Building Your Business Becoming an Owner The Sharing Economy and How it Is Changing Industries By Derek Miller Updated on September 19, 2022 Fact checked by Mrinalini Krishna In This Article View All In This Article What Is the Sharing Economy? What Is the Impact of the Sharing Economy? Transportation Consumer Goods Professional and Personal Services Healthcare What Is Next for the Sharing Economy? Frequently Asked Questions (FAQs) Photo: adamkaz / Getty Images If you've ever used a website or an app on your phone to book an apartment to stay during vacation or even hail a cab, you've participated in the sharing economy. Sharing and gig economies were born out technological changes that eventually changed the way business was done traditionally in many sectors. But the biggest change the sharing economy brought was a way to build an alternative income stream for millions of people across the globe. Key Takeaways Sharing economy helps connect seekers of good or services with their providers using technologySharing economy can help businesses reduce costs and increase efficiencySharing economy can help consumer make environment friendly choicesSharing economy helps workers generate an alternative stream of income through a side hustle What Is the Sharing Economy? Trying to define exactly what the sharing economy is would not do the term justice. The sharing economy is an economic principle that is constantly evolving. In the very simplest terms, it’s the use of technology to facilitate the exchanged access of goods or services between two or more parties. It’s derived from the notion that mutual parties can share value from an under-utilized skill or asset. This value exchange occurs through a shared marketplace, collaborative platform, or peer-to-peer application. Some factors that led to the rise of the sharing or gig economy include advancements in digital platforms and devices, consumer demand for services as well as need for cost and resource efficiency, and lastly globalization. The sharing model isn’t a new concept—as many rural communities thrived off the same idea via bartering. However, thanks to the accessibility of the internet and mobile technology, managing share-based transactions has never been easier. While most commonly referred to as the sharing economy, this term is an umbrella that encompasses other economic systems such as: Collaborative Economy/Collaborative Consumption Peer-to-Peer Economy Freelancing/Gig Economy Crowdfunding/Crowdsourcing Coworking/Cobranding What Is the Impact of the Sharing Economy? The sharing economy has a history of disrupting traditional business sectors. Sharing economy has revealed the problem of excess capacity in many industries. Whether its equipment sitting unused, a specialized worker who doesn't have enough hours, or even the excess supply of a particular product. There is an opportunity cost of not using these resources efficiently, and that is what a sharing economy fixes. By sharing and using existing resources efficiently, sharing economy can help bring down costs for businesses. Note The lack of overhead and inventory help share-based businesses run lean. The increased efficiencies allow these brands to pass-through value to their customers and supply chain partners. Traditional industries are being affected by the sharing economy—and many traditional brands will struggle if they do not adapt to the changing landscape. Transportation Uber’s ascension in the transportation industry is one of the best examples to illustrate the effect of the sharing economy in a traditional sector. Uber and other ride-sharing services offer an affordable, and convenient alternative to traditional transportation options such as public transit or taxi cabs. By utilizing an efficient mobile application and network of vetted drivers, Uber satisfies consumers’ transportation demands while providing an arguably better user experience than traditional means. Top Sharing Economy Brands in the Transportation Space include: UberLyft Consumer Goods PWC research suggests that 86 percent of U.S. adults familiar with the sharing economy say that it makes life more affordable and 83 percent also agree that the sharing economy is more convenient and efficient than traditional methods. Affordability, convenience, and efficiency are also three of the most influential factors in a consumer goods purchasing decision. Therefore, it’s no surprise that share-based brands are also dominating the consumer goods industry. Note A lot of consumers are also environment conscious and sharing economy offers more environment friendly choices of consumption by sharing the same resources. eBay is one of the pioneers of the peer-to-peer marketplace. Their innovative platform allows users to buy and sell used or new items through their interface, and have the goods shipped directly to their home. Consumers can browse a variety of products at custom price points, in various conditions, and with different guarantees. This empowers the consumers and provides them with a more affordable, convenient, and efficient way to purchase goods. Top sharing economy brands in the Consumer Goods space include: eBayEtsyRent the Runway Professional and Personal Services The benefits of the sharing economy are best illustrated in the professional and personal services space. Professional and personal services are defined by work that requires special knowledge, skills, experience, certifications, or training like copywriters, accountants, or plumbers. In relation to the sharing economy, this is also referred to as freelancing, gigs, and other trendy terms equating to short-term labor. Powerhouses like Fiverr, Upwork, and TaskRabbit create value by providing a fast, friendly, and secure platform on which people or businesses can find contractors for hire. Note Freelancers can earn extra money sharing their trade skills and expertise—not unlike owners renting access to their home or car owners sharing rides. Top sharing economy brands in the Professional and Personal Services space include: FiverrUpwork Healthcare Although the sharing economy has yet to really take hold in the healthcare industry, many experts suspect it to be the next frontier for collaborative consumption. The limitations of traditional healthcare systems, expenses and resources, are factors that we’ve seen mitigated in other industries through share-based methods. From telemedicine to group-consultations, the sharing economy is destined to change the healthcare industry. For instance, many times expensive medical equipment can sit unused—creating storage and maintenance expenses. Therefore, share-based startups like Cohealo are helping hospitals save money and increase equipment value by developing technology that enables hospitals to share medical equipment with other healthcare facilities. Top sharing economy brands in the Healthcare space include: AmwellDoctor On DemandCohealo What Is Next for the Sharing Economy? Technology has helped the sharing economy advance to where it is today—and, the trend should only continue as we become more connected digitally. While we’ve seen how dominant collaborative consumption can be in industries like transportation, consumer goods, and services, many other traditional sectors will soon experience changes because of the sharing economy. Frequently Asked Questions (FAQs) Why is sharing economy important? Sharing economy means using technology to connect seekers of certain goods or services with their suppliers. It is important because it can be a good way for businesses to make their business models more efficient and reduce costs. Sharing economy also offers a way for people to generate additional income through a side hustle. And for consumers, it is not only fulfilling their demand for a good or service on-demand and at a good price, but also in an environment friendly way. How do companies reduce cost in sharing economy? Sharing economy has revealed the problem of excess capacity in many industries. Whether its equipment sitting unused, a specialized worker who doesn't have enough hours, or even the excess supply of a particular product. There is an opportunity cost of not using these resources efficiently, and that is what a sharing economy fixes. By sharing and using existing resources efficiently, sharing economy can help bring down costs for businesses. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Internal Revenue Service. "Gig Economy Tax Center." PWC. "Sharing or paring? Growth of the sharing economy," Page 6. Wharton School of the University of Pennsylvania. "The Sharing Economy: A New Way of Doing Business." PWC. "The Sharing Economy," Page 9.