Boats & the Sharing Economy
The concept of the sharing economy is increasingly on everybody’s lips these days. Propelled to fame by the likes of AirBnB and Uber new sharing economy platforms are emerging stronger than ever.
PwC research in 2016 estimates that by 2025 the sharing economy in Europe alone will be worth around EUR 80bn in revenue and will facilitate EUR 570bn in transactions. That’s an exciting development and underpins a major social trend.
People are progressively more likely to be asset light and invest in experiences.
There are many interesting emerging sharing economy platforms. They offer anything from car sharing (various models), parking space sharing – a godsend in big cities like London – to sharing tools or skills and expertise.
I believe that assets such as boats are perfectly positioned for the sharing economy. In fact, Lisa Gansky argues in her book “The Mesh” that assets, which have a high value and relatively low usage are the best positioned for peer-to-peer platforms. She described them as being in the “Mesh sweet spot”.
Boats fall in exactly that category – costs associated with purchasing, maintaining and storing the boat are relatively high. Whereas usage is relatively low on average – the average boat owner takes the boat out around 12 times every year, unless they are avid sailing fans living in geographical areas with a long boating season.
Moreover, if we look at the “value of spare capacity” – i.e. the value of the product multiplied by the fraction of time it is NOT used, we arrive at a latent rental value of an asset. So, the higher the latent value of an asset the more suited it is for the sharing economy. Once again boats are the perfect asset for a peer-to-peer platform as they have a high latent rental value.
Boats are viewed as a luxury item and many would be deterred to invest in owning and maintaining a boat. However, people would enjoy the experience boating offers. Peer to peer boat rental, therefore, presents a unique opportunity to connect boat owners and boat renters. It removes the “exclusivity barrier” to enjoy it, whilst offering boat owners an opportunity to become micro-entrepreneurs and recapture some of the costs associated with owning the asset.
As a boat owner myself – our family has a boat in the South of France - I can really relate. Throughout the year the boat sits in the dry dock until the summer holidays when we take it out, probably a maximum of 10 times – if we squeeze in additional few days and bring friends over. The rest of the year the engine is not in use – and that is not good for the engine.
It is undoubtedly a prized possession for our family, but it does incur costs throughout the year and we do worry about the engine.
Will we rent it out?
Yes, but cautiously.
We need to have trust in the renter and in how the process is handled. But this is a topic for a next article, how Trust enables transactions in the sharing economy. Coming soon.