Businesses such as Airbnb, Uber, and Getaround are just a small example of companies that demonstrate success using this technique. There are countless others who are also doing so, or attempting to figure out ways to explore other verticals in this very same approach.
These companies help reduce consumption by providing greater efficiency of use for products that are underutilized. For example, Getaround is a service that connects people to cars that are not being used. This simple action provides the availability of a vehicle to someone who only needs it sometimes, theoretically preventing an extra car from being put on the road.
By reducing consumption, we see a reduction in the need to extract materials from the earth to support those extra vehicles. From the perspective of the good of the earth, the sharing economy is a good thing.
How? Products that are purchased typically come with some type of warranty from the manufacturer. For example, a video camera would have a one year warranty. If that camera failed after the first year, the cost of repair could outweigh the value of fixing it, thus requiring the purchase of a new camera while discarding the old, a bad thing for the environment.
In the case of a TV that is purchased for $2500, a five year protection plan would cost approximately $349 and provide a much longer secured use of the product. Should the TV fail, the cost to have someone come to your home and look at it would start around $100, just for a diagnostic. Should your repair exceed the value of fixing it, you’re not only out $100, you’re going to need to buy a new TV and discard the broken one. A good protection plan would step in and get that TV fixed.
In these examples, the purchase of a extended protection plan would have prevented the new purchase by extending the life of the product.
This scenario has happened many times to people who don’t have protection coverage, which has in no doubt resulted in environmental waste and additional resources required from the earth.
The good news is, over $38 billion in protection plans are purchased on an annual basis, which should serve to curve some of that waste.
Looking at this industry from an environmental perspective demonstrates additional value for a “feel good” purchase.
The next time when you are asked if you’d like one, or on that online purchase you made, think again about picking up a protection plan. Not only will it save you money and extend the life of your product, you’re taking a step towards helping the planet.