Room for all in the sharing economy

This article is more than 12 months old

With more people turning to car sharing and online hospitality, traditional businesses need to catch up or risk going bust

Our future cities are facing a dizzying dilemma. According to a 2014 United Nations report, two-thirds of the world population will be urbanised by 2050.

Considering that there will be 2.5 billion more people then, we have a case of imbalanced supply and demand on our hands.

Any opportunity we have now to minimise our planetary wear and tear is welcomed. That is where the sharing economy can offer a brilliant alternative.

A study conducted by the Cleantech Group found that the fewer resources spent on travellers using home-sharing companies resulted in 66 per cent less carbon dioxide emission than hotel-based travel.

Car-sharing also helps. According to a University of California, Berkeley, survey, every car made widely available for sharing takes at least 10 off cities' congested freeways.

Each innovation seems to have us breathing easier. But there is a flip side. The sharing economy predominantly goes unmitigated and unchecked.

The digital economy is evolving so fast it is outpacing policymakers. Car-sharing network gurus such as Uber and Lyft are generally not yet adhering to the same taxes and insurance standards taxis uphold.

Accommodation for disabled passengers is generally sporadic, contractual obligations are not articulated and, in some countries, it is debatable whether drivers even make the minimum wage.

Those subscribing to these platforms have to weigh up making a buck on the side at their convenience versus the cost of being thrown in the cold if anything goes wrong.

The same goes with online hospitality. Start-up giant Airbnb has booked over 80 million nights across 191 countries since its 2008 inception.

But many of those homes may not be situated or designed to anticipate the challenges of noise, congestion and waste.

While hotels are taxed and frequently inspected for health and safety, Airbnb hosts are not yet facing such inspections.

Some residents are now crying out for stronger regulation, while many others are greeting their Ubers with open arms.

Is the sharing economy actually benefiting the economy at large? Many would say it is.

Yes, intrepid entrepreneurs are availing themselves of the new sources of revenue they can leverage out of their existing unused assets, but the warning to traditional businesses is that they are tapping a customer who is disgruntled with the current business models.

Shareable founder Neal Gorenflo would argue that these unregulated ventures are having a disturbing impact on the future socio-economic fabric and flow of our cities.

He refers to Uber and Airbnb as "Death Star platforms" that will eventually outstrip all facets of traditional competition.

Consumers now want choice. They are tired of faulty and antiquated services that call the shots and cripple creative mobility by clinging to the past.

They seek the personal independence and disintermediation that mega start-ups defend.

"Death Stars" they may be, but ingenious opportunists who simply saw the gap and took it, they are as well.

Business, beware. Those who fail to listen and to see what their customers actually need, disregarding the invitation to innovate, may very well be "Ubered" some day.

Mr McGuire is chief innovation officer, and Ms Boshoff is senior communications advisor from Aurecon. This article was first published on Aurecon's Just Imagine blog and published in The Business Times yesterday. It has been edited for length.