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Home Business

What Is The “Sharing Economy” And How Does It Tie In With Coworking?

byKate Tattersfield
July 30, 2019
in Business
Reading Time: 4 mins read
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Coworking operators use the sharing economy business model to enable individuals and companies to utilize space(s) on a temporary or rolling basis

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The definition of sharing economy continues to change slightly as technology evolves.

The sharing economy’s share-based model is powered by technology and by 2021 it’s expected that 86.5 million adults will use the sharing economy.

An ever-increasing number of coworking operators, traditional real estate firms and brokers are using the sharing economy business model to enable individuals and companies to utilize space(s) on a temporary or rolling basis.

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The “sharing economy” is a relatively new term that relates to the age old concept of sharing goods and services – but instead of the transaction taking place in a face-to-face context, it’s conducted online via a digital platform such as an app. 

The sharing economy as we know it today can be traced back to 1995 when eBay was launched, disrupting the way people share and gain access to goods. When the term “sharing economy” became widely recognised in 2011, TIME Magazine described it as one of the “10 Ideas That Will Change the World”. 

And they were right!

The definition of sharing economy continues to change slightly as technology evolves. As it stands today, most view it as a way of distributing free (think Freecycle) or paid (think AirBnB) goods or services using a share-based model that is powered by technology.

Here’s Investopedia’s definition:

“The sharing economy is an economic model defined as a peer-to-peer (P2P) based activity of acquiring, providing or sharing access to goods and services that is often facilitated by a community-based online platform.”

NB: Sharing economy is also known as shareconomy, collaborative consumption, collaborative economy or peer economy. 




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Explosive growth

The sharing economy model is one of the quickest growing business trends ever and has received a massive amount of investment over the years. Statistica research shows that there were 44.8 million adults using sharing economy services in the United States in 2016 – a figure is forecast to increase to 86.5 million by 2021.

According to BCG Henderson Institute, an estimated $23 billion in venture capital funding was pumped into the sharing economy market between 2010-2017. (The total size of the sharing economy is difficult to estimate because many of the platform providers are private.) 

Sharing economy assets and services are typically acquired by the user for short-term use. The market is partly driven by people’s desire to make the most (money) out of their underutilised resources and prevent waste. For example, individuals can rent out their spare rooms, underused vehicles, vintage clothes – even tools and appliances.

More recently the sharing economy has evolved to encompass business-to-business (B2B) interactions, which is where the coworking industry comes in. 

 

How coworking fits in

Before the “Workspace as a Service” revolution, space utilization studies continued to show that on average, 40% of a typical offices’ desks were underutilized for at least a part of the working day. This realization eventually prompted the industry to start rethinking the commercial real estate model to make it more accessible and “usable”. 

An ever-increasing number of coworking operators, traditional real estate firms and brokers are using the sharing economy business model to enable individuals and companies to utilize space(s) on a temporary or rolling basis. 

As those of us in the industry know, this is also about having access to shared resources and services such as IT support, conference rooms and a highly skilled membership network. 

When it comes to the way we rent desk space, coworking is the new normal – and here are the stats to prove it. 

Sharing Economy vs Gig Economy

Although people’s opinions on this can differ, the general consensus is that the gig economy relates to individuals who offer their services on a freelance basis, whereas the sharing economy enables individuals and businesses to rent out their assets to people who need them. 

As with the sharing economy, technology powers the gig economy, with platforms such as Upwork and PeoplePerHour proving popular with skilled freelancers who want temporary work and businesses who require people for short-term projects. 

Uber and Lyft, for example, are part of the sharing economy, where drivers rent their car (asset) as a service and means of transportation.

Into the future…

In 2019, we can expect to see changes to the ownership structure of many popular sharing economy companies as they become IPOs. 

This includes The We Company who filed paperwork with the U.S. Securities and Exchange Commission for an IPO in December 2018.

Writing for the World Economic Forum, April Rinne explains that, as well as improved  regulation and the harnessing of economic development on a local level, demographic diversity will be a big focus for the sharing economy in 2019:

“The sharing economy enables people to access things they might not otherwise be able to afford, providing an onramp to greater economic participation. Women are already among the most ardent sharing-economy customers, and the growth of the ‘she-conomy’ is likely to further boost this.”
In the context of coworking, this trend is already being realized through the success and expansion of female-focused offerings like The Wing and The Riveter, and gig-worker-parent-friendly spaces like Cuckooz Nest and Second Home.

Tags: Coworking
Kate Tattersfield

Kate Tattersfield

London-based lit zine enthusiast, music lover and freelance writer specializing in the flexible workspace industry.

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