Aspects of Command Consumption
Wired Magazine named the sharing economy as one of the things we must stop talking about in 2016. The word is expired and loosely represents the values of the business model.
These companies are designed as on-demand services that help consumers find a good or service the exact moment they need it; this idea is revolutionary in serving the average customer.
But a business built on speed creates an unregulated market and leaves fickle incomes and protections for workers.
Glenn Earl, professor of business and entrepreneurship at Elgin Community College, explained that the business is molded over convenience. The phenomenon has less friction in a transaction, meaning that the marketplace is receptive to independent customers that prefer not to engage in human interaction.
“I’m pretty high on the concept, because I think they’re what’s called disruptive business models,” Earl said. “[Airbnb and Uber] are disruptive – they’re changing something. And normally when you make a change in something, that’s where you get the greater acceptance. You change the way you go to the airport, you change the way you get a cab ride, you change the way you get a hotel room.”
Leticia Starkov, professor of economics at ECC, determined that the rise in peer-to-peer consumption is a result of the recent great recession. It may seem new in the way technology has merged with the market, but the idea is universal but now has a different shape.
“They connect buyers and sellers in a more direct way, without many intermediates,” Starkov said.
The element that makes these companies lucrative is expediency. The ever increasing flow of customers are results of a model finally based solely on time-consuming natures.
Businesses, since the dawn of the wheel, have been searching for a suitable way to bring their service and goods to customers promptly to keep their loyalty.
Thousands of years later, an ordinary person who needs a part-time-side job can create a business, funneled through a larger, parental company. For example Airbnb has revolutionized hospitality by providing ordinary home-dwellers an opportunity to rent out their abode to travelers at a cheaper and more flavorful experience than a hotel could offer. Even better, the money is directly uploaded into the home-owners bank account, without even having to see the client face-to-face.
“When do you ask for the money,” Earl said. “When you walk in the door? Sometime when you’re there? So whenever that ask happens, that becomes a little bit awkward. So this is frictionless, which is the ease of which the transaction occurs, they modify that by having a secure Paypal, places where they can go pay for the reservation and pay the funds. The evolution of this peer-to-peer consumption is the two parties who are user’s needs, they never meet, and that’s where this is headed.”
As crowds of individuals join the market-place, competition increases to a staggering amount and previous jobs that dominated the industry can become outsourced. Simple apps such as Uber have changed the courses of seemingly-eternal industries. Cab drivers are now inching towards the unemployed likeness of an ice-delivery man or a cassette player
“When you have, we say in economics, the quantity of labor supplied, so there are more people willing and able to work for lower wages,” Starkov said. “And we need to consider wages that are not including any type of benefits, any type of security. So that is going to bring a downward pressure to wages overall; because if somebody is willing to do it for less then that pulls the entire wages down for other people.”
Professor Starkov then allured to recent international proposed measures to crack down on car-service apps. In September, Chicago taxi drivers marched outside City Hall in protest, and demanded that ride-hailing services such as Uber, be financially regulated by the city the same as cabs, reported by the Chicago Sun-Times.
A portion of Chicago cabbies have joined together under the name Cab Drivers United, formed with AFSCME Council 31, the Illinois chapter of American Federation of State, County, and Municipal Employees which is a public service employee union that fight for the middle and lower class.
The group acts as a collective voice to fight for the right to be treated fairly and justly by the city and be able to earn a decent living. The protest has amassed 2,302 likes on Facebook, and the daily support keeps growing.
As these workers get replaced, potential consumers question the reliability and background checks of non-licensed workers privately hired by these companies. Would a consumer hire a professional at a higher cost, or an amateur for a lower bill?
Sara Sattler, a previous Uber driver, only worked with the business for about four months, from mid-Aug. to Dec., and typically enjoyed covering the regions around Schaumberg. Just like a regular part-time job, Sattler had to apply by sending in a picture of a driver’s license, pass a background check, prove insurance, and then file a few other documents; which makes it difficult for someone with a felony or a previous criminal record to be employed.
When hired, your shift starts when you are in your personal car, logged into the app. On the customer’s version, they will be looking for a driver, and the screen will display Uber-certified riders nearby including their Star rating, and the customer eventually picks whoever fits their liking. The driver is then notified, and left with a window of only thirty-seconds to a minute to respond. Drivers are also unable to locate any customers; they can only see that they have been chosen to pick someone up. One day, Sattler drove for two hours and never found a single ride. She speculated that the service forces its employees to drive around in order for them to receive rides, after she never experienced gaining a customer while parked.
“It’s less that you find customers, than customers find you,” Sattler said.
The fare is estimated inside the app, and results are added by a rate per-minute and per-mile, which varies by location, and then added to a base fare and a safe ride fee.
When contributing back to the employees, compensation is never steady. Sattler recalled some nights being all over the map. Sometimes averaging out at $17 an hour, and other nights $9; this led to her resignation.
“I could go five hours and make $200 bucks, or I could go five hours and make $10 bucks,” Sattler said.
While the market gains more, large contenders of on-demand services are now given an opportunity to disrupt other markets and react to more customers’ needs. Recently, Uber has set out to test the waters of home delivery service; and Airbnb will dabble in renting apartments and homes out to tenants.
“If you think about how you might develop your own peer-to-peer model, I think you will see some creative things in the future,” Earl said.