We all love having our own stuff. But can the sharing economy help save the environment? We explore…
By Jody McCutcheon
Even if you haven’t heard the phrase “sharing economy,” chances are you’re familiar with the idea. Especially if you’ve used Uber, Airbnb, or any of the countless peer-to-peer rental services that have cropped up over the last decade or so.
Also called ‘collaborative consumption’, ‘the collaborative economy’ and ‘the peer economy’, the sharing economy consists of peer-to-peer exchanges of goods or services for payment. It’s basically a natural extension of online shopping, which started in the USA fifteen years ago, and it’s gradually replacing the outdated, industrial-era, centralized economy that relied on an intermediary–a store, dealer, hotel or some other product middleman–leaving the transaction’s most basic participants, buyer and seller, to deal with each other directly.
It’s a pretty big change. In the words of podcaster James Corbett, the sharing economy is a “fundamental transformation of economic relations…a fundamental transformation of our society.”
The Eco Impact
And that transformation is having an ecological impact, too – for the best. The principle behind the peer economy is simple: unused value is wasted value. We are consumers, and we love our stuff. But most of that stuff often sits unused. The typical example is of the average car sitting idle 92 percent of the time (according to a Stanford energy seminar). Cars (Uber) and bedrooms (Airbnb) are the most common examples of commodities offered in a collaborative economy, but demand exists for many things: bicycles, household appliances, money-lending, solar and other types of energy, even dog-kennel services, to name a few. Clothes, too, but I’ll get there shortly.
For now, it will suffice to generally define the sharing economy as the principle of renting stuff on an as-needed basis rather than outright owning it. It’s a model of consumption that goes against the grain of typical accumulation that’s been so prevalent in the West. But can the sharing economy transform capitalism and help save the environment a bit, too?
Origins and Benefits
First, some background. Many peer-to-peer services began between 2008 and 2010, in the aftermath of the global economic meltdown, as a “post-crisis antidote to materialism and overconsumption.” In a time of sensitive pocketbooks, the opportunities afforded by collaborative consumption–buying things more cheaply, earning extra income–helped everyone.
Three main factors spurred its development. One is technology. The Internet and now Smartphone apps make peer-to-peer connections so easy that you needn’t leave your house to complete a transaction. The other main factor is the rising volatility in the cost of natural resources, due to expanding population and a corresponding increase in demand, as detailed in this 2012 Chatham House report. The peer economy creates a form of cost-certainty (not to mention cost reduction) for products, as well as a decrease in demand for added production. This decrease alleviates pressure on natural resources, which of course is a boon to the environment.
Finally, the sharing economy is a reflection of the impermanence of many urban dwellers’ lives. We tend to travel more, move house more and lead more insecure existences, meaning we tend to want to acquire less stuff so that we may travel more lightly.
Since occasional renting is cheaper than outright owning, the consumer benefits from paying less money, and of course the renter pockets extra cash. But the big winner here is the environment, due to more efficient use of resources. Simply put, renting and sharing minimize waste. When unused items are suddenly utilized, it means less stuff gets thrown in the trash, and by extension, less stuff gets produced. In the words of ECrent, a start-up peer-to-peer sharing site that offers a bit of everything: Reduce, reuse, recycle…Rent!
Another benefit of a collaborative economy is its nurturing of the pre-industrial sense of community that was lost with the rise of the industrial-era economy, when people became detached from the products of their labour as well as from buyers of their products.
Theoretically, at its most fundamental, the sharing economy is just a way for people to share their stuff–albeit for a price. James Corbett covers this idea in an International Forecaster article. The technology facilitating peer-to-peer sharing has evolved to allow us to establish communities of our own choosing. Through everything from online dating sites, Airbnb, social media and other avenues, the Internet allows us to connect with like-minded people, who share interests and passions. It doesn’t matter whether they live in another city, another hemisphere or just around the corner.
This is what Corbett meant about society’s fundamental transformation, but another element of this is a DIY vibe. Thanks to the internet, just about anybody can start a peer to peer service. You don’t need to have any inventory or warehouses, just some good software. It’s a new approach to business that large corporations have struggled to keep up with – and they’re feeling the heat.
Fashion Sharing: A Case Study
Despite the rise of fashion swishing and swapping sites, the collaborative economy has been slower to catch on in retail than in the service industry. A 2015 PricewaterhouseCoopers report suggests that while six percent of the US population have engaged in a hospitality-sharing transaction and eight percent in transport-sharing, only two percent have participated in retail-related sharing. Fashion industry chief executives–such as Trisha Gregory of Armarium and Jennifer Hyman of Rent the Runway–are betting with their own companies that fashion-sharing will take off.
The same principle applies to clothing as to other peer economy commodities. Most of our fashion sits unused at any one time, some of it worn only once or twice before going out of style, despite how much it may have cost. According to online thrift store ThredUp, over $8 billion worth of clothing sits unused in US closets. Why not rent it out, extend its value? The advantages are obvious: consumers spend less to rent than to buy (usually about ten to twenty percent of the retail value), allowing them to keep up with trends and wear expensive brands they normally can’t afford; clothing owners earn income from an outfit that otherwise just sits around wasting value; and less stuff needs to be manufactured and therefore eventually thrown in the garbage.
