Sharing is Economy, Part II – Development of the sharing economy

“They’re focusing on the benefits of access over ownership—of practicality over materialism, experiences over processions.“

Neal Gorenflo, co-founder and publisher of the Shareable Magazine

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In the previous post of the “Sharing is Caring” series we have learned why time-sharing became so successful. Now I would like to get a little deeper into the topic by focusing on the historical development of the sharing economy.

What is collaborative consumption?

Even though the term collaborative consumption has been coined in the 70s by Mr. Felson and Mr. Spaeth in their paper “Community Structure and Collaborative Consumption“, it has only recently seen it`s global high point by the publishment of Mrs. Botsman`s book from 2010 „What’s Mine Is Yours: The Rise of Collaborative Consumption“. Collaborative Consumption describes an economic model that is in contrary to ownership based on renting, sharing or swapping of assets.

Mr. Gorenflo`s research has shown that people are most interested to share “infrequent-use items that have high barrier or a burden of ownership.” He divided these into three categories: Transportation (cars, bikes, boats), Infrequent-use items (household items, event equipment, sporting goods) and physical spaces (garages, parking space, spare rooms). Who would have imagined a couple of decades back that there could be couch surfing or car sharing, trends driven by new technology, norms and needs.

Sharing is a basic part of human life.

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Previous generations have shown the tendency to share too, but they were always limited due to trust problems. I may be willing to borrow him my car to a friend. But would I trust a stranger with something so valuable?

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“78% of participants felt their online interactions with people have made them more open to the idea of sharing with strangers, suggesting that the social media revolution has broken down trust barriers.”

Neal Gorenflo, co-founder and publisher of the Shareable Magazine

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With an average of 300 Facebook friends, our generation`s social environment has broadened and it seems only a small step from sharing private information with almost strangers to sharing other assets.

Development of the Car Sharing Industry in Berlin

Let us have a closer look at the development of the sharing industry by looking at the example of car sharing in Berlin, Germany.

Agencies to arrange rides have been part of student`s lives for some time now, like the Mitfahrzentrale. But these agencies organized mainly long-distance rides that students used to travel home and visit their parents (or boy/girlfriends) for low costs.

Drive Now

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The first large company to offer car sharing in Berlin was Drive Now, a company that offers BMWs and MINIs since end of September 2011. As a joint venture of the BMW Group and the SIXT AG, due to the limited amount of cars offered in the beginning, the area of usage was limited to the city center.

Car2go

Car2go, introduced to the Berlin market in April 2012, advanced the service provided by focusing on the time pressure of consumers, as well as their low budget. By offering Smarts, it is easier for consumers to find parking spaces and most consumers rarely need more than a 2-seat car. And with only 0,29 Euro per minute, it costs the same as the MINI from Drive Now and is cheaper than Drive Now`s BMWs. But the registration fee is about 20,- Euros less and can therefore create a competitive advantage.

Multicity

To satisfy the new interest in “going green”, Citroen has introduced a 100% electrical car sharing company called Multicity. The prices are competitive; the cars featured small so it should be easy to find a parking space, but they have more than two seats. Therefore Multicity is a great mix from Drive Now, Car2go and has the great advantage of being “green”.

And the sharing economy has even changed how tax money is spent.

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“The utilization issue is the key pain point, in terms of both efficiency and cost. Depending on the make and model, it generally costs between $3,000 and $7,000 on average for a municipality to operate a vehicle.Utilization is about 30% in most municipal fleets.”

Michael Serafino, General Manager of University and FastFleet Programs at Zipcar

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I always felt like civil services would be the last to jump on a hot trend. And even though it seems their common practice to complain about budget cuts (or anything else), civil services may not be the most “profitable departments” in the world. And now car sharing is used in six U.S. cities with numbers growing.

The sharing economy has come a long way, but only recently with the use of the web and consumers having grown up with the web and trusting in it has the sharing economy come to it`s recent peak, it has now officially become accepted as a global, sustainable trend.

Want to read more? Check out Sharing is Caring, Part III – Exploring Collaborative Consumption, where you will learn about the three different ways of collaborative consumption and get a look into the future.

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