Could a Sharing Economy Transform Saudi Arabia?
In recent articles, various Wamda contributors
discussed the rise of the sharing economy. Gulay Ozkan
discussed the potential of collaborative consumption in Turkey
and the hospitality industry, and Omar Aysha
proposed shared biking services as a solution to Egypt’s
congestion epidemic. Yet one region in the Middle East has the
highest potential to be reshaped through collaborative consumption.
The Gulf region is characterized by excessive individual
consumption, outrageously high carbon footprints, and an abundance
of financial resources that could enable a quick economic
transformation.
What is collaborative consumption?
In an age of rising living costs, over-consumption,
and global concern about the planet and its limited resources,
people have become increasingly interested in alternative economic
models to the current model of buying, selling, and consuming. One
of these new models is collaborative consumption, an economic model
that relies on sharing, trading, renting, swapping, or bartering of
products as apposed to ownership. Collaborative lifestyles are
characterized by the exchange and sharing of goods, services, time,
and assets.
The truth, as many have pointed out, is that the collaborative
consumption economy (or sharing economy) is not new at all. Our
ancestors bartered for centuries, commonly managed farming lands,
and lived in shared communities, both nomadic and settled.
Now, with the rapid growth of the virtual communities, we face a
unique opportunity to live a collaborative lifestyle not just
locally, but throughout the “global village” we live in. Humans are
wired to share and cooperate, and now people are consuming and
collaborating both online and offline.
Global Examples of Collaborative Consumption
One of the greatest examples of collaborative
consumption is the bike sharing system Bixi that originated in
Montreal, Canada. Bike sharing is now the fastest growing communal
transportation system in the world; programs grew by 200% in 2010
alone.
People are drawn to this collaborative system because it is easy
and saves money, space, and time, while reducing waste. Bike
sharing programs are also beneficial on a macroeconomic level as
they create scalable businesses; Bixi alone recorded revenues of
over $51 million in 2011, after expanding to 10 cities across North
America and Europe.
The impact of a collaborative lifestyle is particularly powerful
when it comes to items with a high amount of idle time, such as
power drills and cars. The average car costs $8000 to run a year,
yet sits motionless for several hours a day. These niches are ideal
opportunities for innovative companies like Zipcar, a car sharing
program. In 2009 Zipcar took 250 self-confessed car-addicts and
talked them into trying hourly rentals of shared cars. By the end
of the trial, the group lost 413 pounds collectively, and 100%
decided that they would give up their cars. In 2011, Zipcar very
successful IPO.
Collaborative Consumption in the Gulf
In the U.S., the examples of successful sharing
companies continue to grow (AirBnB, LocalGuiding, etc.). But
collaborative lifestyles have yet to significantly reach any of the
six countries that form the Gulf Cooperation Council (GCC).
A region of the world that was historically renowned for sharing
and trading goods and services without a medium of exchange now
suffers one of the highest consumption (or I should say,
over-consumption) rates in the world. It also has one of the
largest carbon footprints in the world; Gulf states rank
1st, 4th, 6th and
8th for carbon dioxide emission per capita. It makes
sense for countries where oil is cheap, yet this makes the region
ripe for disruption by a sharing economy.
Take driving in Saudi Arabia, for example. Saudi Arabia is the
largest economy in the Arab world, with a population of well over
27 million, the 12th largest land area in the world, and
no public transport infrastructure aside from limited train
services between major cities. Almost all households have one or
more personal automobiles, and the majority travel with less than
three passengers, typically for limited daily trips.
This creates a prime opportunity; a sharing service would decrease
traffic, lower the country’s carbon footprint, and save its
customers money.
The possibilities here are endless; anything from book-sharing
to exchanging old cell phone devices for new electronics offers an
opportunity for collaborative consumption in the Gulf. Imagine a
world where you wake up, carpool with neighbors to work, exchange
old text books for
The Startup Owner’s Manual, rent out your GoPro mini cam that
you rarely use and trade that grey sweater you bought but never
really liked for a new hip summer t-shirt. It can be done. In
Arabia.
Nonetheless, for collaborative consumption to work in the Arab
world we need to alter it to fit our traditions and customs.
Entrepreneurs will surely face challenges launching services that
require high levels of trust such as home-sharing or room-rental
services (as
Arab Rooms is trying to do in Saudi Arabia). Yet these
challenges should encourage rather than discourage the region’s
entrepreneurs, as not only are the rewards for success plenty in
such a large, untapped, market, but it is safe to say that what
succeeds here will surely convince consumers elsewhere.