Is the Sharing Economy a Millennial-Driven Phenomenon?

Image Source: www.washingtonpost.com

Image Source: www.washingtonpost.com

According to the 2015 “1099 Economy Workforce Report,” commissioned by venture capitalists and Stanford University alumni, 39 percent of sharing-economy workers are ages 18-34. This is coupled with almost half (49%) of Sharing-Economy consumers, also ages 18-34, or commonly referred to as “Millennials”.

Yet, AC Nielsen also provides evidence that the majority of consumers in the sharing economy tend to own a house, have children and earn above-average wages, suggesting that sharing is much more than a millennial-driven phenomenon.

So what type of impact are Millennials having in the Sharing Economy? This blog post gathers key statistics and data to help answer that question.

Millennials resonate with the idea of the Sharing Economy since it perfectly fits their budgets.  For example, an article by Lexology says, Compared to previous generations, Millennials have less spending power, are less likely to form households in their 20s and early 30s and are choosing to forego suburban neighborhoods in favor of smaller urban apartments. In turn, “They’re taking a more asset-light stance toward consumption, putting off buying a home in favor of renting, forgoing a car payment and taking Uber, or skipping a hotel in favor of booking a room via Airbnb.”

Additionally, Millennials’ affinity for technology has provided a big boost to the sharing economy. A senior staff writer at The Daily Californian writes, Demographic changes, coupled with the rise of sharing economy options, seem to be paving a new path for the way that young people interact with businesses. For instance, “digital technologies like GPS-enabled smartphones allow millennials to quickly make and respond to requests for goods and services and complete the transactions through online payment systems like PayPal.”

And, finally, research indicates that Millennials are having an increasing impact on the retail industry.  According to an article in the April 2016 issue of Harvard Business Review magazine, the largest category of spending in the Sharing-Economy is online marketplaces (e.g. Ebay, Etsy), with 16.3 million consumers each month spending almost $36 billion annually.

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These reports estimate that the generation’s spending will soon account for approximately 30% of all retail sales.

And, HuffPost Business says, “Nowhere is this medium of exchange more timely than among college and university students worldwide.”  Lexology helps explain this claim by providing the following two examples:

  • Startup Rent The Runway urges customers to question why buy when you can borrow by offering short-term rental options for what might otherwise be prohibitively expensive pieces of formal attire.

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  • More traditional retailers such as The Home Depot offer customers the opportunity to rent expensive machinery such as a stump grinder or sod cutter, items that would otherwise often clutter a garage after they are used for a limited project.

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These offerings hit the same trends: why spend hundreds, if not thousands, when you can share and save valuable space in the process? The “digital natives”, also referred to as, “Millennials” are technology savvy and able to take advantage of these services to have their limited capital extend longer.

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What Can You Share to Save Money?

How to save money using Sharing Economy business models & services.

Ranan Lachman Sharing Economy

Excessive mass consumption among families and individuals started in the 1920s and exploded in the mid-1950s. The automobile industry provided an enormous stimulus for the national economy. By 1929, it produced 12.7 percent of all manufacturing output, and employed one out of every 12 workers. Automobiles, in turn, stimulated the growth of steel, glass, and rubber industries, along with the gasoline stations, motor lodges, campgrounds, and hot dog stands that dotted the nation’s roadways.

Rachel Botsman and Roo Rogers, authors of the Sharing Economy book, ‘What’s Mine is Yours’, refer to this endless mass acquisition of more stuff in even greater amounts as “hyper-consumption”, a force so strong that there are now more shopping malls than high schools in America. However, today, the Sharing Economy is revolutionizing how we acquire and use goods and services by opening up new opportunities for both consumers and workers, allowing people to work on their own terms.

According to a recent poll from TIME, Burson-Marsteller and the Aspen Institute Future of Work Initiative,  44% of U.S. adults say they have participated in the Sharing Economy, playing the roles of lenders and borrowers, drivers and riders, & hosts and guests.

