The Sharing Economy: Review and Reflection

This report discusses about the concept of sharing economy as well as crowdsourcing of funds. In the first section, the concept of sharing economy on a broad sense has been explained with suitable examples. In the next section, the benefits and limitations of sharing economy have been discussed and the concept has been evaluated accordingly. In the following sections, sharing economy has been explained with the help of new concepts like crowdfunding. Crowdfunding is the source of investment for a number of organizations that are looking to setup a new business. Finally, a reflective analysis has been conducted in which personal reflections on sharing economy have been discussed.

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The Sharing Economy: Review and Reflection
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Executive Summary
This report discusses about the concept of sharing economy as well as crowdsourcing of funds.
In the first section, the concept of sharing economy on a broad sense has been explained with
suitable examples. In the next section, the benefits and limitations of sharing economy have been
discussed and the concept has been evaluated accordingly. In the following sections, sharing
economy has been explained with the help of new concepts like crowdfunding. Crowdfunding is
the source of investment for a number of organizations that are looking to setup a new business.
Finally, a reflective analysis has been conducted in which personal reflections on sharing
economy have been discussed.

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Sharing Economy.......................................................................................................................3
2.1 Sharing Economy Explanation..............................................................................................3
2.2 Benefits and Limitations of Sharing Economy......................................................................5
3.0 Crowdsourcing...........................................................................................................................6
3.1 Crowdsourcing Website.........................................................................................................6
3.2 Request and Alignment with Sharing Economy....................................................................8
3.3 Chance of Success for the Request........................................................................................9
3.4 Contribution to Sharing Economy.......................................................................................10
4.0 Reflection on Sharing Economy..............................................................................................10
5.0 Future of Sharing Economy.....................................................................................................11
6.0 Conclusion...............................................................................................................................13
References......................................................................................................................................14

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1.0 Introduction
Sharing economy is a concept of economy in which sharing of resources occur between
two or more user groups. Each of the user group has its own usage of a particular resource and
sharing economy allows them to share the resource such that both of them are able to gather
benefits from the same (Cusumano 2017). This is almost identical to the positive symbiotic
relationship where two different organisms get benefits out of each other. One of the most
common examples of sharing economy is crowdsourcing or crowdfunding in which various
entities or user groups invest in a project where the project manager or developer does not have
sufficient amount of resources to fund for the project.
In this report, sharing economy has been broadly discussed and explained in order to
understand the actual concept of the same. Furthermore, a crowdfunding website has been
selected and a particular project in it has been used for analysis.
2.0 Sharing Economy
2.1 Sharing Economy Explanation
Sharing economy is a type of economy where various sources (open source) consume on
a particular property or resource on a sharing basis. The most basic example of sharing economy
is house rent in which, the owner of the house lets another user to stay in it at a certain expense
(rent). Sharing economy is facilitated by open source media especially the internet where large
number of users can interact with each other for sharing a resource or property (Hawksworth and
Vaughan 2014). Previously, sharing economy was limited to simple rents and services but with
the extensive use of the internet around the world, sharing economy has become much more

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popular in the current time. Furthermore, the increase in popularity of social media has even
more facilitated sharing economy as the media provide a single platform for various sharing
economy usages.
Figure 1: Rise of Sharing Economy
(Source: Schor and Fitzmaurice 2015)
The concept of sharing economy has been successfully adopted by multinational
organizations like Uber, AirBnb and others who use sharing economy technique for operations
(Steinmetz 2016). For instance, Uber is a cab service that does not own any of the cars. Rather,
the drivers with their own cars register to Uber for getting job orders. As a result, Uber does not

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have to pay for the car purchase and maintenance costs and utilizes the owners’ cars for earning
the profit. On the other hand, the car owner also gains the profit by working for Uber.
2.2 Benefits and Limitations of Sharing Economy
While sharing economy has a large number of benefits, there are limitations as well. Both
the benefits and limitations of sharing economy have been discussed in the following points.
Benefits:-
Impact on the environment is reduced significantly due to decrease in the need for
the production of goods as these are shared between different entities.
Sharing economy promotes sustainable consumption and production of the
resources throughout the world.
Sharing economy provides convenient access of resources to the people who are
unable to afford the same or do not want to use the resources for long term use
(Quinones and Augustine 2015).
Sharing economy also provides the option for flexible work hours as well as
wages to the contractors who mainly work independently.
Borrowing and recycling of resources through sharing economy reduces the
overall consumer costs.
Sharing economy increases the overall quality of services via the rating systems
used by the shared economy organizations.
Monetary entry barriers are completely abolished by sharing economy thus
increasing independence and flexibility of the users.
Limitations:-

