Neal Gorenflo of San Francisco went on a sharing crusade three years ago. He identified about 30 ways to share, including peer-to-peer car-rental service Getaround, home-sharing service Airbnb and a shared nanny for his infant son. Gorenflo estimates that his efforts over the course of a year saved him $17,000. But he had another agenda: Gorenflo is co-founder of Shareable, a nonprofit online hub for information on the sharing economy. He wrote about his year of sharing to generate enthusiasm for his passion.
In the three years since Gorenflo conducted his experiment, the sharing economy has exploded. There are nearly 5,000 sharing companies, organizations and programs, according to the Mesh Labs Global Sharing Economy Index. And by some estimates they will generate billions of dollars in revenue this year. Belt-tightening during the economic downturn played a role in the rise of the sharing economy, as more people looked for ways to turn idle resources into cash—say, by renting out a barely used bicycle to neighbors—or to take on a part-time gig. In turn, sharing services found a willing clientele of newly cost-conscious consumers. And technological advances, in the form of the Web and mobile applications, made it easy to connect services with people.
Trust, but Verify
Certain obstacles to sharing, such as a reluctance to stay in someone else’s home or hop into a stranger’s car, have been addressed by the entrepreneurs who launched sharing services. “Trust is one of the most compelling parts of the sharing economy,” says Natalie Foster, executive director of Peers, an advocacy organization for the sharing economy. Many services do background and identity-verification checks. Car-sharing service RelayRides screens renters for major traffic violations, for example, and ride-sharing platform Lyft checks the driving and criminal records of its drivers.
Technology has also addressed the trust issue. Both purveyors and users can often set up profiles, which may include photographs and information about themselves as well as their offerings. People can also review their experiences using star ratings or descriptions. A rude driver who gets a poor rating from a passenger may have a hard time finding other people to pick up. And an Airbnb host who receives rave reviews for providing a bed with a firm mattress and a sumptuous breakfast spread may have more requests than she can accommodate.
Still, the sharing economy has some sticking points. Before you get involved, you’ll want to ensure that you have proper insurance coverage and that you understand the tax ramifications. And legal conflicts have been heating up. Some industries—particularly the hotel and taxi interests—are supporting efforts to slow down, if not derail, the sharing economy, which is disrupting the old ways of doing business. “We’re reinventing familiar services rather than creating entirely new ones,” says Arun Sundararajan, an economist and professor at New York University’s Stern School of Business. That makes them difficult to regulate under current laws.
If you want big savings, look at the areas where you spend the most money. For Gorenflo, sharing a nanny accounted for nearly $11,000 in savings over the price of a private nanny. Transportation is another area where you can make a sizable dent. If you live in an urban area and can get by without owning a car, car-sharing services can save you a bundle. With Zipcar, for example, you can rent a car on an hourly or daily basis, with rates starting at $8 to $10 an hour (plus an annual membership fee of $6 a month or $60 per year). Car2Go rents out Smart fortwo cars on a per-minute basis. Prices start at 38 cents per minute, plus a $35 registration fee. Through peer-to-peer car-sharing services, such as Getaround and RelayRides, you can rent cars from other people.
Staying in someone else’s home while traveling can also lower your expenses. On Airbnb, you could recently rent a private bedroom and bathroom in a townhouse near Seattle’s Capitol Hill neighborhood for $65 a night on a mid-July weekend. For $166 a night, you could rent a one-bedroom apartment in the same neighborhood.
Many find the experience as attractive as the price: It can be an opportunity to connect with someone local as you travel and, in some cases, to try out unusual accommodations. Rather than paying for separate hotel rooms on a trip to Barcelona for a wedding last year, Pooja Lalwani and four other people used Airbnb to book a stay in a three-bedroom apartment for $260 a night. “We had spent a ton of money on our flights, and none of us wanted to waste money on an expensive hotel,” says Lalwani of Washington, D.C.
See what kind of collaborative options are available in your community, too. For a $5 annual fee, residents of Mount Rainier, Md., can borrow drills, saws, ladders, lawn mowers and more through a community tool shed. Prospective borrowers must create an account at NeighborGoods.net, a site that helps community members connect to share household items. Evan Wilder, who helps run the Mount Rainier program, says he has saved $1,725 by borrowing tools through the program instead of purchasing them, based on the value of the tools he has used.