The Sharing Economy

I’m an old geezer but my mind still works pretty well which is to say I know more about more things, from a humble understanding of how the universe works to how e-mails are distributed by and through the internet Living alone in retirement I have more time to consume information, news and analysis from numerous online content providers and by spending many hours a week with YouTube watching and listening to such thinkers as Carl Sagan, Elon Musk, Christopher Hitchens and Sam Harris.

In earlier years my preferred information was dominated by team sports scores, general business news, and the New York Post Page Six gossip columns. Then in 1990 with a subscription of The Economist my interests and curiosity took a leap forward. Like others I was amazed at turn of century to learn of new tech companies about to disrupt scores of businesses in several market segments. Amazon arrived, Borders closed doors and Barnes&Noble shuttered scores of store. The first new automobile brand to enter the US automobile market in nearly a century, an electric powered car, Tesla, barely avoided bankruptcy in 2008 but survived and now has disrupted the worldwide automotive industry, causing other auto makers to go electric, with positive effects on the environment. Wikipedia, a nonprofit, has replaced the Encyclopedia Britannica a way to find a little information on a lot of things, and who needs a library anymore when a click on Google gets you what you want in mere seconds.

These are all examples of businesses, enabled by the internet that have taken market share from more established firms. Entrepreneurs create new companies which, if have better, more convenient and less costly products or services, take market share from existing companies. Nothing new about that. Companies cannibalizing competitor companies.

What’s new is individuals are now taking customers and market share from companies. People are generating income from other people by “sharing” or renting for a fee assets they own. Person-to-person transactions powered by smart phones and apps. 

The Sharing Economy consists of individuals who own something, some product, like clothing mentioned above, that others people would like to use, to borrow for a limited period of time. The owner who is willing to part with that product, to share it with another person (known or unknown,) will get paid for his sharing.

An article in the December 18th issue of The Economist titled “One Woman’s Trash” speaks to a recent sharing phenomenon: that of clothes. “Once Airbnb and Uber had propelled the idea of a sharing economy into the mainstream, firms turning used clothing into an asset class were not far behind. A decade ago we would have struggled to offload second hand clothing, let alone get paid for it, ” adding that in 2021 resold clothing by people to people is expected to generate $15 billion in worldwide revenues. Emptying my closet of suits and neckties from the 90s would require a trip to the town’s local charity store when it reopens from covid closing. No longer. Apps like The RealReal, an online second-hand clothing site, enable you to sell that old suit and sweater that have sat mothballed-up in the closet so long 

The key economic point is individuals sharing something they own to others for a short time may, as in in this case, disrupt retail sellers of clothes as Airbnb and Uber did with hotels and taxis.

Knowing all this it, it took an actual sharing transaction to really see the sharing economy in action.

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I spent a month in North Palm Beach this fall. My son, Lee, who lives in Oakland, flew into to Palm Beach International airport. His itinerary was to drive one hundred and thirty-two miles to Fort Myers on the west coast, see friends. Then he’d motor back across the state to Vero Beach, another one hundred fifty miles to visit his mother, and finally drive another eighty miles to North Palm Beach to visit with me and then return his rental car at PBI. Good business for Hertz or Avis, yes?

No. 

Upon exiting the NPB terminal a Hyundai 2020 awaited him. A woman sat behind the wheel, waved to him, and handed him keys to her car. She then jumped into the passenger seat of a car behind hers. 

Lee was renting this car from someone he never met who owned and was willing to rent her automobile for a week. This beneficial transaction for both parties was enabled by a car sharing app called Turo. As the owner promised Lee online, the car had low mileage and was in perfect condition. The cost was $25 a day compared to car rental companies’ $70.

Need or want something for a day or more but don’t want to own it? An app is waiting for you to find it.