Whether it’s a drill, a car or an apartment: the sharing economy is coming. That’s the prediction of Rotterdam professors Jan Rotmans and Henk Volberda. EM spoke to them about the opportunities, pitfalls and the science behind the sharing economy.
“Sharing is the future”
“You don’t need to own everything yourself”, says Professor of Transitions and Transition Management, Jan Rotmans (FSW), a great supporter of the sharing economy. “There are some things, like a drill or a hedge trimmer, that we only use for twenty minutes a year. Research has shown that 40 percent of the Dutch population would like to take part in the sharing economy”.
In the sharing economy, people share things, with or without payment. They give each other temporary access to their possessions. “Sharing is the future. It generates more contacts locally, saves you money and you can help others”, says Rotmans.
Before this becomes commonplace, however, a lot of things have to change. Because the sharing economy is still in its infancy. In the summer of 2015, the Economic Bureau of ING bank conducted a survey among a thousand Dutch residents into the paid variant of the sharing economy. The results showed that the sharing economy is worth between 40 and 60 million euros, which is just 0.01 percent of the gross domestic product.
But the sharing economy is growing so fast that it’s difficult to capture figures. A few months after the ING statistics were published, Airbnb (sharing lodging for payment) produced new figures: in Amsterdam alone, the company had achieved a turnover of 110 million euros. This indicates the increasing popularity of sharing.
Thuisafgehaald (sharing meals for a small charge) and Peerby (sharing items for free) launched in the Netherlands in 2012 with just a few local people taking part. In 2015, 100,000 people worldwide are members of Peerby and over 80,000 meals are shared with neighbours.
Niels Buiter (29) alumnus Pedagogical Sciences, lends and borrows things via Peerby
“In De Wereld Draait Door television programme, they talked about Peerby. I was curious and decided to download the app. The app displays a map showing where people in your neighbourhood have things you can borrow. I started by borrowing things, but I didn’t lend anything. After a while, your conscience starts to kick in.” Now, Buiter lends lots of things via Peerby too. “My party tent is the thing I lend most, but my tools and trailer are also popular.” But Buiter wouldn’t lend everything. “For example, I don’t lend any electrical equipment because that breaks easily.”
Peerby not only has practical advantages for Buiter, he also likes the social aspect of the site. “I recently needed an e.dentifier for ABN AMRO. I was able to borrow one from an elderly man. He immediately invited me over for a coffee and a chat. The man was lonely but this was a way which gave him some social contacts. One Sunday morning, I found myself without any filter coffee, so I posted a message on Peerby. I received five replies, and I went along to one of them. That girl invited me out on a date and we went out for three months.”
Rotmans isn’t surprised: “I expect to see many sharing platforms becoming much larger, like car sharing, for example. My own children, now in their twenties, aren’t particularly interested in cars and the status that goes with them, so they would be more prepared to share their car. Their generation is not so focused on possessions.”
Renting is the new buying
In the coming years, the present economy will increasingly transform into a circular economy, with the sharing economy playing a major role, says Rotmans. And that means that in the future, people will view possessions differently and the economy will have a different function, according to both professors. “Our economy now has a lot of products with a short lifespan”, says Rotmans. “Things don’t have a long life span.”
As raw materials become scarcer, that will change, he says. “If we move from a traditional economy to a circular economy in which access becomes more important than ownership, it will also become more important for equipment to last longer. You won’t then buy a Philips bulb, you’ll rent one. Manufacturers will have to focus more on achieving a longer lifespan for their products because that will benefit them too.”
“All the systems currently in place are based on suspicion, whereas in the sharing economy, it’s all about mutual trust.”
However, Rotmans doesn’t expect such changes to be easy. Car manufacturers want to sell as many cars as possible, for example. Big manufacturing companies don’t benefit from the sharing economy.”
Rotmans thinks that these companies will try to give the sharing economy a bad image in the media. “All the systems currently in place are based on suspicion, whereas in the sharing economy, it’s all about mutual trust. They will spread stories about people trying to cheat you and that you’re naive if you use the sharing economy. Even though profiteers on sharing platforms will quickly be unmasked by review systems.”
