I recently asked my taxi driver what he thought of Uber. His response? “I love it; it costs me an arm and a leg to rent this taxi. I’ve been driving for 8 hours already and haven’t earned enough yet to cover the overhead of renting this taxi from the owner. The next four hours of my night are crucial to me making a profit.”
Just imagine what that looks like for a minute. You go into your office, grab a coffee, and start your day. At noon your boss says, "Okay, you can start getting paid for your work now; we’ve covered the cost of your desk and computer for the day."
In Vancouver, we are the only city who successfully kicked Uber out, much to the chagrin of the users (want to do something about it? click here). If you live or have lived in Vancouver, you know how challenging the taxi situation is here – good luck getting a taxi out of Gastown on a Saturday night.
Uber allows anyone with a clean car and a good attitude to sign up for the app (following a background check) to become a self-employed taxi driver. The driver has a lesser overhead and greater access to users, thereby earning more money. The user pays less than a typical taxi fee, and the driver/rider rating component provides a comfortable level of transparency for both parties. Uber takes a cut of the cost of the drive. It’s a win-win-win. Flipping a traditional industry on its head hasn’t been easy though, Uber has had its fair share of challenges entering various marketplaces. Legal battles, taxi protests, bad PR, and an unfriendly and bullish reputation to name a few.
So what is the sharing economy?
The sharing economy (sometimes also referred to as the peer-to-peer economy, mesh, collaborative economy, collaborative consumption) is a socio-economic system built around the sharing of human and physical resources (source Wikipedia).
Technology has expanded this definition by opening up distribution. It has replaced the middle man with a distribution channel that provides a new, larger market that is accessible to many. Think of Airbnb. They are making more money than some of the largest hotel chains in the world, yet they don’t own a single hotel.
What does this new sharing economy look like?
- Revamp the middle man. The middle man as the distributor is removed and replaced by a technological distribution mechanism.
- It must be a win-win-win. The new middle man (technology distribution channel) takes a fee, but because they are doing business in large quantities, their fees are a fraction of what the traditional middle man would charge. This means that the end user and supplier benefit, the supplier can charge less, and the end user pays less.
- It opens up a blue ocean of competition and accessibility. Hotel chains aren’t only competing with other hotels, they are now competing with John Smith’s apartment down the street, thanks to Airbnb. Think they saw that one coming? It also means that people who may not have been able to afford to travel take a black cab etc. before, now can.
- New form of ownership. Airbnb, Uber, and many others don’t physically own a hotel or taxi, but they do own proprietary data and the ability to open up access, connecting the supplier and end user.
- Transparency, accountability, and better customer service. Open and honest two-way ratings and reviews keep everyone on their toes and on their best behaviour, we hope.
What are your thoughts on the sharing economy? Do you participate?
- Larissa Dundon