Introduction to the Sharing & Gig Economy Industry

The penetration of digital technology into all aspects of life is no better represented than in the adjustment of work arrangements that is occurring through the sharing economy. A sometimes-misunderstood term, the “sharing economy” is a system of peer-to-peer services, exchanges or rentals facilitated through a digital intermediary (a platform dedicated to helping consumers find and purchase specific services). Often associated with the ride-sharing company Uber, many goods and services can be provided through similar platforms, such as delivery of restaurant meals; grocery shopping and delivery; personal assistants (such as dog walkers); specialty contractors (such as TaskRabbit workers who will assemble IKEA furniture); and internet-based scheduling of everything from restaurant reservations to heavy equipment rentals. Plunkett Research estimates the size of the global sharing economy at $500 billion for 2023.

There were mixed results for this sector due to the Coronavirus pandemic. Ride-sharing companies saw plummeting revenues because of the shelter-at-home, work-from home environment. Likewise, accommodation-sharing platforms such as Airbnb and Vrbo saw large drops in revenues at first, while people were in shelter-at-home mode, but later saw business return as travelers sought options to hotels. At the same time, meal and grocery delivery services like GrubHub and Instacart soared—they were the perfect answer to closed restaurants and COVID-conscious consumers.

Closely intertwined with the sharing economy is the expansion of “gig” and freelance work. While such short-term or one-time (“contingent”) work arrangements are not new, today’s digital platforms enable a far greater number of people who desire gig or freelance work to connect with consumers and businesses that want to hire them. These platforms allow increased access to services and workers in ways never seen before. This segment is often referred to as the “gig economy.”

The sharing and gig economy is a truly disruptive development that was enabled through the rapid, worldwide deployment of the smartphone and through the ease of development of massive web-based services via databases and other systems hosted in the cloud. The nature of this industry is disruptive because the sharing economy offers very advanced solutions to everyday problems, saving time and effort for consumers, and often saving costs and creating efficiencies in the process, whether it’s the ability to let graphic designers bid on a small job for a business, the ease of getting a restaurant meal ordered and delivered to the home or the convenience of getting a ride from an airport to a hotel.

Examples of how the Sharing and Gig Economy is Disrupting Business and Industry:

a. The traditional taxi business has been literally overwhelmed by competition from ride-hailing services such as Didi, Uber and Lyft. Taxi service, particularly in the United States, can be incredibly frustrating—there is nothing worse than waiting in the rain for an empty taxi to cruise by. In contrast, platforms like Uber have given consumers the power to hail a ride from their smartphones, watch on a digital map as the vehicle nears the pickup destination, and pay seamlessly via a saved credit card or other payment option such as PayPal once the ride is completed. This is such an advancement that the world’s largest automobile manufacturers are now planning for the day when a massive segment of global consumers will opt to use ride-hailing as their everyday transportation, declining to purchase and own personal automobiles. A new descriptor has been coined to describe this trend: “mobility services.” In the near future, self-driving vehicles will boost this trend.

b. Meanwhile, bicycle-sharing platforms, particularly the massive networks in China, are offering a highly popular mode of convenient, inexpensive, instant urban transportation for millions of consumers daily who are willing to pedal a bike. This is a global trend.

c. Equally frustrating to many consumers is the task of assembling furniture and cabinetry purchased in-the-box from retailers like Ikea. TaskRabbit will send a highly experienced agent to your home to quickly assemble that new purchase for you in a cost-effective manner. This is so vital an idea that Ikea acquired TaskRabbit.

d. While shopping online via ecommerce and then awaiting your purchase to be delivered via UPS or a similar courier or freight service is rapidly gaining global market share over traditional store-front retailing, there is still immense demand for items that will be used in the home on the same day as ordered. Groceries are the perfect example. Thus, shopping/rapid delivery services such as Instacart are changing the face the grocery industry. Instacart will let you select items that you want from your favorite store, send an agent to do the shopping or the pickup, and then deliver the goods promptly to your home. This is such a breakthrough idea that giant U.S. retailer Target acquired Instacart competitor Shipt, U.S. supermarket chain Kroger launched its own delivery service and a large number of the world’s largest retailers have or will run their own delivery services. Amazon is a global leader in this regard with its same-day delivery (Amazon Fresh”) of groceries and other staples.

e. Traditionally, the provision of hotel rooms and other overnight accommodations was managed by hotel, motel and resort companies, with minor market share going to inns, bed and breakfasts, and long-term furnished-apartment firms. The sharing economy has turned the hospitality industry in an entirely new direction as Airbnb makes millions of rooms, flats and houses available for nightly rental worldwide, and services like Vrbo and Onefinestay specialize in booking travelers into any of millions of vacation homes, condos and urban apartments. Suddenly, travelers can benefit from short-term rental of fully furnished and equipped accommodations, often with features such as multiple bedrooms and baths, laundry facilities and kitchens, and sometimes with fabulous views, swimming pools or gardens.

f. A U.S.-based firm called Rent the Runway grew quickly with its unique business model. This company rents clothing, shoes and accessories, focused on fashion-conscious women. Consumers choose what they want to wear online, and the company ships the items promptly via UPS. When the short-term rental is over, the customer simply puts the item into a special shipping bag and drops it off at a UPS store for easy return. Back at the company, the item is cleaned and restocked to the rental inventory. In fact, the firm has turned into the world’s largest dry-cleaning operation.

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