or to place cargo for a short time on a logistics route. Entrepreneur Jonathan Gillon created the Roost service, where users can share parking lots and storage space. The Woozoo website helps find a neighbour to rent an apartment, and Homestay —  to visit various regions of a country — and find out how people live in the countryside.

People participating in the sharing economy system eagerly help each other. A great example is the Fon organization. This is a global network of free Wi-Fi: you can connect to it in almost all the countries of Europe, in Russia, and even in Brazil, Japan and South Korea. To gain access, you need to buy a router supporting the FON system: it creates two wireless networks – one for you and one for distribution to other participants in the program.

Healthy body, healthy business

Another good example of the sharing economy is in the social and health areas. The British website Good Gym takes a novel approach to helping with healthcare. The creators of this platform believe that training in the gym is not the most effective model to benefit health. Good Gym offers: instead of lifting weights and running in the gym, it’s better to move around the city and deliver food and other products to elderly people or people with special needs. Good Gym even attracts experienced sports coaches who teach for free how to run properly while carrying items for delivery and conduct group classes for those who decide to devote their free time to this useful (in all respects!) business.

In turn, the Shareable company helps residents of various cities organize events where people exchange not only things, but knowledge as well – for example, how to help a small business develop.

Close in spirit is Skillshare, a “talent base” from all over the world that teaches users to draw logos for companies, set up startups, cook vegetarian food and even knit. Over 750 thousand students are already participating in the project. Anyone can teach on the site, you just need to send in your proposed program and take video tutorials, access to which costs $9.95. The price is low, but each student agrees that if he studies diligently and everything goes well, he will begin to teach himself.

Every year, the sharing economy system is supported by more and more people around the world, including for environmental reasons: the planet’s resources are less strained, because many people can use and reuse the same things, and everyone’s happy. Here is an example: when parents exchange their children’s things, who grow very quickly and as a result there are a lot of “almost new” strollers, clothes, toys. These things can be passed from hand to hand, and also – through numerous websites. A few years ago, the Seoul government even issued a law to support individuals and companies that are most actively involved in the sharing economy system.

As you can see, this economic model is not only becoming more and more popular, but it is being encouraged at the level of heads of municipalities.

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