The sharing economy is a social and money-making trend that has grown substantially in the 21^st century. It is changing both society and the fundamental method in which traditional businesses work. It is a system where people share resources, which is usually conducted through digital platforms. The sharing economy has captured widespread consideration outstanding of the notable disruption caused by industrial leaders such as Uber and Airbnb (Laukkanen & Tura, 2020). This essay discusses how the sharing economy affects different parts of society and how standard business works. Startups like Uber and Airbnb have transformed society by increasing accessibility, income, and regulatory problems. Its innovation and sustainability have transformed traditional business structures, requiring a balanced strategy to embrace its innovation and solve its concerns. This essay explores how the sharing economy affects business models, innovation, as well as the environment from an economic, technological, and environmental perspective.

The Rise of the Sharing Economy

The historical backdrop, significant participants and platforms, and worldwide expansion and reach of the sharing economy can assist in explaining its transformational influence on society and established enterprises. This type of economy emerged in the late 2000s and early 2010s depending on technological advances and shifting consumer habits (Lyaskovskaya & Khudyakova, 2021). It offered an alternative to conventional ownership arrangements in response to economic concerns.

Airbnb and Uber pioneered the sharing economy, transforming travel and accommodation. Uber transformed the taxi business in 2009 by linking drivers and passengers through a smartphone app and  Airbnb challenged hotels by offering people to rent out their homes and extra rooms in 2008 (Šepeľová et al., 2021). The sharing economy has grown exponentially, affecting food delivery, coworking spaces, and luxury fashion. The sharing economy’s platforms operate in several nations and localities, demonstrating its worldwide reach.

Figure 1: The Rise of the Sharing Economy (Richter, 2014)

Combining this historical perspective with the presence of important actors and worldwide growth shows how the sharing economy has shaped society and conventional business paradigms. Its rapid expansion poses problems regarding regulation, worker rights, and fair distribution of benefits, which will be addressed in future sections of this study.

Social impact

The sharing economy increases accessibility, convenience, income, and employment, but it also raises disputes and regulatory issues.

The sharing economy increases accessibility, convenience, income, and employment, but it also raises disputes and regulatory issues.

Increased Accessibility and Convenience: Accessibility and convenience are major benefits of the sharing economy. Ridesharing services like Uber and Lyft have reduced wait times and give passengers additional alternatives (Eckhardt et al., 2019). Airbnb has also provided tourists with novel, affordable hotel options. These platforms employ technology to simplify transactions, allowing customers to buy products and services with just a click.

Income Generation and Employment Opportunities: The sharing economy has created micro-entrepreneurs and income opportunities. Turo and Airbnb allow people to sell their automobiles and spare rooms (Mont et al., 2020). Rideshare drivers and food delivery couriers can vary their schedules to supplement their income (Yi et al., 2020). This component of the sharing economy has appealed to those seeking additional income in an uncertain environment.

Figure 2: Uber, Airbnb, eBay and Etsy ( Barber, 2016)

Economic Impact

The sharing economy disrupts company frameworks, promotes entrepreneurship, and raises issues about economic injustice and worker rights.

Figure 3: Sharing Economy (Mantovani Escalante, 2019)

Disruption of Traditional Business Models: The sharing economy has disrupted several sectors. Uber and Lyft have challenged taxis with reduced rates and more convenience. Airbnb provides tourists with alternative lodging options, disrupting the hotel industry. Disruption has increased competition, causing incumbents to change or lose market share. More choices and lower prices benefit customers, but established businesses struggle to stay relevant. The sharing economy impacts various sectors – according to The Guardian (2021), tech giants like Apple, Alphabet, and Microsoft achieving record-breaking sales and profits, driven by factors such as strong iPhone 12 sales and service business growth.