Isabelle Cruse (22), masterstudent Arts, culture and society, organises clothes exchange events
“My wardrobe was bulging, it was time to get rid of some clothes. I didn’t want to throw them out because the clothes were still good. So I set up a Facebook group where students sold their clothes. It went well, but I found it rather impersonal. So I organised a clothing swap in my room. Later, I organised it on campus.” Every piece of clothing you bring can be swapped for something else. The events used to be held in Maastricht, because that’s where Cruse did her bachelor. She’s now set up a Facebook page for Rotterdam students called Shop & Go Rotterdam. That group currently has ninety members and the reactions have been positive. “At the Sustainability Hub market last December, people were really enthusiastic about it. Some students were initially a bit wary because they think that the clothes are dirty or damaged. But that’s not the case at all. I check all the clothes for quality and smell.” For Cruse, this is the ideal way to combine her love of clothes with her desire to live as sustainably as possible. “It saves me money, I get to know lots of people and it makes me a better global citizen. I not only hope to reduce the waste, but also production. Because if clothes sales fall, so will clothes production. It’s a win-win-situation.”
Risks and pitfalls
Professor of Strategic Management and Corporate Policy, Henk Volberda (RSM) also thinks that the sharing economy will have a massive impact on the current economy. Airbnb has disrupted the hotel market, Peerby the DIY market and Uber the taxi market.
Volberda approves of changes to these markets: “For the environment and sustainability reasons, car pooling is obviously much better than if everyone drives alone.” At the same time, the professor is critical about sharing platforms. Particularly when they grow fast and rake in big margins from users, like Uber, which originated in America.
‘It’s beginning to resemble a modern form of slavery’
Uber Pop, which uses non-professional drivers, was banned by law in the Netherlands due to the strict Taxi Act. Volberda is not against the sharing platform Uber in itself. “It’s a handy, smart app. But the problem with platforms like Uber is that they don’t offer the drivers any guarantee of work. Drivers receive minimum payment and in America, they sometimes have to keep four or five jobs on the go to earn a decent living. Because the Uber driver is self-employed, he has no legal rights. And anyone who gets a bad review suffers badly. It may offer many new opportunities and innovation, but it also provides little or no income protection to those at the bottom of the job market and undermines employment rights. This so-called online-platform capitalism is not just a feature of the taxi market but also in logistics, catering, care and other low level service provision. It’s beginning to resemble a modern form of slavery, something which the original founders of the sharing economy never imagined”, says Volberda.
But not every sharing platform is as commercially focused as Uber, according to Volberda. Many sharing platforms only ask for a small margin, like Thuisafgehaald. Or they are free for participants, like Peerby.
Ioannis Fragkos (32), assistant professor bij RSM, is a great fan of Airbnb and Uber
“The first time I rented an apartment from someone through Airbnb was in 2013, in San Francisco. It was an amazing experience. The flat was in a fantastic location, looking out over the beach and the harbour. There was also a kind of wine cellar full of wonderful wines. The owner said I could open anything.”
Fragkos later used the house sharing site on many occasions, in Canada, France, the Netherlands and England. The locations of the apartments particularly appeal to him: often in the middle of a big city. “The only thing I find difficult is that there’s no standard quality. You never know whether everything will be clean. So before I book, I always carefully check the reviews of other visitors.”
When Fragkos is abroad, he often uses Uber taxis. “Particularly in the United States.” He loves the service. “When I arrive somewhere, I use the app and I know that someone will be there to pick me up. I don’t need to find a taxi myself or negotiate a price. I just pay with my credit card, very handy. And bad drivers get bad reviews, and then Uber doesn’t use them any more. That’s good, because you’ve got to be able to trust someone when you get in their car.”
Nevertheless, there are still pitfalls for these platforms and users. “When sharing platforms get bigger, it’s difficult for them not to become too commercial and stay loyal to their ‘green ideals’. If you have a lot of participants, you can earn money from them and it’s difficult to resist that temptation. Big platforms usually don’t have much competition because it takes a long time to gain a reputation as a competitor and built up the same mass.”
Volberda therefore appeals for ‘freemium’ models, in which participants don’t have to pay to participate, but only pay for extra services or options. However, that will be difficult, he foresees, because platforms often mediate between suppliers and requesters. “And most suppliers will ask for payment, and if they don’t do that initially, like Peerby, their financiers will eventually force them to”, he thinks.
“When sharing platforms get bigger, it’s difficult for them not to become too commercial and stay loyal to their ‘green ideals’.”
Volberda is also concerned about the power and the key role which companies like Facebook play in the new sharing economy. Many sharing platforms use social media to make contact and to create mutual trust between the participants. People give each other an assessment or review, by linking their Facebook or LinkedIn account to such a platform. “This gives such companies even more power and less competition. It’s very practical to link everything to social media, but I have serious doubts about whether that’s desirable”, says Volberda.
Furthermore: anyone who is not familiar with social media loses out. And reviews can also exclude people, claims Volberda. “The sharing economy has many great ideas for tackling waste, but we must be aware of the pitfalls.”