Are the sharing economies helping us to trust each other?

Written by Paulina Lundin

Trust is one of the most important factors in building consumer brand loyalty. In the new sharing economies, trust is considered to be the currency and pushed to its limits since we are invited to stay in strangers’ guest rooms or get a ride with someone we don’t know. But how can sharing economies ensure trust to their consumers when they are in no control over their services? I will in this article address how sharing economies are building trust and how they have become more controlled which elaborates the concept of collaborative consumption.

You are what you can access

Do you know what brands like Airbnb, Uber and Feastly have in common? They are all rising stars in the sharing economy sector, but what does it really mean to be a sharing economy actor? The term lacks an universal definition but Rachel Botsman who is considered to be the founder of the term has defined it as “an economic model based on sharing, swapping, trading, or renting products and services, enabling access over ownership” (Botsman, 2013). Instead of buying and owning things, consumers can access things and pay for the experience of temporarily accessing them through collaborative consumption (Yannopoulou, 2013). This allows consumers like you and me to make money from underused assets where physical assets are shared as services (PwC, 2015).

The business model of the sharing economies consists of a digital platform (the central actor) which coordinates and connects individuals (the users) with other individuals (the providers) (Fellander et al, 2015). The internet has empowered growth of these digital platforms (Shephany, 2015) and made it possible to share things on a much larger scale and connecting individuals through a common purpose in new ways (Belk, 2007). The sharing economies have been accused to have changed the traditional way of doing business and the role of the business has “shifted from providing a service to facilitating a service provided by the users themselves” (Wind, 2008: 27). This has resulted in a power shift to the consumers where the sharing economies are relying on independent actors to deliver their services (Chen and Xu, 2009). The consumers who act as providers of the service are expected to meet both the consumer’s and the brand’s expectations, which makes it challenging for brands to ensure high-quality and consistent services and leaves them with less control over their brands (ibid).

  Figure 1: The complete picture of the collaborative economy (Botsman, 2016)

Figure 1: The complete picture of the collaborative economy (Botsman, 2016)

Lack of control
It has been argued that brands have lost control of their content since the evolution of the internet and the Web 2.0 (Christodoulides, 2009). Challenges that have arisen for managers are that they are no longer working in isolation on to decide on the boundaries and perceptions of the brands. They are rather working in cooperation with consumers in the creation of the brands where the sharing economies is one business model that has invited the consumer to take an even larger part in the brand creation. The consumers are here interacting and sharing content as well as are the providers of the products and services (Belk, 2014). Sharing economies have also been described as user generating brands since the consumers are contributing to the creation of the brand value, meaning and identity (Yannopoulou, 2013) but also take the roles as producers, distributers, marketers and users (Chen and Xu, 2009). This adds extra challenges for managers to ensure trust compared to in traditional brands and leave the brands with even less control (ibid).  

Trust is the new currency

Trust is considered as one of the three components in order to build brand loyalty (Hess and Story, 2005) and evolves from consumers’ past experiences with a brand. Trust has been defined as the feeling of security in terms of that the brand will fulfil the expectations (Grönroos, 1997). The importance of building trust is essential in order to decrease the consumer’s perceived risk (Hess and Story, 2005) and is argued to be essential in e-commerce with regards to the increasing risks that are associated with transactions online.

In the sharing economies, it is stated that the parties experience even more risk considering the fact that they do not only risk to experience financial loss but also physical harm when you are buying a service from a stranger (Ert, Fleischer and Magen, 2015). Consequently, trust in the context of sharing economy is even more important and argued to be the currency (Botsman, 2012). Think about the fact that you are letting strangers stay in your home which requires a certain amount of trust in the society. A study conducted by PwC (2015) showed that 89% of the respondents were willing to participate in sharing transactions only if they feel trust towards the brand and the users. This illustrates that sharing economies consists of three different objects of trust: trust towards the individuals, the platform and the product (Hawlitschek et al, 2016).

  Figure 2: Do you trust your peers? (  Tanz, 2014  )

Figure 2: Do you trust your peers? (Tanz, 2014)

A never ending party

To better highlight the challenges sharing economies are facing, we will study Airbnb who is the world’s largest accommodation provider, but who owns no real estate. Launched in 2007, Airbnb consist of an online platform that provides an average of 425,000 guests per night with a place to stay which is nearly 22% more than the giant Hilton (PwC, 2015). The success of Airbnb lies like any other brand within how successful the service is perceived by the consumers. However, the difference is that they have no control of the service they offer.