What’s more, highly skilled jobs, like consulting and teaching, are now shifting to more sharing-economy-like models too.  For example, TeachersPayTeachers, founded in 2006 by a New York City public school teacher, allows teachers to earn money by selling their lesson plans as well as supplemental materials, to other teachers.  A recent PBS article said, “The overall concept of TeachersPayTeachers isn’t entirely new; teachers have always created extra materials or entire units for their classes and shared lessons with other teachers, but the advent of the Sharing Economy has changed things somewhat. The difference now is that teachers are earning money from their after-hours and weekend work and receiving a larger pool of feedback.”

Furthermore, PwC estimates that revenues from sharing in the travel, car, finance, staffing and music and video streaming sectors could rise from $15 billion to $335 billion by 2025.

With the unemployment rate still high, the Sharing Economy is enabling people to make money while they wait for job opportunities to open up. By reshaping traditional business and consumer models, these sharing services help create a healthier, more sustainable system with a more fulfilling goal than “more stuff.”

Here’s a short list of more sharing services that are saving people substantial money:

Hospitality and Dining:

  • CouchSurfing: connect with a global community of travelers to find a place to stay or share your home and hometown with travelers. Couchsurfers organize regular events in 200,000 cities around the world. There’s always something to do and new friends to meet.
  • Feastly: Passionate chefs (common people) who can give you access to hidden food gems you won’t find anywhere else. Feastly provides home kitchens to pop-up spaces, chefs cook in the most unique dining locations.
  • LeftoverSwap: a smartphone app to help you barter or give away your leftovers. The company’s website says, “Help save the world while enjoying food by fixing these pressing issues: -40% of the food goes to waste.”

Automotive and Transportation:

  • Uber: Like Airbnb, Uber is probably one of the most widely known sharing services in the industry. Uber connects riders to drivers through mobile apps, making cities more accessible and opening up more possibilities for riders and more business for drivers.
  • Lyft: Like many other transportation services in the sharing economy, the company’s mobile-phone application facilitates peer-to-peer ridesharing by connecting passengers who need a ride with drivers who have a car.
  • Getaround: Getaround is an online car sharing or peer-to-peer carsharing service that allows drivers to rent cars from private car owners, and owners to rent out their cars for payment.

Retail and Consumer Goods:

  • Neighborgoods: NeighborGoods.net is a social platform for peer-to-peer borrowing and lending. Need a ladder? Borrow it from your neighbor. Have a bike collecting dust in your closet? Lend it out and make a new friend. By sharing with your neighbors, you can save money while reducing waste and strengthen your local community in the process.  
  • Pley - Pley.com is the leading toy subscription service, helping parents save money, reduce clutter and conserve the environment. Members can choose from over 500 toys and never have their children be bored again. Once the kids finish playing, they simply swap out their toy for another one and enjoy endless fun.
  • Poshmark: Poshmark connects you to people whose style you adore, allowing you to shop their closets, anytime you’d like. Have items in your closet that you love, but just don’t wear anymore? List it for sale on Poshmark in less than 60 seconds. Sell what you have in your closet so you can shop for what you really love.

Media and Entertainment:

  • Amazon Family Library: With Family Library, you can share select content between two adults in your Amazon Household.
  • SoundCloud: a leading social sound platform where anyone can create sounds and share them everywhere. Recording and uploading sounds to SoundCloud lets people easily share them privately with their friends or publicly to blogs, sites and social networks.

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Millennials in the Sharing Economy

The social economy is giving rise to a new consumer revolution.  In an era of connected consumerism, social media strategies are going to change your business.

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A friend expressed his disbelief the day he saw his 3-year-old daughter looking through a glossy magazine while “swiping” her finger across the cover photo in an effort to “turn the page”. Instead, nothing happened… of course, because it was a traditional magazine, which requires flipping or turning an actual page over, not swiping aimlessly like you would a digital screen!  Yet, in today’s world, this sort of behavior, or “digital literacy” seen among young people is more and more common.

The term “digital natives”, also referred to, “Millennials,” represents a generation born during the rise of the Information Age. Typically, these people are categorized as being born after the 1980s and who grew up in a world of increasing technology advancements. Although the “Baby Boomer” generation, named after the huge spike in U.S. births from World War II, is thought of as the country’s largest generation; in 2016, Millennials actually outnumber the boomers by 11 million people.  Furthermore, according to Forbes, Millennials represent about a fourth of the entire population, with $200 billion in annual buying power.  Therefore, understanding these generational traits have major implications for organizations around the world.

