A guide to the sharing economy
There’s plenty to consider before putting your ‘idling asset’ on the market.
What would you do with an extra $1000 a month? Pay off some debt, or go on a long-deserved holiday? Would you put it towards your mortgage repayments, or splurge on a new wardrobe?
According to new research released by The Sharing Hub, an Australian community of sharing economy platforms, one in 10 Victorians is significantly boosting their income as a supplier in the sharing economy. On average these suppliers are working just an extra five hours a week to earn an extra $1126 a month.
Even more people – 44 per cent of Victorians – are using the sharing economy in some way to make and save money, and this is expected to rise to 56 per cent before the end of the year. RACV already provides member access to two sharing platforms – RACV Car Share and RACV DriveMyCar.
But, what exactly is the sharing economy? And, if it’s so great, why haven’t we being doing it all along?
The popularity of the phrase ‘sharing economy’ has increased sixteen fold since 2013.
“Sharing is nothing new. People were certainly sharing before now, but with immediate friends and family. But, sharing economy platforms, the technology they use, has allowed sharing to flourish between strangers on a large scale,” says Mike Rosenbaum, co-founder of The Sharing Hub and CEO of Spacer, an Australian marketplace for storage space.
Collaboration in Cities: From Sharing to ‘Sharing Economy’, a World Economic Forum report from December 2017, reports that according to Google Trends, the popularity of the phrase ‘sharing economy’ has increased sixteen fold since 2013. The paper explores case studies from around the world; from the six ‘libraries of things’ in Seattle where citizens can borrow tools to 97 distinct sharing schemes now in place in Seoul.
The report explores three distinguishing features of the sharing economy, also known as the ‘collaborative economy’, ‘gig economy’ and ‘platform economy. Firstly, the sharing economy uses digital technologies to match buyers and sellers; secondly, it operates under the assumption that assets have excess or idling capacity (e.g. an empty car space or a spare room in your home); and, finally, it ensures there is a way to verify trust between users, via reviews and ratings.
RACV Home Advocacy and Advice Manager Nathan Taylor sees a lot of potential for Victorians who use the sharing economy. “Unequivocally the sharing economy is here to stay. The global economy is becoming much more integrated and everyone in the Victorian economy is competing in those global value chains. But, Victorians can use their idle assets to help boost their income,” he says.
“Aussies like the idea of sharing. Melbourne and Sydney were early adopter cities and have very high numbers compared to other cities,” says Mike Rosenbaum. These days, the sharing economy is a lot more than just Airbnb and Uber, with dozens of homegrown Australian platforms. “We have 25 founders in The Sharing Hub who collaborate and share ideas about great apps that make sense for Australians including Zoom2u, a courier service, and Mad Paws, which is like the Airbnb of pet sitting.”
Nathan Taylor was an early adopter. “We rent out our car space through Parkhound while my partner and I are at work. We had a dormant asset we could use and it’s a great way to reduce cost of living pressures.
“The extra income goes straight on our mortgage. We have made around $5000 over the past two years,” says Nathan.
According to The Sharing Hub research, suppliers in Victoria use their extra cash to tackle living costs, including paying bills (31 per cent); making rent or mortgage payments (23 per cent); and reducing debt (19 per cent).
We wanted other people to experience our area, which we love so much.
Many Victorians are not just motivated by extra income. Stephanie, a 47-year-old part-time worker from Melbourne who is a supplier on Mad Paws, says: “Initially it wasn’t the money. I had two dogs but then one passed away and I wanted a companion for Poppy, the other dog, who was a little depressed. But, the extra money has been quite good also.”
Merryn Padgett and Marcus Andrews in Paynesville, East Gippsland, also had other reasons beyond making money when they joined Camplify, a caravan hire and RV sharing community. “We wanted other people to experience our area, which we love so much. East Gippsland is known as ‘God’s country’ – it has lakes, mountains, and beaches. Joining Camplify fitted our environmental and ethical beliefs about sharing resources and supporting local economies.”
While Stephanie uses the extra income from Mad Paws for holidays and a “nice meal every now and then”, Merryn and Marcus have invested their earnings back into buying more caravans to expand on what they now see as a business.
“Our business, Earth & Sea, is the only caravan hire business in East Gippsland using Camplify – there would be a lot more competition closer to the city. But we are already thinking about going into accommodation as well; we know a lot of people who have listed on Airbnb and their businesses have boomed,” says Marcus.
Mike Rosenbaum says this is a growing trend. “We have seen a real increase in ‘multi-apping’ in the past few years. People are hooked pretty quickly.”
Many sharing economy platforms basically remove all the administration tasks.
Another key benefit for suppliers is the flexibility that is inherent in sharing economy platforms. Stephanie works part-time from home, and is also studying a Bachelor of Education. “MadPaws allows me to dictate how much or little I want to do extra. It’s very flexible and on my terms,” she says.
The Padgett/Andrews family agrees. “Marcus had a heart attack in 2015 and so he can’t take on any high-stress jobs. He is a stay-at-home dad to our two kids while I work part time in local government. Camplify has made it easy for Marcus to focus on the set up of the vans and the customer side, while I take care of the marketing and business tasks,” says Merryn.
Many sharing economy platforms will do all the advertising for you; provide security around payments and credit card transactions; offer insurance and dispute services and basically remove all the administration tasks. Though that doesn’t mean it’s risk free.
“My risk was low when I decided to rent out my car space, but if I was to rent out a room in my home, or a whole house, my risk would be much higher, but the return greater. Like every element in life, the sharing economy is a trade off between risk and return,” says Nathan, who is also an economist.
We used to share with people we knew, but now we can share with anyone who has enough ‘reputational capital’.
Louisa Williams, from Essendon, is a supplier on Kindershare, a platform connecting owners and renters of baby equipment. “There is always the possibility that your items are at risk of becoming damaged, but so far so good,” she says.
For Louisa the risk was worth it given the “idling capacity” of her assets. “I have so many family travel products that only get used a few times a year, so why not make use of them all year long and let others enjoy them without having to buy them outright? It’s a win-win and the extra income means we get to go on family holidays more often.”
“Technology creates a trust platform. We used to share with people we knew, but now we can share with anyone who has enough ‘reputational capital’,” says Nathan. “Remember though that you have to declare all additional income on your tax. But, you may also be able to declare more expenses as deductions. Of course, consult with your accountant to understand all your tax obligations.”
Whether you choose to “opt-in” to Victoria’s sharing economy, as a supplier or as a customer, it’s all about doing your homework. “It’s a great responsibility taking on someone else’s pet so you should be sure and do your research. Look at the pros and cons, the time and the effort, and decide if it is worth it for you.”