This model especially appeals to Millennial and Generation Z patrons. Dubbed “NOwners,” these new-generation consumers have basically spearheaded the sharing economy with their valuation of experiences over possessions and satisfaction from sharing and renting commodities over owning them. This use-and-resell/return mentality isn’t far from disposable materialism, only without the actual disposing of things.
Several notable fashion-sharing businesses exist. Perhaps the best-known is the aforementioned American company Rent the Runway, which began in 2009 and now has over 5.5 million users. Rent the Runway offers designer outfits, jewellery and accessories, specializing in formal occasions like weddings, proms, graduations, balls, galas, even date nights.
Need a high-end bag? You don’t need a membership for Bag, Borrow or Steal. Rent by the month for as long as you want. Other fashion-sharing businesses include the UK’s Girl Meets Dress, Europe’s Chic By Choice and Australia’s Glam Corner.
But such rental operations aren’t as easy to manage as service sites, such as the fast-growing international sites like ecrent.com or Uber. Whilst these effectively function as software programs to bring together consumers and providers, a company like Rent the Runway moves actual physical goods. Furthermore, companies must offer a flexible inventory to account for variations in demand of fit and style. Rent the Runway actually sends out two sizes to customers, the one requested and a backup.
But more people are signing up for fashion rental, especially for special occasions. And if peer-to-peer sharing succeeds in fashion, there’s a good chance it will succeed in other retail sectors, like garden appliances, furniture and tools.
It’s Not Perfect
While collaborative consumption may benefit the environment and consumers, it isn’t without its criticisms – especially from big business and governments. One main complaint from these entities is the inconsistency with which matters of insurance, legal liability and tax collection are interpreted from city to city and country to country.
For instance, are insurance costs from vehicular accidents the responsibility of ride-share companies or individual drivers? Are accommodation-sharing companies exempt from hotel taxes? Are tenants allowed to sublet their apartments in violation of their leases? The answers to these questions differ, depending on where you’re asking them.
Then there’s the question of employee’s rights. There are increasing numbers of people making a living from renting out rooms and acting as Uber and Lyft drivers, but because these are considered freelance jobs, there are no health benefits, social security contributions, worker’s compensation, sick or vacation leave, or union protection. Not that most part time jobs today offer those benefits, anyway.
Maybe the biggest question is how long the peer-to-peer economy will remain autonomous and unaccosted by big corporations. Indeed, some have already crashed the party – Avis, for example, bought hourly car rental ZipCar, and the Marriott just bought out One Fine Stay. It seems inevitable that other big companies will follow, eventually weaseling their way in on the game and potentially making everything that’s new old again.
Hopefully not, though. Part of the beauty of the sharing economy is feeling like you’re participating in some kind of grassroots consumer revolution, shunning large multinationals in favour of doing business with people you can contact any time with a smartphone, and of course helping to save the environment a tiny bit by reducing your overall consumption.
So, can the sharing economy help save the environment? Well, for the sake of our pocketbooks, and more importantly, the planet, it’s important that we all learn to share a little bit more.
10 of the Best Sharing Economy Sites
1. Le Tote – You’ll never need to buy clothes again! Le Tote mimics those wonderful monthly subscription services, but this time with clothes. You simply “heart” an item to add it to your wish list, and in each box you receive, you get at least one hand-chosen item from that wish list, in addition to some items that your Le Tote stylist picked out for you. If you get something you fall in love with, you’re free to keep the item to purchase it and just send the rest back.
2. Ecrent – Like an Etsy for services. From iPhone repairs to home baked apple pies, you’ll find someone to do it for you here. No need to ever buy your own tools when someone just around the corner can sort out whatever home issues you find yourself facing.
3. One Fine Stay – Basically an upscale Airbnb. One Fine Stay only provides posh properties, in key cities where jetsetters tend to spend their time. Like Airbnb, this saves water and energy as towels and sheets aren’t washed until the end of your stay.
4. Poshmark – Buy and sell your unwanted clothing to those who will treasure it with this company’s easy to use app. In the market for something new? You can also follow people whose style you love and see when they’re selling off their lovely stuff, too.
5. Fon – Don’t you hate when you’re travelling and can’t find any wifi, so are stuck paying ridiculous roaming charges? Fon allows you to access wifi wherever you are, saving you loads of cash and hassles.
6. Freecycle – Got an old mattress to give away? Looking for a desk but don’t want to buy a new one? Freecycle links you in with locals who are interested in giving -and taking – stuff away for free. It’s actually a great way to save money, as most councils demand a fee for taking your old white goods and furniture.
7. Lending Club – Hate big banks? This peer-to-peer lending club lets you circumvent them. Invest a bit of money with them and you’ll also get a greater rate of return on your savings.
8. The Bike Project – We love the bike rental services cities like Paris and London provide. But what if you need your own bike? You can buy a used one here, or get your own fixed.
9. DogVacay – Find the best dog sitters in your area – cheaper and kinder than a kennel! Plus, if you love pups but can’t have your own, you can sign up to be an occasional sitter.
10. Turo – Kind of like Bag, Borrow or Steal but for cars. Got a prestigious or quirky car to rent out when you’re not using it? This is your service – as long as you’re in the USA, that is.
Main image: Rent the Runway