However, companies have been struggling to connect with this generation because many of the traditional methods of advertising have proven ineffective at capturing their attention. This resistance from traditional businesses is giving way to an understanding of the need to adapt and adjust to this “new normal”.

There is a review of data that shows Millennials have characteristics that set them apart. According to NPR, unlike their parents’ generation, Millennials are ushering in an age when minorities will lead the U.S. population. This is also supported by a shared Millennial trait of being a very ethnically and racially mixed generation.  Another shared characteristic among Millennials is civic-mindedness. Many define doing good with efforts related to protecting the environment. For example, according to a 2011 study by ad agency network TBWA/Worldwide and TakePart, 70% of young adults consider themselves social activists.

One industry offering a multitude of services aligned to these Millennials wants/needs is the Sharing Economy.  Today, many are continuing to discover the benefits of peer-to-peer exchanges of goods and services. For example, in regards to civic-mindedness, Sharing Economy ridesharing services like Uber and Lyft limit climate change by promoting sustainable travel.  Additionally, a sharing economy company such as Pley, a toy subscription  company, eliminates 10.5 pounds of CO2 emission for every toy it rents.  Home sharing companies also encourage sustainable travel. According to a study conducted by the Cleantech Group, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels, including hotels that have earned five-star efficiency ratings. This is because fewer resources are used to care for travelers.

In terms of being a very ethnically and racially mixed generation, corporations that hold contradictory views on political and social issues are at risk when it comes to reputation rankings amongst Millennials.  A prime example of this can be seen from the recent Chick-fil-A same-sex marriage controversy where the company CEO made public comments opposing same-sex marriage and resulted in protests and boycotts of the chain.  Regardless of the size of an organization, when it comes to using social and mobile technologies, one must work hard to build strong relationships with constituents, and to reach them wherever they are and at a moment’s notice.  To truly cultivate these relationships and to mobilize a base, organizations need to expand their outreach to include multiple online channels and tools such as social media, email, and mobile.  All of these platforms are experiencing explosive growth and will continue to gain momentum.

As the world becomes more networked, inclusive and diversified, more companies will need to  reevaluate their communication strategies and behaviors to reinvigorate their understanding of, and relationships with these critical stakeholders.

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Climate Change Control in the Sharing Economy

Sharing Economy Climate Change Control Ranan Lachman BlogThere is an incredible civil war going on throughout the world and a critical need for greater global awareness on the issue. Across much of the world, climate change is making environments less capable of supporting human life.

Recently, however, after more than two weeks of debate, nearly 200 countries have adopted the global agreement to cut and then eliminate greenhouse gas pollution collectively.  ABC News reports, “There were tears of joy at the United Nations climate change conference in Paris after world leaders agreed on an historic deal to cut emissions.” According to news from the National Post, in the pact, the countries commit to limiting the amount of greenhouse gases emitted by human activity to the same levels that trees, soil and oceans can absorb naturally, beginning at some point between 2050 and 2100.

The 2015 Paris Climate Summit is a helpful reminder that the Sharing Economy, which helps find more productive uses for underutilized assets, is having a positive, transformative effect on the environment.

For example, Sharing Economy ridesharing services like Uber and Lyft limit climate change by promoting sustainable travel. A sharing economy company such as Pley, a toy rental company, eliminates 10.5 pounds of CO2 emission for every toy it rents.  Additionally, home sharing companies also encourage sustainable travel. According to a study conducted by the Cleantech Group, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels, including hotels that have earned five-star efficiency ratings. This is because fewer resources are used to care for travelers.

Investors are increasingly intrigued by the potential of these sharing economy companies to radically upend both how we consume goods and how we work to afford them—whether it’s monetizing underutilized assets or forgoing purchase of those assets altogether.  

The rise of the sharing economy is a potent weapon in the carbon war.  One third of business leaders see the value in sharing best practice, costs and resources to improve efficiency and reduce emissions that would enable them to respond effectively to climate change.  But economic transformation cannot come from invention alone, it is also dependent on the adoption of new, innovative products and services across the economy.

Click to View: Importance of “Design Thinking” in the Sharing Economy

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