As Uber petitions municipal governments and battles angry taxi drivers in cities across Canada, at least one person in Parliament will be paying close attention. On April 8, the Conservative Party of Canada named Alex Nuttall, the MP from Barrie–Springwater–Oro-Medonte, as the official Opposition critic for the New Sharing Economy.
The appointment seems like a premature move, not least because Nuttall is a critic with no corresponding government department to criticize. But mostly, it’s because Canada’s sharing economy doesn’t appear to be all that large. Despite the media coverage, controversy, protests and fears of disruption generated by the likes of Uber and Airbnb, those two companies remain the only sharing (or on-demand) economy players of scale in Canada. Other big American platforms, like Instacart for grocery delivery, TaskRabbit for errand running and Postmates for delivery, have yet to cross the border. Meanwhile, homegrown upstarts are still finding their footing. Before the Canadian sharing economy can really start to grow, policy-makers will need to clarify the regulatory environment, and companies that are not Uber or Airbnb need to figure out if their business models actually work.
“Right now, it’s really hard to get a firm handle on a total figure [for] what kind of economic activity the sharing economy encompasses in Canada,” notes Sunil Johal, policy director at the Mowat Centre, an Ontario-focused public policy think-tank at the University of Toronto’s School of Public Policy and Governance. A PwC estimate suggests the five key sectors of the sharing economy—accommodation, transport, retail, finance and services—were worth a collective US$15 billion globally in 2015. “If you just do some simple math in terms of Canada’s share of the global marketplace, then it’s not a gigantic number—it’s in the low hundreds of millions or high tens of millions,” says Johal.
Market size likely plays a significant role in why American companies have been reluctant to enter Canada, notes Nuttall. Indeed, Torontonians only really have Uber as a taxi alternative, while residents of Miami, Malacca and Mumbai can tap the driver networks of Lyft, Grab and Ola respectively. Nuttall says that even companies already operating here tend to be well-represented in urban areas but not in suburban or rural regions. “In Barrie, I believe we have six Uber drivers,” he says. “If you go 45 minutes down [Highway] 400 to Toronto, it’s thousands.” The U.S. simply has far more cities populated with enough potential users to justify market entry.
Some companies are also still working out a profitable business model where they currently operate. “Once they can nail that down, they can start exporting it to other jurisdictions,” Johal says. Startups like Instacart and TaskRabbit have recently cut large numbers of employees and undergone strategic realignments, as they try to figure out crucial details such as how much to pay people and what profit margins to expect. Until then, they’re sticking to the U.S.
Plenty of Canadian startups are looking to stake out market share in the meantime, though not one of them has the scale of Uber or Airbnb, or even a national presence. That may be because they’re not as well-funded as their Silicon Valley peers or because they simply haven’t built up enough name recognition yet. But these startups are learning from the mistakes made by their southern neighbours.
Take grocery delivery. Though it also offers one-hour delivery, Toronto-based InstaBuggy’s modus operandi is different from that of San Francisco’s Instacart. Unlike Instacart, whose personal shoppers were kicked out of stores in the early days, InstaBuggy worked with grocers to install in-store pickers and packers from the beginning. Over the past year, Instacart has redesignated much of its workforce as part-time employees instead of contractors; InstaBuggy’s drivers have always been part- or full-time employees. “When you have contractors, you open a can of worms to issues like liability, taxes and so on,” notes Julian Gleizer, who launched InstaBuggy last year. Using employees instead of contractors also makes it easier to enforce customer service standards.
Lawmakers’ evolving response to the sharing economy may be another reason some platforms have avoided Canada thus far, according to Nuttall. “If there’s no regulatory structure in place, it can be an unsteady place to invest,” he says. Once governments write their policies for these platforms and their users, companies can decide whether they’re willing to enter the market.
Though most regulatory issues have fallen to municipal bureaucrats so far, Nuttall says the feds do have a role to play. “We can take leadership by entering into and facilitating the debate, as well as sharing good policy ideas,” he says. For example, policy-makers at the federal level can conduct their own research on the effects of the sharing economy and pass it along to municipal and provincial authorities.
Some variations in labour rules aside, the Canadian and U.S. regulatory regimes are actually more closely aligned than they are with other parts of the world, which is good news for major sharing economy companies. “It’s probably easier for them to translate their business model here than it would be, perhaps, to some other countries in Europe or Asia,” notes Johal. “In many cases, we will be the next stopping point for some of these companies.”
That could be the case with Lyft—the firm made a submission to the April meeting of the City of Toronto’s Licensing and Standards Committee. Still, that statement was noticeably noncommittal. “While we have no immediate plans to launch in Toronto, we see tremendous opportunity for ride-sharing in your city,” wrote Mike Masserman, Lyft’s senior director of federal and international government relations. Until Lyft sees a compelling reason to head north, sharing economy enthusiasts will just have to hail an Uber.
MORE ABOUT THE SHARING ECONOMY & INNOVATION:
- How Four Seasons is fighting back against Airbnb
- Why human resources is the future of marketing
- How Airbnb and Uber are transforming the modern vacation
- How companies are putting the Internet of Things to work today
- How Indochino gets a new suit to your door in under two weeks
- How Big Pizza is crushing the mom-and-pop pizzeria with technology
- How to bring your customer scheduling into the mobile age