Wireless and Digital Services

The Sharing Economy – truly useful or recycled hype?

By Tim Murdoch - Last updated: Friday, June 2, 2017

Image courtesy Flickr user Chiu Ho-yang

The New York Times has an interesting article on the bubble emerging in China for start-ups that promote sharing stuff: Bikes, concrete mixers and even basketballs.

With acres of bikes for hire now lying unused, and Uber swallowed up by a price war, you might have thought that the hype for the sharing economy in China was finally fading. Not at all, it seems. New start-ups are emerging, albeit with less ambitious goals.

The example chosen to prove the market madness is Zhulegeqiu – a basketball rental service: Simple, cheap and an opportunity for a new business simply because the ball is awkward to carry around.

The thing that struck me most in the article is the presumption that this is all doomed to fail – hype recycled by wannabe entrepreneurs trying to make a fast buck. And, while most will indeed fail (an unchanging fact of the tech start-up world) and many investors will lose their money, progress is real. The internet services and digital businesses we have now are beyond even the dreams of the tech start-ups that failed in the early noughties. Just as with the internet, the pressures for the sharing economy to succeed are huge.

  • Environmental impact, the circular economy and small urban dwelling all play into not owning stuff
  • Gaining access to the latest and best stuff without having to shell out the capital costs each time
  • Only paying for stuff when you actually want to use it: fully amortized and fully serviced

The second thing to strike me was that the ‘sharing economy’ described here is not really talking about sharing things we own. Rather it is about renting things that we don’t.

Renting things, even down to a simple basketball, is an idea with legs if this basketball is “current”, well maintained, available, in the right place, doesn’t need carting around and available to rent for short periods of time and at low costs. Crucially, the service must be well designed and it must be really simple to pay for – not cash, but electronic payment backed by a reliable ID.

Industry has been leading the way on this for quite some time, under the banner of ‘servitization’, a process whereby you pay much less to buy the original equipment, but then pay the manufacturer for that equipment to be fully managed for you throughout its operational life. The manufacturer is in effect taking a bet, both that their equipment will operate well and that they can maintain it efficiently. This is a risk that they can only afford to take if they know exactly how a product is being used and how it is behaving.

Rolls-Royce’s “Power by the Hour” is much lauded in this space, and is today enabled by real time data feeds from more than 20 sensors in the heart of every engine. Expect the world of Internet of Things (IoT) to expand in order to make this work – bringing the “Servitization” revolution to the small and low cost, as well as the complex and expensive.

For the truly simple, picture our Chinese basketball service; as well as a great App with built-in e-payments, a large bag of balls and plenty of staff, you’ll still need an internet connected lockable box. In turn, that box must know who is opening it, but also later that the equipment has been placed back inside and what condition it is likely to be in, so that the user can be charged, the ball maintained and rented out again.

Two things are certain, however: To take part in the emerging sharing/renting economy you will need firstly; an electronic means of payment and secondly; a good personal credit rating and/or electronic (social) identity.

 

Image used under Creative Commons, courtesy Flickr user: Chiu Ho-yang