Didn’t we all hear as kids: ‘don’t get into stranger’s cars’?
This statement has been embedded in my education. And I’m pretty sure it’s also the case for most people of mine and previous generations: raised to fear strangers.
But today, getting into stranger’s cars has become part of my daily routine. Uber here, Lyft there. During my exchange in China last year, I was even using Uber to go to work and come back, every day, costing me the same price as a metro ride!
There’s an interesting question to be raised when analysing this shift in behaviour. What has changed in my behaviour from 10 years ago to now?
My level of trust.
In this blog post, I will analyse the notion of trust and its various implications for the different actors involved through the prism of the sharing economy. I will prove that the role of trust is critical not only for users and companies that are building new ways of consuming and delivering services but also for the future dynamic that will determine the success of the sharing economy. I conclude that trust is a key element that embodies the new currency of collaborative consumption.
How Information Technology changes how we consume
The advances in Information Technologies have enabled the development of online platforms promoting user-generated content, sharing and collaboration (Hamari et al., 2015
The Rise of the Sharing Economy
Consumption is taking a whole new dimension revolving around the concept of ‘sharing’. The Sharing Economy is a socio-economic ecosystem built around the sharing of human and physical resources (Matofska, 2016)
. Basically, it is relying on people renting things from each other for a commission.
Let’s look at the Sharing Economy’s main benefits (from a broad socio-economic perspective):
1. Economically speaking
– for instance, a Uber driver earns on average $6 an hour more than traditional taxi drivers
and they are using their own cars, cutting costs further down. As riders, we benefit from more convenient and cheaper ways of transportation. Owners make money from underused assets, and we gain access to more resources than we could ever before.
2. From an environmental perspective
– the Collaborative Consumption optimises the use of assets, for instance renting a car when I need it on Turo
from local communities, rather than owning one. So that leads to fewer cars in circulation and thus we need fewer resources to build them.
– these platforms enable us to reconnect on a human level. Platforms such as Skillshare
, or Airbnb, enables to meet new people and interact with individuals beyond our close social circle.
In short, the Sharing Economy’s mission is to foster sustainable marketplaces optimising the economic, environmental and social consequences of consumption to meet the needs of current and future generations.
The evolution of trust in consumption
By engaging in collaborative marketplaces like Kickstarter
, we are essentially going back to old market principles. Over the past 50 years, consumption decisions have been made based on brands (Delgado-Ballester et al., 2001
). For instance, we will comfortably drink a bottle of Coca Cola in a foreign country.
We then evolved to sharing information online through social media. Then, we started sharing our banking information online. We’ve now evolved to trusting everyone for everything: rent out outfits for a night, rent children toys for an afternoon, rent out a neighbours car, exchange coding classes for sushi-making ones etc…
“We are entrusting complete strangers with our most valuable possessions, our personal experiences and our very lives. In the process, we are entering a new era of Internet-enabled intimacy
Platforms in the sharing economy are using technology to build strong connections in real life. They are described as technology enablers. So essentially, we are shifting from infrastructures that protect people from each other, to platforms that help people trust each other (Green, 2017
This analysis sheds light on numerous aspects of the sharing economy but particularly on the importance of building trust.
But building trust is complex
First of all, trust is hard to define. Recently it was described as the “willingness to commit to a collaborative effort before you know how the other person will behave” (Yildizeli et al., 2016
As seen in the previous part, technology enablers allow Individuals like myself to achieve significant levels of trust without having to even meet in person. (Ufford, 2015
So what convinced me, as a trustee, and 40 million individuals
to take the leap to get into a stranger’s car using Uber?
And equally, why would an asset owner (aka ‘trustor) rent their car to strangers using Turo
Trust is the element that makes people use these kinds of platforms.
First, because peer-to-peer online exchanges such as Comuneat( a local food community connecting aspiring chefs with lazy cooks), are associated with a high degree of transaction complexities. From online by matching with a potential customer, getting in contact and scheduling a time to meet. To then, meeting in person, connecting, and completing the transaction. Just for one end of the process (Yildizeli, 2016).
Second, if we refer back to Turo’s example, there are risks for both ends that need to be mitigated.
As a trustee, when looking to rent a car, I have some expectations about the service: ‘how likely is that asset I am renting going to meet my expectations?’.
And as a trustor: ‘how likely am I going to get my asset returned in good conditions?’.
Here, placing their personal belongings and properties at risk to strangers.
“Sharing, whether with our parents, children, siblings, life partners, friends, co-workers, or neighbours goes hand in hand with trust.” (Belk, 2010
Finally, in an era of collaborative consumption, we lose sense of ownership to widen our senses of sharing and caring about human relations. We’re moving towards a more cooperative world, where interpersonal trust that used to be scarce, is now abundant. Thus, trust should be a keyword in companies’ business models, to continue towards a friendlier and more connected era of trust.
‘‘The building block of society – Interpersonal Trust – is being tranformed from a scarce resource into an abundant one.”
Some even state that trust is the main reason for the existence of collaborative platforms (Sundararajan, 2016). Without trusting each other, individuals would not share anything.
