A Sharing Economy Essay

For almost 30,000 years, the human species' survival has been dependent on our ability to build functional groups and transmit information within these communities (Kramer 1). Until around 20 years ago, communication and trade were mostly limited by geographical constraints (Kramer 1). The evolution of human communication, largely impacted by the technological explosion of the digital age, has brought us to a unique juncture in history where we must rethink what it means to be a member of a community (Kramer 6). With the rise of the Internet and social media a new global community, capable of performing a multitude of instant digital transactions, was born and as a result transformed the way we share our trade resources.

This culture of trade became commonly known as the sharing economy. According to The Business of Sharing: Making it in the New Sharing Economy by Alex Stephany (2015), the sharing economy can be defined as the value of making underutilized assets accessible to a community through online platforms, resulting in a reduced need for ownership of such items (Stephany 9).

From the perspective of both the service provider and the client taking advantage of the service or product on offer, this makes financial sense in terms of a reduction in cost and expenditure compared to the alternative options offered by traditional companies. This can be considered as one of the main benefits of starting and operating a company in the sharing economy. Yumamia.com is an Egyptian sharing economy company that specializes in gourmet cooked meals delivered directly to their clients. The company promises affordable and high quality meals to their prospective customer, prepared by their network of qualified housewives.

With the ever-increasing performance demand on people of the working class, free time has become a luxury that only a few get to enjoy. In addition, the constant escalation in food prices globally makes eating out, a costly alternative. Yumamia addresses these problems head-on by offering an affordable alternative, without infringing much on the busy schedule of the company executive or the working parent who simply cannot afford to spend hours preparing a meal.

From an entrepreneurial perspective the startup requirements to start a similar operation, or join an existing company such as Yumamia are relatively low compared to traditional companies within the same sector. This suggested low entry barrier into a fully operational business can be considered as one of the major advantages of starting a company in the sharing economy as opposed to conventional alternatives (Yaragi et al. 9).

Whereas a regular eating house would require the acquisition of rental property, professional equipment, staff, extensive licensing and health certificates, the sharing economy equivalent would require only a functional kitchen, and an experienced chef. Health inspections and related regulations may of course depend on the region or state that the shared economy company are operating from, but their checks can in most cases be considered lax compared to the requirements that formal companies have to adhere to.

To the stay-at-home parent, or the qualified chef that would prefer to avoid daily commuting, companies such as Yumamia provides an attractive source of income, for not only does it give the individual the opportunity to utilize their skills from the comfort of their homes for financial gain, but also enables them to put their underutilized kitchen equipment to valuable use (Martucci). With the increasing level of unemployment due to various social and economical factors, this approach presents an attractive alternative to the individual with an entrepreneur mindset. This concept does not only benefit the supplier of the service, but can also be considered beneficial from an environmental perspective, since it encourages consumers to acquire less unnecessary equipment, resulting in less production, which translates to less strain on the environment.

Another advantage of initiating a sharing economy company, whether by joining an existing platform or establishing your own idea is ability to capitalize on new and better opportunities (Martucci). Whether these opportunities involve initializing a completely new idea, creating a new approach to an existing idea or simply adding an additional service to your current share business, the sharing economy provides an almost infinite platform for opportunities and services that would otherwise be difficult to obtain and impossible to manage. Yumamia offers their customers the option to download an application that enables them to order their meal from a menu, pay for the order online through the application and keep per second track of the order’s progress, from initiation to delivery.

While the advantages of conducting business in the sharing economy can be an attractive prospect and certainly one worthwhile capitalizing on, it does not come without its own set of risks and disadvantages, of which privacy and safety features amongst the top of the list. This general concern translates to the fact that parties from both sides of the transaction will at some stage have to forfeit certain aspects of their privacy (Martucci). It may be argued that this particular disadvantage comes with the territory of online trading, but there is a logical approach that may turn the sacrifice of personal information into a mutual advantage. Sharing economy companies like Yumamia collect information on customer location, preferences and customer experience to provide a more efficient and personalized service, while the customer benefits by having their personal preferences adhered to.

A further possible disadvantage, relates to the stability of the employees providing services through sharing economy companies. The financial success of an employee would largely depend on the efficiency of the application matching the potential client to the service provider, and workers might have to submit themselves to unpredictable working hours (Sherman). It would thus be imperative from a worker’s perspective to familiarize themselves with the requirements, terms and conditions and product demand of the sharing economy company in their area. Since very few workers would be content with preparing a meal at 3AM, special attention should be given to availability clauses before committing to any service level agreement.

When it comes to quality of service and product, Yumamia goes the extra mile to ensure that they meet the highest of customer expectations. This is accomplished through a dedicated customer service that assists customers from order confirmation, to an after sales service that collects information on the complete customer experience (Amr). However this might not hold true for all operators. The lax regulations governing some sectors of the sharing economy, combined with the inability to exercise direct control and supervision over the kitchens where the meals are prepared, can produce risks that might prove difficult to manage. It is possible however, through proper pre-inspections of the service provider’s kitchen and equipment, and with regular health inspections to such premises that this potential risk can be successfully mitigated.

Conclusion

Even thought the idea of initiating a business prospect within the sharing economy might seem feasible, careful consideration would have to be exercised through conducting a proper risk assessment. Although the costs of starting up such an endeavor might seem attractive, failure to mitigate potential pitfalls can very well prove to be the costly hidden price tag that might close your digital doors for good.

Works Cited

Amr, Abdelrahman. “6 Egyptian Startups to Watch Out For”. theglocal, Apr. 2016, www.theglocal.com/articles/635/6-egyptian-startups-to-watch-out-for. Accessed 22 Apr. 2017.

Kramer, Bryan. Shareology: How Sharing is Empowering the Human Economy. Morgan James Publising, 2016.

Martucci, Brian “What is the Sharing Economy – Example Companies, Definition, Pros & Cons”. Moneycrashers, N.d. www.moneycrashers.com/sharing-economy. Accessed 22 Apr. 2017.

Sherman, Eric / Moneywatch. “5 Ways the “Sharing” Economy Works Against Workers”. CBS News, Aug. 2014, www.cbsnews.com/amp/news/5-ways-the-sharing-economy-disadvantages-workers. Accessed 22 Apr. 2017.

Stephany, Alex. The Business of Sharing: Making it in the New Sharing Economy. Palgrave Macmillan, 2015.

Yaraghi, Niam, & Shamika Ravi. The Current and Future State of the Sharing Economy. Brookings India IMPACT Series, no. 032017, 2017, pp. 9-10.