Is There Enough Trust In the Sharing Economy?

The sharing economy is essentially the concept "What's mine is yours, with a fee." Apps like Uber, AirBnb, Vayable, and Relay Rides are all considered as part of the sharing economy. People pay a fee to utilize another person’s property like a house or car. The sharing economy also includes apps that offer services and not goods. For example, there are apps that connects pet owners to pet sitters. In addition to goods and services, Rachel Botsman, author of What's Mine is Yours, states that the core of the sharing economy is people renting things from each other.

The sharing economy is alike to Ebay and Amazon, all are peer to peer businesses. Ebay is an online platform where sellers from all over the world offer their goods and buyers can purchase. Sites similar to Ebay relies heavily on the World Wide Web. However, before the Internet, buying and selling goods could only be done through local stores, television advertisements, and magazine catalogs. With the invention of the Internet and subsequently websites like Ebay and Amazon, it became considerably easier to buy and sell. Transaction costs and times spent were lowered for both parties, buyers no longer needed to physically be at a store and the wait time between receiving a catalogue, sending it back, and receiving the items were diminished.

However, the open market of the sharing economy, where anyone can become a seller, raises the problem of reliability. How can buyers determine which sellers were reliable? The solution to this was a review system set up for both for the buyer and seller. After purchasing a product or service, the buyer would be able to review the seller’s product quality, efficiency, and responsiveness. In turn, the seller could also review the buyer. This review system builds reputation and trust for both parties. With reviews often accessible to anyone, it is very easy to spot an unreliable seller. However, the problem lies in the fact that not all platforms in the sharing economy has a review system. And if there is a review system in place, they are all different.

The prominent question people have when utilizing a sharing economy app is the trustworthiness of both parties involved. The Airbnb app provides a perfect example for this concern. How can homeowners place trust in strangers living in their house with no supervision? In turn, how can renters trust that the owners place is clean and safe?

Despite this issue, the sharing economy continues to be very profitable and sustainable. According to an article by Brookings Institution, the revenue for the sharing economy in 2014 was $14 billion and is estimated to reach $335 billion by 2025. The reason for the sustainability of the sharing economy is due to how widespread and accessible the Internet has become.

The future of the sharing economy lies in the development of a standardized peer rating system. This means that a user will carry his reputation from one platform to another. This will significantly improve the effectiveness of the rating system. An unreliable seller on a single platform will have his reviews be the same and known to users of every other platforms. This will eliminate the problem of  reliability in the sharing economy as each user will 1 review system with their entire purchasing and selling history.

1. Why do you think people are willing to place trust in strangers?

2. Do you agree that the Internet is the reason why the sharing economy is sustainable?

3. What do you think about the standardized peer rating system? Would it benefit the industry?

Works Cited

Yaraghi, Niam, and Shamika Ravi. “The Current and Future State of the Sharing Economy.” Brookings India, Mar. 2017.

“The rise of the sharing economy.” The Economist, The Economist Newspaper, 9 Mar. 2013, http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy.

Ng, Jin. “Is there enough trust in the sharing economy?” UKFast, 3 Nov. 2017, http:://www.businesscloud.co.uk/news/is-there-enough-trust-in-the-sharing-economy.