The FINANCIAL — In Georgia, ownership is idealized: people are proud of having material possessions such as houses, cars, expensive watches, or clothes.
The FINANCIAL — In Georgia, ownership is idealized: people are proud of having material possessions such as houses, cars, expensive watches, or clothes. Possession provides two benefits to the owner: not only does she get the benefit of being able to use the item, it also confers social status upon her, and shows other people that she has the financial resources to be able to make such a purchase. Georgia is not unique in this: people generally like to buy and possess stuff. However, in the West we’ve recently witnessed a move away from ownership towards renting and sharing, something which is often called “collaborative consumption”. In this article, I’ll examine this trend, and I will try to see if it is something that may also take hold in Georgia.
The most important assets in most people’s lives are their houses. In fact, in Georgia, because of its Soviet past, house ownership is very high: according to GeoStat, 91.5% of houses in Georgia are owner-occupied. Buying a house is still, as in many other countries, considered a rite of passage.
Cars are also seen as status symbols, and their owners often maken serious financial sacrifices for their four-wheeled babies: stories of men buying expensive cars and then not having money to fill up the tank are not unheard of.
However, instead of buying something, you can also rent it. Over the last few decades we’ve seen rental markets for various items bloom in the West. While renting apartments and houses has been relatively prevalent for a long time, especially in Western Europe, rental markets for other products such as cars have also come into existence. Although traditional car renting has been around for a while, a new type of collaborative car rental industry has appeared. An interesting example of this is ZipCar, an American company that allows consumers (which it calls Zipsters) to rent cars by the hour. These cars are conveniently placed on street locations throughout big cities in the United States, Canada, and the United Kingdom, and can be accessed with an electronic membership card. If you live in an urban area in one of these countries, now the need to own a car has disappeared: when you need a car, for example to pick up groceries or go on a day trip, you simply pick up a ZipCar in your neighborhood.
Not only are people renting more, they are also jumping on something even hotter: consumer-to-consumer sharing. As described in an article by Danielle Sacks, published on www.fastcompany.com, consumers are now using online services to share various assets they own but don’t need to use full-time with consumers who don’t have those assets but who would like to use them from time to time. The most obvious one is cars, and the car sharing market in the United States is expected to hit $3 billion in revenue in 2016. However, consumers are also sharing other things: they are making loans to other consumers through online lending platforms, and they are sharing their couches on websites such as CouchSurfing.
Will sharing and renting take off in Georgia anytime soon? Yes, but there are significant barriers to be overcome. The biggest problem is Georgia’s notoriously low level of social trust: it is hard to share something with someone if you don’t trust that person. Rental businesses such as renting out cars are also difficult when the insurance industry is still relatively undeveloped.
Is the move towards renting and sharing a positive one? I think the answer here is yes: it is a much more productive use of resources. The average person uses his car about 8% of the time. That means that 92% of the time it is just sitting there. This is obviously not a very productive use of (natural and economic) resources. Sharing also allows consumers to monetize assets, or in other words, to use assets that they already own to make money.
For businesses, it is also important to pay attention to this trend: this change in consumption patterns may affect your business and your sales. For example, if 20% of the people who previously used to buy your product now rent it, or share it with other consumers, this can significantly impact your sales. Instead, you could also try to try to take advantage of these changes by creating marketplaces that allow consumers to share products with each other, or rent things. Who will create the first car sharing platform in Georgia?
Renting and sharing are two trends that have really taken off in the West. Although significant barriers still exist in Georgia, we will start to see them appearing here as well. Renting and sharing have a range of positive consequences, and businesses that are able to take advantage of these trends will come out on top. Be ready!