Six reasons that justify the resurgence of the sharing economy

What’s behind the success of the sharing economy? Within what we could call the sharing economy, we have different types of companies devoted to a number of activities, such as the recirculation of products (ebay o Wallapop), the exchange of goods (time banks), the optimization of active usage (BlaBlaCar or HomeStay) or building of social connections (crowdfunding), and they have all experienced an incredible success in their practices. Sharing economy and culture expert Luis Tamayoand Julio Gisbert, time bank expert and author of the book Living Without a Job (Vivir sin empleo) reveal some of the factors driving this boom:

1. Technological proliferation

Technology has allowed to escalate the trust and the volume of what was already being done at a smaller scale (friends, family…) and is undoubtedly one of the main drivers of the sharing economy’s success, says Tamayo. Gisbert also agrees that technological development, and especially the advent of mobile technology, has had a lot to do with the resurgence of the phenomenon.  And within mobile technology, “geolocalization has been essential to its success.”

2. The economic situation

There is also a purely economic reason: the crisis. “With limited resources, being able to share instead of buying is a much more affordable option for many more people,” says Gisbert. In his opinion, the crisis and government cuts have weakened the welfare system, which is why time banks (and these startups) have proposed ways to solve the situation and cover sectors where the welfare state cannot reach.

The vast majority users of these type of platforms and, broadly speaking, are 25 to 35 years old, something quite logical, given their purchasing power

For Tamayo, although "the crisis helped drive this phenomenon thanks to an increasing awareness about the importance of saving,” this is not the direct cause, but rather a part of the great boom of 2010, which resulted from a combination of causes. “For the user of sharing platforms, it was the opportunity to save or earn some extra money, besides trying out a different peer-to-peer service experience,” he notes. On the other hand, he recognizes that entrepreneurs discovered a business model that allowed them to “offer something innovative with the possibility to generate a positive social impact.”

3. The social media

Another cause that has contributed to the reemergence of this phenomenon, and which cannot be overlooked, is the growing social interest for staying connected and belonging to social networks. “We are talking about a side of the digital economy that is based on sharing. The social media were the training grounds where we learnt to develop our ability to connect and trust people we don’t personally know, where we developed the skills to acknowledge others digitally, which have helped develop the sharing scale at a massive scale,” says Tamayo.

4. The user-to-user prescription

This factor is intimately linked to the use of social media: peer-to-peer prescription is an essential part of all these platforms (BlaBlaCar, Airbnb, etc.). Their success would not have been possible without it.  In fact, according to Tamayo, “the first impulse of a person that is unfamiliar with – or who has never tried - these options is of mistrust. However, the satisfaction index once a user tries out a collaborative experience is very high, which is another one of the secrets behind their expansion," he explains. Apps, on the other hand, are the present-future of many of the next-generation collaborative platforms.

5. Millennials

The generation born between 1982 and 2000, permanently connected and with scarce economic resources, has contributed to a large extent to the success of this economic model. Julio Gisbert is certain about it. For him “this is exactly what is happening in digital banking, where millenials never visit branches, conduct all their transactions using their mobile devices”.

For sociologist Luis Tamayo, new generations will undoubtedly mark the future: “the vast majority users of these type of platforms and, broadly speaking, are 25 to 35 years old, something quite logical, given their purchasing power.” However, veteran platforms such as Airbnb, with an already established business model, are growing among older age groups, especially among women.

6. Social awareness

Many authors, such as Halina S. Brown and Philip J. Vergragt (in his essay ‘Innovations in Sustainable Consumption’, 2014) argue that the environmental aspect is intrinsic to the sharing economy and that almost all of such businesses include reducing their environmental footprint among its guiding principles. Many reports confirm that millennials are more willing than other generations to help others a make a difference and that turns social awareness into another factor that needs to be taken into account.  However, according to Gisbert, only a minority owes this awareness to “ideological” reasons.  “There is an ideological motivation among certain groups, especially in exchange networks such as time banks and similar networks. Their members are more ideologized and they do bring another series of factors into the equation, but in broadly speaking, I believe they are a minority.”

Today, the sharing economy is still growing at very healthy rates, both in terms of volume and of investment. But of course, it has a lot to do with the digital transformation process that is taking place and, as Luis Tamayo says, “we are moving from an industrial era towards a digital era, and the sharing economy is one of its most notable manifestations.”