Sharing and Collaborative Economy : buzzword abuse ?

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We can see it every day all around us : business models are transforming, industries are being disrupted by new players and models that break current leaders down

These models have names : sharing economy, collaborative economy, collaborative consumption, just to mentions the most frequent ones. By dint of thinking about it, I came to wonder about a couple of things.

– since all these words seem to be equally used, are they about the same thing or distinct models – even if they’re complementary.

– they’re often designed of “business models coming from the internet”. What’s the link between digital and these new models ?

– in the end, how much is it about a revolution and how much about buzzwords .

If I refer to Wikipedia :

The sharing economy (sometimes also referred to as the peer-to-peer economy, mesh, collaborative economy, collaborative consumption) is a socio-economic system built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations.

So it’s about the same things. What makes me uncomfortable for many reasons :

– If I have a pizza and share it, there will be less left for me.

– If I have an apartment and share it I’m going to keep it but will have less room left for me.

– If I have an apartment and share it while I’m away, I keep it but it’s used when I’m not there.

In fact it all depends on either one consider sharing should be for free or not. If yes, you’re going to realize that very few of this new economy businesses belong to the sharing economy. On the other hand, If you think that sharing may be for a fee, we’re facing a paradox.

The sharing economy is never selfless

Most of times, these models are shown as an alternative to a capitalist trading model they’re going to break down. I don’t fully agree because :

– if I share my apartment, care or drill, even for a small fee, I’m doing nothing but optimizing my return on invested capital. Rather than having a car that costed 100 and using it only one day a week, it’s better to share it for 0,1 a day. No loss in usage value but a better return on capital because I have both the usage value and the sharing value when I don’t use it.

– there’s nothing to share if nobody buys something in the first place. On the other hand, instead of having 100 drills sold on the market that will be used 0,1% of time, there will be only one sold but it’s going to be used 100%. Indisputable benefits for users. But we can wonder who’s going to manufacture drills in this context, if the loss of economies of scale won’t make prices increase and if the jobs destroyed by the collapse of the industry (manufacturing, retail…) won’t cause people not having enough money to pay for the sharing.

Moreover, and that’s my second point, we can see that most of the sharing economy is about good that are not destroyed during the consumption process. That’s an evidence that, behind a nice wording, it’s more about optimizing one’s investments than selfless behaviors.

As for collaborative consumption, many examples can be found according to Wikipedia, ranging from Ebay to Uberpool. Here again, I found that these approaches have nothing and common and should not be put in the same category.

From my perspective, Uberpool (Or Blablacar in France) are about collaborative consumption. People organize to consume a good or  service. With an difference worth noticing : if BlaBlacar is both about the sharing economy (someone shares his car for a ride) and collaborative consumption ( people share the expenses), Uberpool is only about collaborative consumption : expenses are shared by the driver does not share his car but makes them pay for a full professional service.

Ebay does not belong to the collaborative consumption either. From my perspective, collaborative consumption requires joint actions (taking a car together, renting an apartment with friends) while it’s sequential in the case of Ebay. People organize the product life cycle in order to sell it instead of throwing it away or leave it in a closet. That’s nothing more than that the second-hand market being digitized on a marketplace. Except rating there’s nothing collaborative with Ebay so that’s to few to see a new economic model there. After all, reputation mattered in the old economy too.

Collaborative consumption is joint, not sequential

There’s a subtle thing to het about sharing. We’re in the field of the sharing economy when sharing is not a business activity. The sharing economy may require participation to cover costs or even make very little money while, in other cases, a full service/product is billed and being fully billed is the only purpose of the product.service. In one case it’s a complement, in another it’s one’s main activity for a living.

In short, using the same words for different things leads to buzzword abuse to refer to things that have nothing in common.

Sharing economy : a an owner I share a good or service for a little fee but it’s more to cover costs than to make actual money. Example : AirBnb, Blablacar. It’s more about optimizing one’s investment that making money.

Collaborative consumption : as a customer I organize with others to jointly consume a product or service to shared the cost of oversizing (there are 4 seats in a cab, why paying for 4 while I can share it with 3 others). This is a joint activity (co-organization).

One is on the customer side, the other on the provider side. Collaborative consumption can happen outside of the sharing economy and a good put in the sharing economy can be consumed collaboratively or not.

So, to answer the first question, collaborative economy and collaborative consumption are not the same thing. They involve both disrupting new models and old ones that used digitzation to rebrand themselves without changing their core model.

What leads to another question : what’s the link between digitization and these new models. To be continued in a future post…

Image Credit : Sharing by Thinglass via Shutterstock