The Sharing Economy: Why renting things you rarely need is a smart money move
Does your home or garage sometimes feel like a storage facility?
In the past, our possessions had limited value to others. But today, you can use your stuff to share in the sharing economy. There are so many reason for renting out your stuff – financial, ecological, and don’t forget the convenience factor.
We’re talking about why and how lending and borrowing non-essential items can be a huge benefit of the connection economy.
The average power drill is used for less than one hour over its lifetime. Why then, have so many of us felt compelled to buy one?
In Rachel Botsman’s TED Talk, The Case for Collaborative Consumption, she says it’s the hole in the wall that we need, not the drill itself.
In a world in which both plastic and electronic waste are reaching dangerous highs, we need to think twice about our trigger-happy buying behavior and find a sustainable alternative to the disposable approach. Many are turning to peer-to-peer sharing platforms in order to either save money by avoiding unnecessary purchases or make a little money by sharing the things they own.
What is the Sharing Economy?
The sharing economy is an economic system where individuals share resources (goods, services, or space) through a network of online platforms. This model allows for more efficient use of resources, while also creating new business opportunities for entrepreneurs and earning opportunities for individuals.
The internet and big data makes crowdfunding easier than ever. Examples of this collaborative economy include
- Ride sharing – through services like Uber or Lyft
- Home or apartment sharing – through digital platforms like airbnb or vrbo
- Peer to peer lending platforms
The Rise in Online Sharing Platforms
Web-based sharing platforms are nothing particularly new. But a combination of insurance, improved verification procedures, and growing online trust has seen more and more people start sharing their stuff in the past year or two. Across the US and UK, Fat Lama (yes, there’s only one ‘l’ in their name) offers lenders insurance of up to $30,000 per item on each rental transaction. That means that lenders can rent peacefully in the knowledge that they’re covered for any item, from power drills to their DSLR camera.
Still need convincing that renting your stuff is wise? Here’s why peer-to-peer lending makes total sense in today’s culture.
Less waste = better for the planet
As mentioned above, we have a fast-growing waste problem. From the plastic waste illuminated by David Attenborough’s recent Blue Planet series, to the UN’s latest report on rising e-waste levels, it’s clear that the way we consume is harming the planet.
Sharing platforms like Fat Lama address this head on. If one drill can flow freely from one neighbor to another, then fewer tools need to be in circulation; as a result, excessive manufacturing is avoided and less waste is produced.
Get to know your neighbors
How often have you wished your community felt a little more intimate? It’s a common problem, especially in urban areas, where many of us can co-exist on the same street for decades without taking a minute to say hello. For all the communication opportunities technology opens up, it can also isolate us.
By lending and borrowing your belongings, you’ll be meeting and talking with people in your area. More often than not, sharing platforms will connect those with similar interests, too. Photographers and filmmakers are lending their spare kit to fellow pros or keen hobbyists. Music lovers are sharing DJ equipment. Cyclists are sharing road and mountain bikes. And you might love being a host for home sharing.
What are the challenges associated with the sharing economy?
Some challenges associated with the sharing economy or peer-to-peer platforms include:
- Regulation: The peer economy often operates in a regulatory grey area, which can lead to disputes over legal responsibilities, taxes, and worker rights.
- Trust and Safety: Users of sharing platforms need to trust the people they are sharing with, which can be difficult given the lack of background checks and regulations. We’ve seen examples of this in the ridesharing industry.
- Competition with traditional businesses: Sharing economy platforms can disrupt traditional businesses, leading to resistance and pushback from established companies.
- Income instability for workers: Many workers in these business models are considered independent contractors and don’t receive employee benefits.
- Data privacy: Personal data is often collected and shared by sharing platforms, raising concerns about privacy and the potential for misuse.
Save money by not buying items you need temporarily
Sharing platforms are providing serious savings opportunities for borrowers. On the one hand, they prevent unnecessary purchases. In fact, Fat Lama has saved its renters more than $37m in non-purchases this year.
Peer-to-peer rentals also tend to be significantly cheaper than rental shops. Items like cameras were previously available to rent from hire shops, but renting from a neighbor generally means a saving of 20-30%.
Make money by renting out your stuff
Sharing platforms are also giving individuals, innovators, and small businesses a significant secondary income stream. The ability to make some extra money from your neglected possessions is a win-win.
We’ve all been guilty of impulse buys that have been a bit of a flop. When these items have the capacity to pay for themselves in rentals, they don’t seem quite so disastrous as purchases.
By listing these items on a lending platform, you can often make the money back and then some. Some users are regularly earning $5000 a month in lender income, so the financial rewards are not to be underestimated.
The sharing economy offers a range of social, environmental, and financial benefits. You may not own a drill, but it might be worth considering what you do have lying around the house. Putting your underused belongings to work could even pay for your summer holiday!