The Rise of Peer to Peer Sharing and Rentals

Whether we recognize it or not, the American culture of consumerism is profoundly changing. Innovative peer to peer (P2P) technologies are giving up-start companies a set of tools to disrupt traditional forms of Business-to-Consumer (B2C) commerce. New payment technologies such as PayPal's Adaptive Payments system allow website developers to create marketplaces where people can rent or share virtually anything with anybody.

The future impact of these technologies may be difficult to gauge now, but they epitomize the basic premise of the discipline of economics: the efficient allocation of resources.  After all, why should you own a step ladder if you only use it once a year when someone in your neighborhood or apartment building owns a ladder that your could borrow or rent?  Until recently, it would have been nearly impossible to efficiently discover who in your area owned a ladder for you to use or rent. Plus, the P2P technologies to facilitate such transactions didn't so much as exist beyond auction and classified sites such as eBay and Craigslist.

However, new sites such as www.getaround.com and www.relayrides.com allow you to rent someone's unused car in California, and it's perfectly legal to do so given the recent changes in insurance laws in the state. These sites could have as significant of an impact on the traditional rental car companies and auto manufacturers as Google had on the publishing and newspaper businesses. My own experience with the car sharing service www.zipcar.com is a great example of how people can sell their cars and use car sharing services to locate and rent a car by the hour in the neighborhood.  I owned a car that I used only 5-10 hours a month. That level of utilization is not only a huge waste of money ($275/month for a garage and $200/month for insurance), but it's a total waste of resources (metal, plastic, rubber, etc).  Zipcars are utilized up to 80% of their physical capacity. This is the efficient allocation of resources at play, and it's good for me, better for the environment, and good for commerce to boot.

Sites such as www.rentalic.com allow you to list and rent your unused tools, law mower, and other household items. Our site, Sherpa Travel Exchange, allows people to rent their unused living space to travelers through a secure P2P online booking system using the latest Adaptive Payments technologies. All of these sites enable people to more efficiently allocate resources; whether those resources by lodging space (as in the case of Sherpa), household goods or your under-utilized Honda Civic in your driveway. The people who own the stuff make money from their stuff and the people that don't own the good or service benefit by paying only for what the need.

Thirteen years ago many people thought selling your items to complete strangers over the Internet was a crazy idea. Today, eBay is a multi-billion dollar business. Underscoring the success of sites like eBay and many of the new generation of P2P start-ups is the fact that these website operators offer the mechanism that is most essential to their survival and grown: ratings and reviews systems. Such systems engender trust and reliability and remove risk and uncertainty from the transaction. Ratings and reviews sites such as Yelp and TripAdvisor now permeate much of retail, travel and hospitality services, respectively. At the same time, the Better Business Bureau and the Gallup Organization recently found that 47% of consumers stated that they had "some, very little, or no trust at all" in companies that they do business with in everyday life. (Source found here) As our trust in companies erodes, we are beginning to trust complete strangers more and more.



P2P Sharing Goes Mainstream



Environmentally speaking, the impact of the new crop of P2P sites may impact the natural resource constraints that are so often an inconvenient truth about our modern society. Rachel Botsman's excellent book entitled What's Mine Is Yours: The Rise of Collaborative Consumption cites an interesting and chilling anecdote; that is, if everyone in the world lived like an average middle-class American, we would need five times more resources that actually exist on our planet. Frightening indeed. Folks, the planet's population ain't shrinking! So, we must find ways to more efficiently allocate the existing resources, goods and services we have at our disposal or face a future driven by unnecessary scarcity as the people within places like China, Brazil and India ascend to ever higher standards of living.  Collaborative Consumption is not just a fad.  In fact, Collaborative Consumption was listed as one of Time Magazine's top 10 sustainable trends.

If you're interested in learning even more about how P2P sharing business models are changing commerce, you can also check out an excellent new book by Lisa Gansky entitled The Mesh: the Future of Business is Sharing.

Safe travels,

Russ

The real unemployment rate

Today, the U.S. Bureau of Labor Statistics reported that the U.S. economy lost a paltry 11,000 jobs. With all the fanfare, you would have thought that there was some reason to celebrate. Far from it.

Sure, we're no longer losing jobs at the same pace as at the beginning of the Great Recession, but one in ten people in the labor force is still out of work. Of the 165 million people in the labor pool, that's 16.5 million people that are out of work that are looking for a job and just can't find one. But it's a lot worse than that... The Bureau of Labor Statistics doesn't count people who are employed in part-time jobs to make ends meet or people who are considered to be "discoraged job seekers" and have stopped looking for work altogether - presumably because any family of four can eat off of the $800 subsidy paid twice a month. Yeah, that is, if you like to feed your kids ramen noodles three times a day.

