Trend watch: Sharing economy & product-as-a-service in 2026 — signals, winners, and red flags

The global product-as-a-service (PaaS) market reached $81.4 billion in 2025, growing at 24% annually as manufacturers and platforms shift from selling products to selling outcomes. From industrial equipment subscriptions to consumer electronics leasing, this model is restructuring how goods flow through economies and redefining the relationship between ownership, usage, and waste.

Why It Matters

The sharing economy and product-as-a-service model address two converging pressures: resource scarcity and regulatory demands for circularity. The EU's Ecodesign for Sustainable Products Regulation (ESPR), effective 2025, pushes manufacturers toward durability and repairability, making ownership-based models less profitable and service-based models more attractive. Meanwhile, the average consumer product utilization rate remains below 10% for items like power tools, formal wear, and specialty kitchen equipment.

For emerging markets, the shift carries additional significance. PaaS models reduce the upfront cost barrier for industrial equipment access, enabling small and medium enterprises to deploy advanced machinery without capital expenditure. In Sub-Saharan Africa, equipment-as-a-service platforms for agriculture and construction have grown 62% year-over-year since 2023, opening productivity gains previously locked behind financing constraints.

The environmental case is well documented. A 2025 study by the Ellen MacArthur Foundation found that shared and leased products reduce material throughput by 20-40% compared to ownership models, provided that products are designed for longevity and that logistics networks operate efficiently.

Key Concepts

Product-as-a-Service (PaaS): A business model where manufacturers or platforms retain ownership of physical products and sell access, usage, or outcomes. Revenue shifts from one-time sales to recurring subscriptions or pay-per-use fees.

Sharing Economy Platforms: Digital marketplaces that enable peer-to-peer or business-to-consumer sharing of underutilized assets. These range from mobility (ride-sharing, car-sharing) to tools, clothing, and industrial equipment.

Total Cost of Ownership (TCO) Shift: PaaS models redistribute costs from the buyer to the provider, embedding maintenance, repair, and end-of-life management into the service price. This creates incentives for the provider to build durable, repairable products.

Utilization Rate: The percentage of a product's available use-time that is actually consumed. Low utilization is the core economic justification for sharing: a power drill used 13 minutes in its lifetime can serve 50+ households through a sharing platform.

Reverse Logistics: The supply chain infrastructure required to collect, refurbish, and redistribute products in a PaaS model. Reverse logistics costs are the single largest operational challenge for service-based businesses.

What's Working

Industrial Equipment-as-a-Service Is Scaling

Caterpillar, Hilti, and Rolls-Royce have demonstrated that PaaS works at industrial scale. Hilti's Fleet Management program, covering over 2.5 million tools across 120 countries, now generates more than 50% of the company's revenue. Customers pay a monthly fee per tool, and Hilti handles maintenance, replacement, and end-of-life recycling. The model has reduced average tool downtime by 30% and cut tool waste by an estimated 25% compared to purchase-and-dispose cycles.

Rolls-Royce's "Power by the Hour" model, where airlines pay per flight hour rather than purchasing jet engines, has been refined over two decades and now serves as a template for capital-intensive PaaS. The model aligns incentives: Rolls-Royce earns more when engines run reliably and efficiently, driving continuous improvement in fuel economy and maintenance scheduling.

Emerging Market Adoption Accelerating

In India, equipment rental platform Infra.Market reached $1.5 billion in annualized revenue in 2025 by enabling construction companies to access heavy machinery on demand rather than purchasing it. The platform manages maintenance and logistics, reducing equipment idle time from an industry average of 40% to under 15%.

In East Africa, Hello Tractor's IoT-enabled tractor-sharing platform connects smallholder farmers with tractor owners, achieving 85% utilization rates compared to 30% for individually owned tractors. The platform has served over 1 million farmers across Nigeria, Kenya, and Mozambique, demonstrating that PaaS can drive agricultural productivity without requiring individual farmers to make capital investments.

Fashion Rental Gaining Mainstream Traction

Rent the Runway, despite early financial struggles, reached profitability in late 2025 after restructuring logistics and implementing AI-driven demand forecasting. Each garment in its inventory is worn an average of 30 times before retirement, compared to the fast-fashion average of 7 wears. The company's 2025 impact report showed a 72% reduction in carbon emissions per wear compared to single-owner garments.