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† Sometimes, the term sharing economy is misleading as it sometimes only acts as
“access economy”. Researchers have discussed this concern that some unethical
users use this economy to get access to a certain resource or property he cannot
get otherwise.
† Sharing economy is causing massive loss of jobs around the world. It is very
much evident in the case studies of companies like Uber who operates via the
sharing economy (Hamari, Sjöklint and Ukkonen 2016). However, while Uber
continues to grow with efficient and prompt services, it is seriously hurting the
business of the existing independent taxi drivers. More and more taxi drivers are
losing their businesses to the online cab service companies like Uber. Even bigger
threat emerging is in the fact that Uber is currently planning on replacing human
drivers with AI that will cause further losses in jobs of taxi drivers.
† Another major limitation of sharing economy is that the benefits are not evenly
balanced between the shared users.
† Sharing economy also does not define the status of labor or workers who are
shared by two or more different entities. In these cases, it is unclear whether these
workers are to be treated as employees or contract workers.
3.0 Crowdsourcing
3.1 Crowdsourcing Website
Crowdsourcing is a form of sharing economy where a particular entity involves the
economic participation of a large number of entities in the open forum for helping in funding in a
project. However, in return, the participants are also offered certain benefits (Zervas, Proserpio

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and Byers 2017). There are a number of crowdsourcing websites that publish advertisements for
projects that require crowdfunding.
Figure 2: Use of Crowdfunding by Entities (As Per 2017)
(Source: Steinmetz 2016)
For the purpose of analysis and discussion, the crowdsourcing website chosen is
Crowdcube. Crowdcube is an UK based crowdsourcing website that provides platform to a large
number of projects that require online crowdfunding for development and funding (Schor 2016).
In this platform, the developers or users post an advertisement for their requirements and set the
total amount of funding necessary.
This particular website is chosen because it is one of the most popular crowdfunding sites
and furthermore, chance of fraud is very less. Whenever a user posts a need or invests in a
project, their identities are verified and authenticated. Furthermore, this website is easy to use
and provide detailed and informative user interface for the new and old users. This website also

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provides a good deal of opportunity to the start up businesses that are looking to generate funds
earning a strong entry to the market.
3.2 Request and Alignment with Sharing Economy
There are a number of active investment projects currently running in Crowdcube
awaiting sufficient investment. While some of the projects have already been able to achieve the
required amount of funding, some other projects are significantly behind and are still looking out
for potential investors (Edelman, Luca and Svirsky 2017). From all the active projects, the one
chosen for analysis is the Yapster, a new online chatting app for retail and hospitality teams.
According to the developers, this particular app will be able to benefit hospitality and retail team
members to interact with each other as well as their parent organization during specific needs for
communication.
The request presented in the project is to gain sufficient amount of investment for the
development of the app. As a part of return benefit to the investors, the company has declared
different reward structures depending on the amount of investment made in the project (Martin
2016). For instance, for users investing £10 to £1000, there are no significant rewards whereas
for the investors above £50,000, there are a wide number of rewards, including 25% lifetime
discount on Yapster license for unlimited number of users within a single organization. Hence,
Yapster is using the concept of sharing economy to generate sufficient amount of investment for
the development and promotion of the website.
The target investment for the project is £650,000 and the total set deadline is 30 days.

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3.3 Chance of Success for the Request
Chance of success for a project request depends on a large number of factors. Firstly, it
requires an attractive proposition that should interest a huge amount of investors as well as users.
Secondly, it requires good business prospect judging by which, the investors can expect
sufficient amount of profit (Möhlmann 2015). Thirdly, the company background should be
reliable with a good track record, especially those who have already been around in the market
for some time. In this regards, Yapster is a startup business without any sufficient background.
The chance of success for the request made by Yapster is analyzed as follows.
Proposition – Yapster has made a very interesting proposition for the project - an online
chatting app that will benefit the retail and hospitality workers. The chat system will provide a
number of features like one to one chat system, group chat system, video calls, free phone calls
and others. The prospect of this application is very good and the investors may decide to invest
high amounts into this project (Ert, Fleischer and Magen 2016). However, the issue is that there
are already a large number of online chatting apps available in the market that provide all the
proposed features of this app. Furthermore, the target user group of Yapster is very limited in
terms of the open world and hence, the chance of success of the request is low.
Business Prospect – Again this particular aspect faces a steep challenge in the face of the
market competition. Online chatting apps like WhatsApp, Hike, Messenger and others have
already established themselves in almost every sector and hence, it is very unlikely that Yapster
will be able to go ahead of these companies and gain a significant place in the market (Lei, Yayla
and Kahai 2017). Furthermore, the opposing companies already have huge amount of investment
behind them whereas Yapster is still depending on crowdfunding. Hence, again, the chance of
success of the request is determined to be low.

