If you’ve been regarding the sharing economy as little more than a novelty so far, now is the time to stop. Digital powerhouses like Uber and Airbnb have pretty much hogged the headlines for the last year, and for good reason; Uber has transformed city transport, and Airbnb was recently valued as being worth considerably more than the Hyatt hotel chain. But there are plenty of other companies disrupting traditional markets, in a diverse range of sectors, by basing their business on electronic, decentralised models.
Rent The Runway is one such platform with major growth plans. The dress rental company currently has offices in New York and Las Vegas, and aims to secure $50 million in funding by the end of the year. While much recent coverage of Rent The Runway has focused on its impressive dry-cleaning operation (according to Fast Company and New York Magazine the in-house ‘spotters’ are veritable stain-removing Jedis), there is no getting away from the fact that, five years after launching, the company is still not making a profit. This largely boils down to a common sense issue; unlike other shared services like Uber cars, most women don’t have a regular need to hire couture gowns. To combat this, Rent The Runway introduced a subscription service for every-day items, which some have described as “Netflix for accessories.”
Founder Jennifer Hyman has herself stated that the original dress hire business was only a starting point, and that her long-term vision is for Rent The Runway to become “the Amazon of rental.” Speaking to Fast Company this summer, she explained that “in fact, we started in fashion, the hardest category, because a dress can get destroyed – someone might spill a glass of red wine on something. Whereas, if I’m renting expensive golf clubs, that’s going to be an easy, rational thing for me to do. I don’t have to have someone do a smell test.”
One of the central questions relating to this new breed of enterprise is how to go about regulating it. Collaborative Consumption founder and Love Home Swap CEO Debbie Wosskow believes that the United Kingdom has the potential to be a leading force in the sharing economy, as long as regulation is suitable for this new, evolving space: “The big advantage is that we haven’t regulated yet,” she says. “So it’s not just paying lip service to being the centre of sharing. Genuinely there’s an opportunity for the UK to put in place sensible regulation, and no one else has consulted with the industry, both incumbents and new entrants, in this way… We need to be careful about not overregulating and stifling these businesses.”
Wosskow, who is leading a review of the UK’s sharing economy, asserts that the sharing economy represents a whole new working culture, where independent freelancers and contractors are increasingly the norm, and regulation should reflect that. “If people are choosing to work as freelancers, for whatever reason, that is their choice and we need to make sure there is enough protection in place without stopping new businesses,” she says. “There are widely different businesses, from ride sharing to power tools – but they’re all dealing with assets and they’re dealing with a lot of similar problems around insurance and trust and identity verification and security. It’s a consequence of dealing with assets in a new way.”
Sarah Cannon and Lawrence H. Summers at Harvard Business Review make the case for leveraging the technology available to foster clear, honest communication between shared platform businesses and potentially sceptical regulatory bodies: “By being focused on consumer interest and responding to regulators’ legitimate concerns, sharing economy firms will reach a broader audience of advocates than they anticipated and better outcomes.” Professor Arun Sundararajan similarly champions transparency and accountability, stating that “peer-to-peer platforms in particular have both a moral and a business imperative to protect the providers and consumers of their services.”
In short; there is yet to be a singular ‘right’ way of doing business in the shared economy, but it is not going anywhere, and the extent of its influence on start-up culture remains to be seen.