Figure 4: Uber and Lyft Users Sales (Cramer-Flood, 2020)

Encouragement of Entrepreneurship: The sharing economy boosts entrepreneurship. Using platforms to monetize assets or skills can help individuals to become micro-entrepreneurs. Airbnb hosts turn spare rooms into cash, while freelance gig workers utilize Upwork to work abroad (Barber, 2016). This democratization of entrepreneurship empowers the economy and creates numerous business options.

Economic Inequality and Labor Concerns: Sharing economy concerns include economic inequality and worker rights. Gig workers lack job stability and benefits despite their entrepreneurial flexibility. Fair wages, labor protections, and regulatory safeguards have been debated. Some participants prosper while others struggle.

Technological Advancements

The sharing economy advances technology, through mobile apps and user-friendly platforms. These developments have increased competition, data-driven decision-making, and creativity.

Mobile Apps and User-Friendly Platforms: Sharing economy businesses are expanding rapidly on mobile applications and user-friendly platforms. Uber and Airbnb offer intuitive applications that improve user experiences and transactions (Barber, 2016). These systems allow customers to access services with a few smartphone clicks with the help of quick registration, real-time tracking, and safe payment alternatives.

Data-Driven Decision-Making: The sharing economy relies on data analytics for informed business decisions. Uber uses massive data sets to optimize pricing, estimate demand, and manage resources (Cramer-Flood, 2020). Data-driven techniques improve service quality and company sustainability. However, concerns regarding data privacy and monitoring have prompted ethical data usage conversations.

Environmental Considerations

An emphasis on resource efficiency and sustainability, a reduction in automobile ownership and travel habits, and a more sustainable future are all consequences of the sharing economy.

Resource Efficiency and Sustainability: Sharing economy systems maximize resource efficiency by using underutilized assets like automobiles and residences. Sustainability ideals are supported through reduced waste and energy use. Car-sharing programs like Zipcar reduce greenhouse gas emissions and resource strain by reducing vehicle production.

Reduced Car Ownership and Travel Patterns: The sharing economy has reduced car ownership and changed travel habits. Uber and Lyft have made ridesharing easier, lowering the number of private cars on the road (Cramer-Flood, 2020). Airbnb encourages guests to stay in local neighborhoods, decreasing the environmental effect of centralized hotels (Barber, 2016).

Challenges and Criticisms

The sharing economy has changed several aspects, but it has also caused legal and regulatory issues, trust and safety issues, and thus resulting in major community impacts.

Legal and Regulatory Battles: Legal and regulatory challenges affect the sharing economy. According to CTV Your Morning (2017), businesses like cabs and hotels have pushed for stronger laws to foster an environment of fair competition. Complex regulatory frameworks from these conflicts make it difficult for corporations to operate in several nations.

Trust and Safety Concerns: The sharing economy raises trust and safety problems. Host and driver inspection and service quality have raised consumer safety concerns (Yi et al., 2020). These platforms need to rebuild customer trust owing to fraud, property damage, and personal safety incidents.

Impact on Traditional Businesses

The sharing economy disruptive influence has left an indelible mark on traditional business This impact is explored through case studies of affected industries, adaption strategies employed by incumbents, and the potential for coexistence and collaboration between traditional and sharing economy players.

Figure 5: Airbnb’s Market Share Of U.S. Lodging Demand (Hdetlefsen, n.d.)

Industries Affected: The sharing economy has affected several businesses. Uber and Lyft are competing with taxis in the transportation business (Cramer-Flood, 2020). Airbnb offers unique rooms and has challenged hotels. Poshmark and Depop are challenging established clothes shops.

Adaptation Strategies: Traditional companies must respond to this change to compete. Hotels have adopted online booking platforms and enhanced guest experiences, while taxi companies have introduced ridesharing applications (Yi et al., 2020). Retailers are expected to investigate e-commerce and omnichannel strategies to keep up with the competition.s

Coexistence and Collaboration: Traditional and sharing economy enterprises need to work together. Some hotels list on Airbnb, broadening their reach. Another example is drive-sharing platforms which have partnered with car rental firms.

