Do you office at WeWork and ride a Bird every day? Are you renting a dress this weekend for a wedding, taking a Lyft to it and staying in an Airbnb? Most of us participate in the sharing economy every day without realizing it anymore—72% to be exact. The sharing economy is vast and ever-growing, and has created a new set of consumer expectations that has developed a convenience conundrum. Most recently, it has expanded to furniture and pillows.
PwC says the definition of the sharing economy is still broad and uncertain but has defined it as “an emergent ecosystem that monetizes underutilized assets or forgoes the purchase of those assets altogether, in favor of borrowing, renting or serving up micro skills in exchange for access or money.”
This is a huge catch-all definition and there are many buzzwords related to the sharing economy—the gig economy, the collaborative economy, peer-to-peer economy, crowdsourcing, coworking, circular, on-demand and the list goes on. They all mostly have some overlap with each other, as seen in the Venn diagram below:
BofA Merrill Lynch Global Research
Today we’re going to focus on ownership over access angle of the sharing economy because it has created a massive shift in the way we operate. Look at this chart below—the joys of owning a physical good have been replaced with the joys of accessing it, quickly and cheaply.
You’d think that materialism is taking a back seat these days, but it’s actually more front and center than ever before, just in disguise. Because we’re able to get more things (and typically more expensive ones) for less money, we can be even bigger show-offs than before. Heaven forbid we’re caught in the same dress twice! Doin' it for the gram is a real thing—which is pretty much the main reason Rent the Runway was founded (more on them later).
US Bureau of Economics Analysis
Although the sharing economy had already reared its head via Airbnb and Uber in 2008 and 2009 respectively, it was a twist on behaviors we were already conditioned to do—using hotels and taxis wasn't a new concept, these services just provided different and quicker options.
But jump forward a few years to 2011 and a major watershed moment happened. Do you remember when Spotify launched in the US? I was a freshly minted NYC advertising baby and we met with Spotify sales reps who were explaining how we’d never have to buy a song on iTunes again (unless Beyonce made me).
My mind was blown—not only was I super pumped to use it (literally ask any friend, I should have gotten a commission for how many people I convinced to sign up) but also seeing firsthand the impact it was going to have on the media landscape was crazy.
Most importantly, a new consumer behavior of embracing access over ownership started taking root, transforming from nascent to expected nearly overnight. Once Netflix came on the scene with their original content in 2013, that expectation was set in stone.
Why do we like the sharing economy so much? Convenience—in price, in efficiency and in ease. Other benefits include building trust, a stronger community and a better environment but my guess is those are nice add ons, not the motivating factor. In our productivity-obsessed culture, anything that can help us be more efficient and therefore more productive is good as gold.
eMarketer
Is sharing really caring? Sometimes yes, sometimes no. There are a LOT of opinions out there on the benefits and downfalls of this new way of the world. I’ll spare you the details, but if you want to know the downfalls, read here, if you want to know the benefits, read here.
What it has created though, is a convenience conundrum. The more convenient things get, the more things you can do in a shorter period of time, meaning the more things you pile on to your list, and the more stressed out you feel for not completing them all. It’s a never-ending black hole.
In Sapiens: A Brief History of Humankind, Yuval Noah Harari addresses this head-on: "One of history’s few iron laws is that luxuries tend to become necessities and to spawn new obligations. Once people get used to a certain luxury, they take it for granted. Then they begin to count on it. Finally, they reach a point where they can’t live without it. Over the few decades, we have invented countless time-saving machines that are supposed to make like more relaxed - washing machines, vacuum cleaners, dishwashers, telephones, mobile phones, computers, email. We thought we were saving time; instead, we revved up the treadmill of life to ten times its former speed and made our days more anxious and agitated."
Does the notion of access over ownership affect our relationships with brands? A LOT.
HBR fielded a research study that found "when consumers are able to access a wide variety of brands at any given moment, like driving a BMW one day and a Toyota Prius the next day, they don’t necessarily feel that one brand is more ‘them’ than another, and they do not connect to the brands in the same closely-binding, identity building fashion. They would rather sample a variety of identities which they can discard when they want."
Similarly, James Wallman, author of Stuffocation: Living More With Less, says "we have shifted from the twentieth century’s big dominant value system of believing that having more stuff will make us happier to the belief that happiness comes instead from experiences."
This puts an even larger pressure on companies participating in the shared economy to develop a strong brand experience, knowing the product or service isn’t permanent. Some brands are doing this really well and others aren’t.
In the same HBR study, they found that the Zipcar community doesn’t want to be a community at all, because “they experience Zipcar in the anonymous way one experiences a hotel; they know others have used the cars, but have no desire to interact with them.” Therefore, their efforts to create a community were moot.
Spotify, on the other hand, is a shining example of creating a powerful brand experience. Although we're not actually buying music from them, they create personalized playlists like “Discover Weekly” that users look forward to each week. Off-platform, they’ve launched awesome activations at conferences like SXSW along with award-winning OOH campaigns using their data as the content (see awesome billboard below). Last year they were named Cannes’ first media brand of the year, so they must be doing something right.
Ad Age
What other industries have been affected by this new economy?
Ikea just announced a scalable subscription service, so you can rent as much of the oddly named Swedish furniture as you desire. Fingers crossed this means no more assembling.
Rent the Runway and West Elm just launched a partnership allowing RTR Unlimited subscribers to rent “home bundles” consisting of trendy pillows, blankets and other home accessories. Jennifer Hyman, co-founder and CEO of Rent the Runway, believes the home category is "very well-suited for the circular economy knowing millennial and gen-Z consumers are constantly moving as they enter new life stages."
With that being said, some have taken the sharing economy nomenclature a bit too far. The car industry is a major culprit—Porsche, BMW, Volvo and Mercedes have all recently launched car subscription programs, gasp! On deeper inspection, it’s pretty much the same difference as a lease and more expensive too. The only upside is you can "Drive a Cayenne on a Monday and a 911 on Friday." Sign me up!
Some might wonder, is the sharing economy bubble going to burst in the near future? The World Economic Forum predicts four key trends for 2019, outlining that "this year will see the first sharing economy IPOs, and it may see the first large-scale bankruptcies as well." That doesn't mean it is slowing down though—by 2025 it is projected that the sharing economy will make up half of the revenue for five major sectors. At this rate, I wonder if someone could live their whole life via the shared economy—who is up for the challenge?
World Economic Forum and PWC
What does this all mean? The sharing economy is now mainstream so whether you're a brand that participates or not, consumers expect you to provide the ultimate convenience. But in an effort to provide convenience, don't lose your brand experience along the way because to stay top of mind you need to offer way more than just your offering. Get creative—with how people discover your brand, with ways people can interact with your brand, with other companies you partner with. And as a society, maybe we should just revert to simpler times with no technology. Who's with me?