So, Business models need to be built around trust
On one hand, technology firms form an ecosystem of credibility and trust between consumers by putting in place Trust Systems:
1. Dual-review Systems
– To achieve symmetry of accountability and transparency
, key players have put in place dual rating systems where both the trustor and the trustee are being ratedThose ratings are then made available to the entire community. This can achieve a basic trust level between the two parties. Therefore, we can find those on Uber, Airbnb, TaskRabbit,
2. Vouching systems –
By accumulating positive rating and reviews, platforms incentivise users with status levels, as seen with Airbnb’s ‘Superhosts
‘ or with TaskRabbit’s ‘EliteTasker’. They do it especially well at Couchsurfing
, where users declare certain friends as trustworthy. Additionally, they can only vouch for others if they have at least three vouches themselves. Thus, vouching forms a circle of trust, exclusive to 6.8% of members at Couchsurfing for example.
3. Verification systems
– On Skillshare
and other platforms, an additional trust verification happens when members pay a small fee to have their name and address confirmed; this step is optional but can help users gain additional trust.
The purpose of these systems is to give members additional information to aid in judging whether another member is trustworthy. This means, that better reviews, and/or a higher status level is recognised by the user as ‘more trusting’ and thus leads to more requests in theory (Lauterbach et al., 2009
But on the other hand, the key challenge is to brand the platform itself as ‘trustworthy’. Because at the end of the day, it is the platform that accredits users a certain level of ‘trustworthiness’. This has been observed as trust in the platform such as Uber, influences individuals. Whereas ‘Trust in drivers’ doesn’t (Mittendorf, 2017
theory claims that individuals in a system can be trusted as long as the system is trustworthy.
The success of the sharing economy lies in how its brands cultivating trust.
Pioneers of the industry have invested heavily in measures and campaigns to understand what increases the sense of trust between online users. To showcase the growing importance of trust: I want to elaborate on one pioneer of trust in the collaborative economy: BlaBlaCar
, a french ride-sharing company.
First, it can be seen in BlaBlaCar’s value proposition: ‘Trusted Carpooling’, that ‘Trust’ is embedded in the company culture. They recognised it as being the most important factor driving demand. They actually recognised that 83% of users are willing to pay more for drivers with better ratings.
Second, Blabla car created their dedicated Trust framework designed to ensure full trustworthiness. In their framework D.R.E.A.M.S., they recognised after various trial and errors, 6 factors needed for full trust:
Third, they’ve created a dedicated landing page to share their findings on consumer behaviours towards trust: Superheroes of Trust
. This initiative aims to empower the whole Collaborative industry to prioritise Trust in their business models. They are keeping an active profile on social media, and aim at raising awareness on its importance amongst the industry.
The result? They ran a survey to gauge trust amongst their users and found that 88% of respondents say that they highly trust other BlaBlaCar members. This is close to the 92% who highly trust their friends.
Incredible no? People trust more strangers with online profiles than their own colleagues!
I think BlaBlaCar got it. They’ve put the right set of digital trust tools in the hands of their users and managed to recreate a sense of trust, almost equal to a friend’s.
It is therefore essential for the platforms to create a trustworthy and credible image, essential for them to attract potential users. It is equally important for the users to have faith in the platforms as it is to trust the people using the platforms.
The importance of virtual reputation
The trust systems being driven by information online, users eventually become their own PR Managers, trying to build a seamless online profile on how they want to be seen by the rest of the world.
When thinking about it, if I were to be an Airbnb host, I would want people around the globe to believe that I am trustworthy.
I’m therefore carefully going to monitor my profile online, but also look to provide above-expectations services to my guests, to get more business. I know this will generate positive ratings and written reviews that will solidify my online reputation and increase people’s propensity to trust me.
Competition arises amongst users to appear “as trustworthy as possible”. Looking at Airbnb statistics, we confirm that as user’s reputation goes up, so has the chances of getting a request and the price to charge.
This process supposedly creates a virtuous circle of trust and higher-quality services, ans most importantly poses the question of the Value of Trust.
Value of trust set by the trustee
When choosing who to trust and not to trust online, our decision is essentially influenced by the trustor’s reputation.
As the trustee’s readiness to pay increases in correlation with its trust level towards the service provider, trust
Value is based on trust.
‘Trust is the currency of the Sharing Economy’
So what does all this mean?
Collaborative platforms are creating a new digital trust ecosystem. With the abundance of excess capacity, in the high consumerism economy and ultra-digital we are currently living, I think sharing is a great way, not only to lower spendings, and has less impact on the environment, but also leads to rediscovering and connecting with those around us.
Within the sharing economy, startups who will prioritise trust in their business model will be deemed to success. The extent to which it will reach mass adoption will highly depend on their
ability to communicate trust between users.
Value is based on trust.
I’d like to end this blog with a quote I found really inspiring, and supporting why I am looking forward to this new era of trust: connecting more, and being empowered as individuals.
“Trust is incredibly powerful because it enables us to feel comfortable sharing and so we share more often.” (BlaBlaCar, 2017
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