Conclusion

The research undertook the task of delving into the profound influences of the sharing economy on societal structures and conventional business paradigms. The study analyzed the genesis of this trend, which has both unsettled established practices and birthed novel opportunities. The primary outcomes of the research underscore enhanced accessibility, avenues for income, and technological progression. However, the study also spotlights hurdles related to governance and establishing trust. It is pivotal to recognize certain constraints of this study, notably the ever-evolving character of the sharing economy and its differential repercussions across various sectors and geographies. The research followers for the sustained scrutiny of governing mechanisms, redressing concerns centered on trust and safety, and championing a symbiotic relationship between longstanding businesses and platforms within the sharing economy era.

References

Barber, L. (2016, February 18). Uber, Airbnb, eBay and Etsy: 2.5M people a month are now part of the online sharing economy, finds JP Morgan. CityAM. Retrieved September 25^th 2023from  https://www.cityam.com/uber-airbnb-ebay-and-etsy-25m-people-a-month-are-now-part-of-the-online-sharing-economy-finds-jp-morgan

Cramer-Flood, E. (2020, September 22). Uber and lyft users and sales will decline dramatically this year. Insider Intelligence. Retrieved September 25^th 2023from https://www.insiderintelligence.com/content/uber-lyft-sales-will-plummet-before-rebounding-2021

CTV Your Morning. (2017, January 27). The evolution and impact of the sharing economy. YouTube . [Video]. https://www.youtube.com/watch?v=SO78QkTxz6Q

Eckhardt, G. M., Houston, M. B., Jiang, B., Lamberton, C., Rindfleisch, A., & Zervas, G. (2019). Marketing in the sharing economy. Journal of Marketing, 83(5), 5-27. https://doi.org/10.1177/0022242919861929

Hdetlefsen. (n.d.). Airbnb’s Market Share Of U.S. Lodging Demand. hotel, appraisers, feasibility, architect, design. https://www.hotelappraisers.com/airbnbs-market-share-of-u-s-lodging-demand

Laukkanen, M., & Tura, N. (2020). The potential of sharing economy business models for sustainable value creation. Journal of Cleaner production, 253, 120004. https://doi.org/10.1016/j.jclepro.2020.120004

Lyaskovskaya, E., & Khudyakova, T. (2021). Sharing economy: For or against sustainable development. Sustainability, 13(19), 11056. https://doi.org/10.3390/su131911056

Mantovani Escalante, A. (2019). The Sharing Economy: behaviour of young consumers [Doctoral dissertation, Masarykova univerzita, Ekonomicko-správní fakulta]. CzechRepublic 

Mont, O., Palgan, Y. V., Bradley, K., & Zvolska, L. (2020). A decade of the sharing economy: Concepts, users, business and governance perspectives. Journal of cleaner production, 269, 122215. https://doi.org/10.1016/j.jclepro.2020.122215

 Richter, F. (2014, June 3). Infographic: The rise of the sharing economy. Statista Daily Data. https://www.statista.com/chart/2323/the-rise-of-the-sharing-economy

Šepeľová, L., Calhoun, J. R., & Straffhauser-Linzatti, M. (2021). Sharing Economy Business Models: Informational Services Innovation and Disruption in Uber and Airbnb. Developments in Information & Knowledge Management for Business Applications: Volume 2, 521-540. http://dx.doi.org/10.1007/978-3-030-76632-0_18

The Guardian. (2021, July 27). Google, Apple and Microsoft Report record-breaking profits. The Guardian. https://www.theguardian.com/technology/2021/jul/27/google-apple-and-microsoft-to-report-record-breaking-profits

Yi, J., Yuan, G., & Yoo, C. (2020). The effect of the perceived risk on the adoption of the sharing economy in the tourism industry: The case of Airbnb. Information Processing & Management, 57(1), 102108. https://doi.org/10.1016/j.ipm.2019.102108