17 July 2015

The UK is a world leader in the sharing economy


The new opportunities presented in the shared economy have fuelled societies of micro-entrepreneurs to take advantage of their tangible and non-tangible assets through digital innovation. This is particularly the case in the UK- regarded as the mecca for sharing economy entrepreneurs and companies.

A published report from PWC projects that total revenue in UK for the shared economy could rise from $0.5 billion today to $9 billion by 2025. This includes the four leading sectors of the sharing economy which include peer-to-peer finance (P2P) and accommodation, car sharing, and music streaming.

Of course we have all heard of the leading companies such as the controversial taxi app Uber and community-driven hospitality giants Airbnb. However, the UK now boasts many new and upcoming companies that we may not be aware of who are leading innovators throughout all sectors of the shared economy.

Peer-to-Peer Financing

The original peer-to-peer lending service is Zopa- which matches lenders to borrowers directly online and eliminates the need for a banking process. Since 2005, when Zopa was created, there have been 70 new P2P companies.

Stemfund, a new UK based P2P lending platform released in January brings many advantages for transaction services. Firstly, investors now have the choice of selecting a specific person they want to loan money to, as well as deciding the rate of the loan (this is different from Zopa who set a fixed low interest rate of 4.4% on its loans). Secondly, unlike Zopa, who use real money for transactions, Stemfund uses the decentralized currency bitcoin. The advantage of using bitcoin is that it is available in every country and has minimal transaction costs.

Peer-to-Peer Accommodation

Airbnb is undoubtedly the most well-known and fastest-growing travel company in the shared economy, but there are also a number of growing alternatives to P2P accommodation, especially in the UK as the sector enters the breakthrough chapter of its economic life cycle. This includes Love Home Swap, a two-way home exchange where members pay an annual fee and have access to free accommodation options. An advantage of Love Home Swap is that members earn points when another member stays in their home and can spend those points to holiday in other member homes for free. With 70000+ listings in 150 countries- Love Home Swap has clout over higher-end customers who are more likely to travel throughout the year and who own property, therefore targeting a more exclusive member network then Airbnb which is more likely to appeal to millennials in search of cheap accommodation.

Music Streaming

As I discussed previously in CapX, Spotify and recently launched Apple Music will become the dominant music streaming services. No other service is able to compete with the number of impressive features both tech giants offer such as a music library which holds an excess of 30 million songs. There are however, UK based services that offer alternative features which are preferred to over Spotify and Apple Music. For example, Blinkbox Music is a low cost alternative with a free option and £1/week paid option which is relatively cheaper than Spotify and Apple Music’s $9.99/month paid option.

Car Sharing

The uberisation of the shared economy has accelerated the growth of the car sharing market in the past few months. A new service that was released two months ago in the UK and the United States and is relatively unknown is greentomatocars- an on-demand booking style similar to Uber. Greentomatocars already has numerous customer advantages; for example, unlike Uber where all payments are made through a credit card, Greentomatocars offers customers the flexibility to also pay by cash. Greentomatocars may also prove to offer a more reliable service than Uber’s as the company only accepts 1 in 5 of its applicants after drivers are put through arduous company entrance exams (the greentomatocars knowledge of London). Greentomatocars also pledges to compensate its customers for every minute the drivers are late, an offer that showcases the company’s confidence in its service.

The four sectors examined above are a clear indication that the UK is introducing more and more challenger businesses that offer cutting-edge services with greater consumer choice.  “There is a huge opportunity for the UK, and our ambition should be to be the world’s leading sharing economy” writes Debbie Jacob’s-CEO of Love Home Swap.

However, in order for the UK to continue as the forefront of the global sharing economy, more protectionist measures need to be established to ensure the longevity of innovative services such as greentomatocars and Love Home swap. For example, Uber was recently forced to suspend its new service UberPop from its mobile app in France where taxi drivers blocked highways and Paris airport entrances with burning tires in protest for what they believed was an illegal and dangerous service. Another example is in the southern California city of Laguna Beach, where there is a current 45 day freeze on rent permits after numerous complaints related to short-term rentals.

There has been some initiative by peer-to-peer companies to protect UK’s share economy. For example, SEUK, a voluntary group comprised of 19 of the most influential peer-to-peer companies have set out the objective to recognize the challenges facing the sharing economy and developing innovative responses to them. Groups like SEUK therefore encourage companies to work together and understand the different systems that are in place to efficiently deal with issues such as customer complaints whilst also allowing companies to share information about how their business is impacting the UK economy.

The UK’s new peer-to-peer companies must therefore continue to challenge innovation by establishing a competitive advantage against leading companies such as Uber and Airbnb whilst also ensuring that their services do not put at risk the sharing economy industry.

Lorenzo De Simone is a CapX contributor