New business models: Sharing

There has been a recent explosion in companies leveraging the sharing model. This model is based on the idea that consumers don’t necessarily want to buy a particular product, but they want the services it provides. If a car is reconceived as a service rather than a good, then consumers don’t actually need to own the car, they just need to pay for mobility services. The sharing – “collaborative consumption” model is currently gaining ground for sharing cars, clothing, couches, space, tools, meals and more, including skills and even jobs. This business model is underpinned by the fact that many of the assets we own are underutilized. The internet has made it possible to (cheaply and quickly) connect with others to share these assets. The owner of the asset can be a company who rents it out, as is the case with Zipcar’s car sharing business. Or, the company can facilitate the sharing of an individual’s asset with others, like RelayRides. It’s like borrowing from a friend, except that transactions are made possible by insurance and user ratings, instead of just trust.

The owner of Rentalic, a company that allows users to borrow and rent a whole host of goods from others, did extensive user testing before launching the site. He found that goods with certain characteristics lend themselves best to the sharing model: they must cost more than $100 but less than $500, be easily transportable, and be infrequently used. That includes goods like lawn mowers, but excludes computers and other electronics.

There are clear environmental benefits to the sharing model. The sharing, rather than outright purchase, of a good reduces the total number of goods that are needed, so fewer are produced in the first place, reducing resource use. The goods that are made spend less hours just sitting idle, increasing their efficiency of use. The sharing model is a step in the right direction towards reducing excess consumption of both goods and resources