Current Issue
This Month's Print Issue

Follow Fast Company

We’ll come to you.

4 minute read

Defining The Sharing Economy: What Is Collaborative Consumption—And What Isn't?

Are Airbnb, Zipcar, Etsy, and Uber really all doing the same thing? Or do we need better definitions of this new economic force?

  • <p>As the sharing economy sector expands, there has been a fracturing of understanding of what the it actually is, and what it is not. These slides illustrate Rachel Botsman's latest definitions of the various subsections.</p>
  • 01 /12

    As the sharing economy sector expands, there has been a fracturing of understanding of what the it actually is, and what it is not. These slides illustrate Rachel Botsman's latest definitions of the various subsections.

  • 02 /12
  • 03 /12
  • 04 /12
  • 05 /12
  • 06 /12
  • 07 /12
  • 08 /12
  • 09 /12
  • 10 /12
  • 11 /12
  • 12 /12

This year, the term "sharing economy" was introduced into the Oxford English Dictionary, proof—not that we need it—that the sharing economy as an idea is here to stay. But what’s happened along the way is a fracturing of the understanding of what the sharing economy actually is, and what it is not. The picture is growing increasingly confusing, and it’s a problem. Many terms are being used to describe a broad swath of startups and models that in some way use digital technologies to directly match service and goods providers with customers, bypassing traditional middlemen. The terms "sharing economy," "peer economy," "collaborative economy," "on-demand economy," "collaborative consumption" are often being used interchangeably, though they mean very different things, as are the ideas they go hand-in-hand with, like "crowdfunding," "crowdsourcing," and "co-creation."

Confused Yet?

The "sharing economy" is a term frequently incorrectly applied to ideas where there is an efficient model of matching supply with demand, but zero sharing and collaboration involved. Platforms such as Washio, Deskbeers, Dashdoor, and WunWun that require the tap of an app to instantly access a clean shirt, massage, or keg of beer are fundamentally different from platforms like BlaBlaCar or RelayRides, which are genuinely built on the sharing of underused assets. Pizza Hut and Amazon one-hour delivery aren’t the sharing economy, and these on-demand apps are no different; they are mobile-driven versions of point-to-point delivery. They’re thrown under the same umbrella as part of the sea change in consumer behavior that uses the smartphone as a remote control to efficiently access things in the real world.

This muddiness in terminology is partly coming from Uber. The experience of using geolocation and frictionless payments to change our ability to get a taxi is creating a transformation in terms of how we expect and want to access everything from getting a parcel shipped on Shyp to a dog walked on Wag, with a tap of a screen. But the Uberfication of everything brings with it confusion about what is true sharing.

Key Criteria

When we ask ourselves whether a company is in or out of the sharing economy family, maybe it is better to try to filter them against clear criteria versus definitions. I think there are five key ingredients to truly collaborative, sharing-driven companies.

  • The core business idea involves unlocking the value of unused or under-utilized assets ("idling capacity") whether it’s for monetary or non-monetary benefits.
  • The company should have a clear values-driven mission and be built on meaningful principles including transparency, humanness, and authenticity that inform short and long-term strategic decisions.
  • The providers on the supply-side should be valued, respected, and empowered and the companies committed to making the lives of these providers economically and socially better.
  • The customers on the demand side of the platforms should benefit from the ability to get goods and services in more efficient ways that mean they pay for access instead of ownership.
  • The business should be built on distributed marketplaces or decentralized networks that create a sense of belonging, collective accountability and mutual benefit through the community they build.

Perhaps we should be working towards a certification system that recognizes true "sharing," "collaborative," and "peer" platforms. Indeed, Debbie Woskow, author of "Unlocking the Sharing Economy: An Independent Review," is working on an industry-wide ‘kite mark’ for responsible sharing economy companies in the U.K.

Getting clear on terminology

To be sure, there is overlap between examples and meaning of terms but there are also distinct differences that are important to note. In November 2013, I wrote a piece for Co.Exist outlining the need to clarify definitions. I recently revisited these definitions to make sure they best encapsulate the behaviors, business models, economic principles and companies typically used under the term. I have added "On-Demand Services," as they are often being discussed as part of the same ecosystem:

Collaborative Economy: An economic system of decentralized networks and marketplaces that unlocks the value of underused assets by matching needs and haves, in ways that bypass traditional middlemen.

Rachel Botsman 2015

Good examples: Etsy, Kickstarter, Vandebron, LendingClub, Quirky, Transferwise, Taskrabbit

Sharing Economy: An economic system based on sharing underused assets or services, for free or for a fee, directly from individuals.

Rachel Botsman 2015

Good examples: Airbnb, Cohealo, BlaBlaCar, JustPark, Skillshare, RelayRides, Landshare

Collaborative Consumption: The reinvention of traditional market behaviors—renting, lending, swapping, sharing, bartering, gifting—through technology, taking place in ways and on a scale not possible before the internet.

Rachel Botsman 2015

Good examples: Zopa, Zipcar, Yerdle, Getable, ThredUp, Freecycle, eBay

On-Demand Services: Platforms that directly match customer needs with providers to immediately deliver goods and services.

Rachel Botsman 2015

Good examples: Instacart, Uber, Washio, Shuttlecook, DeskBeers, WunWun

As the sharing economy grows, it will continue to divide and, as it does, I believe the need to understand and hold true to what it is really is will become greater. The sharing economy is uniquely placed to reflect our desire as human beings to connect directly and to feel a part of community larger than our individual selves, which serves a purpose far higher than simply the trading of stuff, space and talents. It’s good to criticize the core ideas and companies, as this will only challenge it to improve, but let’s make sure we accurately define what we’re criticizing first.

I welcome your feedback at rachel@rachelbotsman.com.

Slideshow Credits: 01 / Rachel Botsman 2015; 02 / Rachel Botsman 2015; 03 / Rachel Botsman 2015; 04 / Rachel Botsman 2015; 05 / Rachel Botsman 2015; 06 / Rachel Botsman 2015; 07 / Rachel Botsman 2015; 08 / Rachel Botsman 2015; 09 / Rachel Botsman 2015; 10 / Rachel Botsman 2015; 11 / Rachel Botsman 2015; 12 / Rachel Botsman 2015;