What happened to the sharing economy?

A few years ago, Silicon Valley couldn’t stop using a trendy buzzword — the sharing economy. The good old top-down economic model with a clear separation between service providers and clients was falling apart. And huge tech companies disrupted entire industries, from Airbnb to Taskrabbit, Uber, Etsy and Getaround.

When you retrospectively look at the sharing economy boom of the early 2010s, many of the principles that defined that generation of startups have slowly disappeared. Instead of a huge societal shift, the sharing economy is slowly fading away.

What is the sharing economy?

In the past, if you wanted to buy a good or a service, you would ask a company or a professional to provide it.

You’d buy something from a company in particular because you knew it would be the exact thing you need. That’s why plenty of companies spent huge amounts of money to build a brand and a reputation. If you just bought a car, chances are you’ll see thousands of ads for cars before you buy your next car.

And that’s also why distribution channels have been key, especially in commoditized markets with low brand differentiation. For instance, when you buy a new printer, chances are you just head to an electronics store or type “printer” on your favorite e-commerce website. If HP doesn’t have a distribution deal with those stores, you’ll just buy an Epson printer.

If your neighbor wants a new printer in a couple of years, you might recommend the same printer, but you may have forgotten where you bought it. There’s little differentiation between distribution channels in that case.

The marketplace model

The sharing economy happened because a group of entrepreneurs wanted to invent new distribution channels. Sure, some traditional distribution channels secured exclusive rights to sell specific products.

But those startups made a radical change. They wanted to work on a completely new inventory of goods or services.