The reality is that our economy, and our labor market, is in shambles. The real unemployment rate is closer to 17.5% when you factor in all the people that have stopped looking or have taken on part-time work just to make a few extra bucks. That's another 12 million people that can't find suitable full-time work. At a "full-employment" rate of 5% unemployment, our economy would have about 8 million unemployed people. There's nearly 20 million more people unemployed than there was when our economy was at full employment a couple years ago. That's freightening.

So, what's one to do if they can't find full-time work or refuses to don the orange apron at Home Depot or the blue apron at Wal-Mart for 25 hours a week and no benefits? Well, many people have turned to eBay to sell there stuff. In the last year, the number of online auctions on eBay has more than doubled. The average daily auction volume in August, 2008 was 15 million auctions. In November, 2009 it was close to 35 million. eBay is as popular as ever because it's a great place for people to make some extra cash. People are selling their stuff in droves.

The unemployed and underemployed are also turning to direct selling and Multi-Level marketing companies in droves. Amway, Tupperware and Avon have all experienced record growth in the ranks of their agents/salespeople. When times are tough, Americans become ultra resourceful. Door to door selling is even making a comeback. Who would've thought? I guess if people aren't at a job, then they're at home, so why not...

Speaking of resourceful, people are also getting into the hospitality business. I recently counted the number of short-term rooms for rent posted on Craigslist. These are rooms for rent by the day - not by the month or by the year. These are people looking to make a few extra bucks by providing lodging services to travelers. I found that on a typical weekday there are more than 1,000 new ads posted for short-term rooms for rent. This is more than double the number from just a year ago. Craigslist lacks essential security features to make it a fully functioning lodiging classifieds site, yet people are willing to take the risk to make a few extra bucks by renting out their extra space to travelers.

Americans possess an unprecendented amount of unused space in their homes. Resourceful people all around the country are learning that they can monetize their unused living space by getting into the hospitality/lodging business. People are running make-shift B&Bs as a way to avoid foreclosure. Not a bad idea if you ask me...

Mint.com posted a humorous video that discusses the real unemployment rate on YouTube.

Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102

415-997-9925 Google Voice
russ.hearl@staysherpa.com
www.sherpatravelexchange.com

Stay Smart. Stay Sherpa.

Hostage – At The Mercy of the Hotel Giants

Last Spring, I took my 12 year old son up to Reno to play in a 3 day basketball tournament. This meant that I had to find a room for us to stay in. There were not many hotels that were walking distance from the basketball venue, so we were stuck with the decision of staying far away which meant driving through traffic to each game and paying for parking each time, or staying at the adjacent hotel and being left at their mercy regarding price and accommodations. In order to get a good price, I had to play the old hotel game of booking a room, checking pricing every day, and being prepared to cancel and re-book when the price came down. I also had to worry about the room I would end up in.

I later came to find out that this was a small, run down and bed bug invested hovel standing in the parking lot of the main hotel. It was easy to see that the hotel considered people in these accommodations to be second-class citizens. Reading the reviews also led me to another conclusion. The Motor Lodge was just a ruse to get people into the hotel. When people actually arrived and saw how bad it was, they immediately complained and asked for an upgrade. And, for an additional fee, the hotel would accommodate them. I, personally, thought it was misleading and out right robbery.

Well, let me tell you. Hotels are designed to be at or close to capacity at all times in order to meet their revenue goals. This means they will do anything they can think of to bring in more money. Second, the hotel industry has gotten away with having no real competition for years. Taking a look at the numbers, there are about 4.4 million hotel rooms in the United States. Matching this with the fact that hotels like to stay close to 70% full or more, means whenever it is believed a hotel can attain a profitable occupancy rate, one is built. In short, whenever hotel occupancy rates are good, the hotels are free to treat people like trash, because they know they will make their money any way. However, when occupancy rates fall, the hotels are forced to treat their customers better.

Try a Homestay. Yes, you heard right. More and more people are staying in other people’s homes when they take a trip. The accommodations are often better, the price is always better, and your options are unlimited. That is, if you can find a good source for Homestays. That is where companies like Sherpa Travel Exchange come into play. Sherpa will soon be offering a “Travel Exchange” focused on Homestays, Home Exchanges and Vacation Rentals. With 60 million homes in the United States, and 90 million vacant rooms, the inventory potential is huge. If just 5% of the available rooms were up for rent, the number of rooms available to travelers would double. Now this is something that would get the hotel industries attention.

So, my advice to you is to not get caught up in the games of the hotel giants. Don’t get stuck, like a hostage, at the check-in counter asking for a better room because they will stick you in a dump while they wait for you to beg and pay for a better room. Think about a Homestay and get treated like a real person by a knowledgeable local host the next time you travel. Until next time, happy travels.

Darrin Underwood

Contributor

Sherpa Travel Exchange

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