Does the sharing economy share a commitment issue?
Some of the biggest tech companies in the sharing economy today, such as Airbnb and Uber, started as an answer to the 2008 recession. In fact, there are many more in the US which we haven’t even heard of here, such as Rover, a pet sitting app, JustPark, a parking space-sharing company, and TaskRabbit that connects handymen to customers. The list is endless.
Built upon this sharing economy, are many of the most popular apps and services we see today.
The reason for the growth of the sharing economy can easily be explained by the challenging economic climate that people were faced with during the recession of 2008; wherein an easy second revenue stream was highly desired. It wasn’t about commitment at that time as much as earning some extra cash from dormant assets.
However, the then young children and teens, the Millenials and Gen Zs as we call them today, saw the impact of the recession. They grew up in a time when money was tight for most families. They saw their parents sell their cars, be fired from their jobs, move to lesser affluent neighbourhoods.
It was they who understood the value of money — and impact of the commitment to loans, cars, property and more — from a very young age. Moreover, they saw the fear of an uncertain economic future. Today, these two generations make up a large majority of the workforce and the consumer market.
Today, we see these generations buying fewer cars while opting to go green. They prefer to rent rather than own property, residential as well as commercial. The blogs on money-saving tips are through the roof. This generation also doesn’t stick to their jobs for more than a few years.
They do not want to be bound by contracts. They do not want to commit without having an assurance of the future. Multiple studies tell us how Gen Z is frugal and want more value for every cent they spend.
But why is that? There is a deeper reason — that of a very reasonable and understandable commitment issue.
This commitment issue is not only a reflection of the consumer market, but also businesses. Tech companies who brought forth this sharing industry suffer from the same commitment issue as can be seen in their preference for asset-light business models.
However, while they are changing the market demand and forcing companies to give more value for their buck, companies have (arguably) found a way to make a profit.
Co-working and co-living spaces are the epitomai of this market trend who have increased prices to give long term commitment-free spaces. While others include Careem, BlaBlaCar, MellToo, Dubizzle, Urbanclap and others.
The other aspect is that this hesitation to commitment can also be leveraged in businesses, as WeWork has clearly shown to the world.
There is no market that cannot be tackled. One can even argue that their commitment issue has given rise to a whole new collection of tech companies that are disrupting the space and pushing for innovation.