COVER STORY

Millions of Australians are cashing in on the new way of doing business, either to make a living or boost their savings

Earn an extra $30k each year using the sharing economy

Would you like to make money from your spare accommodation, spare cash, spare time or under-used car and other assets? Or do you want to access goods and services quickly, cheaply and easily from sources you trust?

Welcome to the sharing economy, a new and growing set of business models using basic technology to directly connect consumers.

“It’s about creating alternatives from what you’ve got,” says Daniel Foggo, CEO of peer-to-peer lender Rate Setter. It provides marketplaces that bring both the supplier and consumer together, cutting out the middleman and enabling both sides to benefit, he says.

The sharing economy is becoming big business. It’s valued at $15.1 billion, the total amount spent by Australians on platforms such as eBay, Uber, Airbnb and other newer services such as Sherpa, Share A Camper and Mad Paws, according to the latest Rate Setter Sharing Economy Trust Index (SETI).

This represents an increase of 4% over the six months to November 2016, says the SETI bi-annual report, which measures our attitudes and behaviour towards sharing economy services.

And it’s set to grow fast, by more than 250%, reaching $50 billion in the next five years as more Australians take advantage of new opportunities to save money and boost their income, according to Rate Setter’s research.

Most of us are embracing it; nearly two-thirds of Australians used the sharing economy in the six months to November 2016. And this figure is set to climb with 75% of respondents saying that they intend to use at least one service in the following six months.

“The beauty of the sharing economy is that everyone, young and old, can participate in a way which suits them,” says Foggo.

Almost 60% of us are earning money from peer-to-peer marketplaces, an average of $94 a month, up 30% over the past six months.

With the underemployment rate relatively high – 8.7% in the February quarter (the latest figure available) – these new marketplaces have given many a way to supplement their incomes.

“The great thing about the sharing economy is that you are the master of your own destiny. You get to choose the hours you work and in some instances how much you charge, so it’s perfect for anyone looking to supplement their income,” says Mike Rosenbaum, the CEO of Spacer.com.au and a founder of the Sharing Hub, Australia’s first sharing economy accelerator, to be based in Sydney.

“You also see people using many platforms to make a full-time income. I know one who uses more than seven platforms to make over $100,000 a year,” he says.

Rosenbaum says the Sharing Hub will enable both young and established companies to share knowledge and experience and to promote and invest in the growth of this exciting emerging industry.

The great thing about the sharing economy is you are the master of your own destiny”

The increased take-up of the sharing economy for spending and earning reflects both higher levels of comfort in using these services and the explosion of new services, says Foggo.

To be a successful operator in these new marketplaces it’s essential to build trust, he says. “You can do this by delivering good services, seeking honest feedback and being transparent.”

Rosenbaum agrees. “Because you’re dealing with other people in your community where you can rate and get rated, you often get a better service as people are being held accountable, and because everything is tracked it builds trust.”

Foggo says his research found 26% of survey participants reported significantly higher levels of trust compared with six months ago.

“Newer entrants are benefitting from the halo effect of established players such as eBay and Airbnb, helping people understand the value and quality of services offered by these platforms as both a buyer and seller,” Foggo says.

But our trust in the sharing economy remains affected by a perceived lack of personal safety (50% of respondents), a lack of understanding of how such services work (49%) and issues relating to regulation (40%), according to the SETI report.

“As the sector continues to grow in Australia, we expect regulation and oversight to increase, and this is something we welcome,” says Foggo.

He says the regulatory endorsement of ride-sharing businesses such as Uber has seen those services receiving the largest increase in trust in the latest survey compared with the six months prior. And it’s also one of the fastest growing services – 24% of respondents used it in the latest period and 33% say they will use it within the next six months.

Other attractions of these marketplaces are cost and convenience, according to the survey. “You can get hold of assets or services in a few minutes or hours,” says Rosenbaum. “And most sharing platforms can be up to 50% cheaper than commercial solutions.”

He says there has been a shift in consumer behaviour from most people wanting to own assets to now being happy to rent other people’s assets to save money.

“We’re also seeing more people using multi-sharing economy platforms to become micro-entrepreneurs. By doing so, people can make this into a full-time job, even a business.

“The sharing economy is perfect for all ages but we notice parents in particular like using it to save for holidays or to pay bills.” Those transitioning into retirement also use it to make extra income or to fill in spare time, he says.

Rate Setter’s research found that 44% of over-55s earn money through sharing economy services. “Older Australians are the ones with the experiences and assets to make the most of the sharing economy, so it makes sense that they are the ones who get on board and try to generate some additional income,” says Foggo. “And the sharing economy is a workplace which has no discrimination.”

The research also found that younger generations, those aged below 44, are the biggest spenders at more than $110 a month. But over-65s are the fastest growing group of spenders in the sharing economy, paying an average $82 a month.

Peer-to-peer services offer people much more value for money, and millennials are at a stage in life where they are trying to save money, says Foggo.

Online marketplaces such as eBay and Gumtree remain the most popular, with 54% of respondents having used such a service in the previous six months, according to the survey.

Apart from ride-sharing, other sectors increasing in popularity include accommodation, such as Airbnb and Couchsurfing (15% used them in the previous six months and 26% intend to use them in the next six months), online outsourcing such as Airtasker (3% growing to 8%), crowdfunding such as Kickstarter and Pozible (5% growing to 9%) and P2P lending such as Rate Setter (2% growing to 5%). The latest Rate Setter SETI survey was conducted in November 2016 and included 1000 respondents.