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Company Background – As mentioned previously, Yapster is a startup business without
any significant background. Hence, serious investors will not want to invest in the project and
the company will struggle to generate funds even in this popular crowdfunding platform.
By analyzing all the factors, it can be said that the overall chance for the success of
request posted by Yapster is low. This is further supported by the fact that the company has only
be able to generate crowd fund of about £139,720 that is merely 21% of the minimum expected
amount in the first 10 days of the request.
3.4 Contribution to Sharing Economy
It is very unlikely that this project will make a significant impact on sharing economy
even though it follows the principle of sharing economy. This is mainly because the target user
group is very much limited in comparison to the open world user groups. Furthermore, although
it follows a typical sharing economy model, the benefits for the investors in the project is way
too low to be considered for sharing of economy (Schor and Fitzmaurice 2015). In addition, it is
not yet sure whether the company will successfully achieve the investment benchmark within the
specified period of time. Hence, if the project ultimately fails, it will result in loss of both the
developer as well as the investors who have made significant amount of investment in the
project. This issue will definitely not add any meaningful thing to sharing economy. Rather, it
will only add to a limitation of sharing economy.
4.0 Reflection on Sharing Economy
To me, sharing economy is very important in everyday life especially in workplace and
other places where a number of people are working together with the same target or objective. I
view sharing economy as an efficient method for conservation of resources as well as efficient

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usage of the same. Sharing economy can come in many different forms that are evident in the
workplace. For instance, the use of a coffee machine by all employees in the office is a minor
example of sharing economy. Again, sharing a cab with other people trying to reach the same
destination is an efficient method of saving fare money, fuel usage as well as car usage on a
significant scale. This also reduces emission from fuel and reduces damage on the environment.
Again, I think sharing economy is a great opportunity to generate funds for a startup business
given that the new business has sufficient amount of potential. I have also explored another
aspect of sharing economy that is recently been promoted with the use of social media –
crowdfunding for high cost treatments needed for those with limited resources. For instance, in
social media sites, I often come across some posts made by a family member of a patient saying
the treatment will require a huge amount of funds. Crowdfunding generally benefits these
unfortunate cases although this does not directly benefit the investors except of mental
happiness. On the other hand, I have also noticed several entities making misuse of shared
economy in unethical methods. There are certain bidding websites where customers can bid for a
product generally set at an extremely low price (for instance a car for $300). However, in order
to bid for the product, the visitor needs to use tokens that they need to buy from the website.
With continued purchase of the tokens and use of these tokens in bidding (that seems to go on for
indefinite period of time), the company generates more than enough price to give away the
products at such low prices.
5.0 Future of Sharing Economy
As per the analysis by various researchers, sharing economy has an unusually bright
future in spite of so many limitations and drawbacks. The adoption of smartphones by the

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majority of world population is the main driving force behind the rise of sharing economy. The
smartphones provide open access to the internet to the users who can then enter into an open
platform of sharing economy (Kuppuswamy and Bayus 2018).
Figure 3: Project Growth of Sharing Economy
(Source: Zervas, Proserpio and Byers 2017)
It has been seen that with time, sharing economy has been adopted by a large number of
users around the world – from large business organizations like Uber to common people while
renting rooms and houses for their own purposes. With the development of smartphone apps,
sharing economy is getting even more boost that it needs to get strongly established around the
world. According to certain researchers, the sharing economy will also establish itself in newer
markets like China and India and will increase productivity in all types of the markets.

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6.0 Conclusion
Finally, it can be concluded that sharing economy is an efficient mode of world economy
if only it can be implemented in the right way by solving its limitations and problems. The
benefits of sharing economy can have many positive impacts on world economy and help to
solve the problems of inflation and drain of economy whereas establishing a balance of the
global economy. However, in order to achieve these, the limitations and issues must be solved on
the top priority. Crowdfunding can be promoted around the world to help build up startup
businesses but the ethical use of crowdfunding should be ensured first. Many fraud entities place
crowdfunding requests and disappear after generating sufficient amount of funds resulting in
massive losses of the investors. Hence, sharing economy including crowdfunding should be
allowed to grow in a controlled environment with sufficient measures taken to prevent unethical
users. In addition, the medium through which the sharing economy grows should also be further
improved. The smartphone apps used for the purposes of sharing economy should be designed
and developed in such a way that they verify the identity and background of the user before
allowing him to participate in the sharing economy.

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