A story that shook the Airbnb brand in 2011 was when a provider of a house had her home robbed where the guests stole her jewelries, passport, and credit cards. This again addresses the concern for sharing economies: The Airbnb brand has no control over the service they provide. By the time it happened, it turned out that Airbnb wasn’t financially responsible and wouldn’t compensate her for the damages. The only thing Airbnb did was to give the police information in order to track the person in charge (Arrington, 2011).

Problems like this were by the time it happened addressed on Airbnb’s website as:

  • What if someone will steal my grand piano?
  • Highly unlikely. Grand pianos weigh thousands of pounds and do not fit through doors (ibid).

Another accident that illustrates this problem happened to a family who had rented out their home which was completely damaged when they returned back from their vacation, moreover the party was still going on when they came back to their home and they had to force out a group of 20 guests (ibid).  

As illustrated by these cases, it is clear that the consumers of Airbnb are exposed to a high level of risk. It also illustrates that the level of trust in our society can be argued to have increased where we are growing more comfortable with trusting strangers with our possessions and even our safety. This can be seen as not only an economic shift, but also a cultural shift (Clarabridge, 2015).

A new era of control
In order for Airbnb to better control their service and decrease the possibility that something like the above will occur again, they have stressed the importance of different control systems. One of these are the rating systems which enables the consumers to evaluate their experience. Although it enables better control, it still leaves Airbnb with lack of control where they are dependent on the consumers’ evaluations in the matter of how other consumers will trust the brand.

This asymmetric power relationship was something that Airbnb changed in 2015 when they decided to build a new infrastructure of control. By then they began to monitor the activities across the platform, handled the payments, guaranteed every purchase to be covered by their insurance “Million host guarantee”, offered the service of professional photographers as well as set up a customer-service hotline to build a new era of control to ensure trust. These can all be referred to as actions in order to increase customer satisfaction which together with trust are important components in building brand loyalty (Hess and Story’s, 2005).

Who do we trust - our peers or the brands? 

With regards to information online, there are considered to be two types of trust in our society: institutional and social trust (Höhmann and Welter, 2005). Institutional trust represents the level of confidence individuals have in the institutions which also includes brands. In contrast, the social trust refers to how much we trust our peers in our surroundings (ibid). Through the new controlling infrastructure, Airbnb has changed from being a passive provider of a service to become an active participant where the consumers can rely on a system that is protecting them instead of trusting each other (Tanz, 2014). Since the consumers go through a platform to access and share services it illustrates that we rather have confidence in brands instead of directly trusting our peers in the surroundings. Through these controlling efforts Airbnb want you to feel like they are the good guys, getting rid of the bad ones from the platform which gives the consumers an illusion of trust.

Is commercial the new sharing?

These increased controlling activities that Airbnb has implemented illustrates a move from the original role of the sharing economies that was to facilitate sharing through a platform. The consumers had then a large part in the business and were the providers of the service and contributed with user generating content to the brands. Today we can see a trend in many sharing economies where the central actor is taking an increased responsibility in the exchange in order to control their brands, increase trust and to assure customer satisfaction. This illustrates that Airbnb is moving away from the concept of collaborative consumption into a more commercial brand trying to maximize their profit through better controlling the exchange and being more concerned about their brand. Hawlitschek and Teubner (2016: 2) has also noticed this shift and referrers to it as “it is almost ironic that the most successful and most frequently referenced examples of companies today are highly commercialized and profit-oriented platforms such as Airbnb, Uber, or Ebay”.  

To sum it all up, the internet has enabled increased interaction among individuals which has created challenges for brands in terms of control. These new changes have been expressed in terms of increased risks for brands where they feel a need to control their content in order to ensure that the consumers feel trust towards the brands. The actions that Airbnb has taken are responses to these challenges where they want to decrease the risk that consumers feel towards the brand in order to ensure trust.

Trust is however not a static concept and is rather changed over time depending on the situation and who is involved. This raises the question how sharing economies should balance control at the expense of that the unique characteristics of collaborating consumption and social trust are decreasing. These controlling actions also show that the difference between staying at Hilton and Airbnb has become rather blurred. In an increasing amount, one can find examples of sharing economies who not only build these platforms for individuals to connect, but also to capitalize on this phenomenon. The fact that these brands don’t own any assets but rather use the principles of collaboration consumption to build an empire should raise concerns.

So next time you are using the service of a sharing economy, you should ask the question: Do you trust the Airbnb brand more than you trust your peers? Maybe the latter should be called a “real” sharing economy and if you choose the first alternative we should question Rachel Botsman’s (2012) statement whether trust is still the currency in sharing economies and if it not has been replaced by control.

 

 

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