Why shared services signal huge cost-savings

A mobile phone user looks at a logo of taxi-hailing app Uber on his smartphone in Shaoyang China. The taxi service provider allows consumers to submit a trip request through an app. PHOTO | AFP 

By MUMBI WAWERU

In Summary

• Collaboration and sharing through technology has transformed the way we live, work and consume.

Uber, a taxi service provider, allows consumers to submit a trip request through an app which is then routed to its drivers near you. It has been in Nairobi since January, 2015. It is the perfect example of what is a “sharing economy”.

Such economy allows people to share underused assets or services for free or at a fee from direct individuals. It could be skills, equipment, office space or renting out your room to a stranger.

It is a socio-economic system built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption by different individuals and organisations

Thanks to technology, it is all happening in our backyards. You are probably participating in it but you do not realise it.

Let’s take a step back. Have you heard of collaborative consumption, collaborative economies, crowd funding or peer economies? These are terms used interchangeably when talking about shared economies.

The catch is that they all have different meanings but with similar ideologies. We will break them down as we move forward. But, the most substantial element among all terms is “trust”. It would be challenging and difficult in executing such social economic system without it.

For example, “Airbnb” is based on trust. It is a website where people rent out lounging. If you have space or room in your house that you would like to rent out for extra income all you do is create a profile within the website.

It is the ratings and recommendations that attract clients to your property.

Today, the company has approximately $24 billion valuation. Can you imagine welcoming a stranger to your house? If your answer is no then Airbnb is not for you. Hence, you will need to trust that individual for you to host them for a few days or months.

Rachel Botsman, an expert in collaboration and sharing economies, defines collaborative consumption as an economic model based on sharing, swapping, trading or renting products and services, enabling access over ownership. It consists of three elements: unwanted or underused goods redistributed.

Non-products such as space, skills and money are exchanged and traded differently.

Pay to access the benefit of a product verses owning it outright, for example Zipcar, the world’s largest car- sharing and car club service.

Similarly, collaborative economy is defined as an economy built on distributed networks of connected individuals and communities’ verses centralised institutions, transforming how we produce, consume, finance and learn. Kickstarter is the world’s largest funding platform for creative ideas.

Peer economy is whereby two individuals buy or sell goods and services directly to each other without a business or company.

Have you heard of M-farm? It is a Kenyan-based company that links farmers to buyers directly. All you have to do is subscribe to the service via M-Pesa.