In Europe, Decathlon launched equipment rental services across 1,200 stores, covering camping gear, sports equipment, and outdoor apparel. The program saw 4.3 million rental transactions in its first full year, with 38% of renters converting to repeat users.

What's Not Working

Consumer Electronics Subscriptions Struggling

Despite significant investment, consumer electronics PaaS has underperformed. Grover, a European electronics subscription platform, faced mounting losses in 2024-2025 as device depreciation outpaced subscription revenue. The core challenge is rapid technology cycles: a smartphone loses 40-50% of its residual value within 12 months, creating a structural gap between what consumers are willing to pay monthly and the provider's cost of maintaining a fleet of depreciating assets.

Samsung's Galaxy subscription service, launched in 2023, was scaled back in late 2025 after lower-than-projected adoption rates. Consumers showed willingness to subscribe to high-ticket items (washing machines, refrigerators) but not smartphones and tablets, which they prefer to own due to personalization, data privacy concerns, and perceived switching costs.

Reverse Logistics Costs Remain Prohibitive in Many Categories

For lower-value items, the cost of collecting, inspecting, cleaning, and redistributing products often exceeds the revenue generated from additional rental cycles. A 2025 analysis by McKinsey found that reverse logistics adds 30-50% to operating costs in furniture and home goods rental, compared to 10-15% in industrial equipment where items are high-value and standardized.

Ikea's furniture rental pilot, launched in 30 markets, was consolidated to 12 markets in 2025 after logistics costs proved uneconomical for lower-priced items. The program now focuses exclusively on office furniture and premium residential collections where unit economics work.

Greenwashing Concerns Eroding Trust

Some sharing platforms have drawn scrutiny for environmental claims that do not hold up under lifecycle analysis. Ride-sharing services, initially marketed as reducing car ownership, were found by the Union of Concerned Scientists to increase total vehicle miles traveled by 69% in major US cities, primarily through deadheading (driving without passengers). This finding has created skepticism about sharing economy environmental claims more broadly, even for platforms with genuinely positive impacts.

Key Players

Established Leaders

• Hilti: Fleet Management tool subscription serving 2.5 million+ tools across 120 countries, generating over half of company revenue.
• Rolls-Royce: Power by the Hour jet engine leasing model, operating for 20+ years with 16,000+ engines under management.
• Caterpillar: Cat Financial and equipment rental services covering construction, mining, and industrial machinery globally.
• Decathlon: Equipment rental program across 1,200 European stores with 4.3 million transactions in its first year.

Emerging Startups

• Hello Tractor: IoT-enabled tractor-sharing platform for smallholder farmers in Africa, serving 1 million+ farmers.
• Infra.Market: Indian construction equipment rental platform with $1.5 billion annualized revenue.
• Fat Llama: Peer-to-peer rental marketplace in the UK covering tools, electronics, and specialty equipment.
• Rheaply: B2B asset exchange platform enabling companies to share or redistribute underused equipment internally and externally.

Key Investors and Funders

• Tiger Global: Lead investor in multiple sharing economy platforms across emerging markets.
• Sequoia Capital India: Backing equipment-as-a-service platforms in South and Southeast Asia.
• European Investment Bank: Providing debt financing for circular economy PaaS ventures through the Circular Economy Finance Support Platform.

Signals to Watch in 2026

Bullish signals:

• EU Digital Product Passport regulation driving manufacturers to track product lifecycles, making PaaS data infrastructure a competitive advantage
• Insurance companies launching usage-based product coverage specifically designed for shared assets, reducing PaaS operator risk
• OEMs embedding IoT sensors at the factory level, reducing the retrofit cost of monitoring shared equipment by 60%

Bearish signals:

• Consumer electronics subscription platforms continuing to face unit economics challenges, potentially triggering consolidation or market exits
• Regulatory uncertainty around platform worker classification affecting peer-to-peer sharing models
• Rising interest rates increasing the cost of financing product fleets, squeezing margins for capital-intensive PaaS providers

Red flags:

• Platforms claiming environmental benefits without publishing lifecycle analyses or utilization data
• PaaS providers with customer acquisition costs exceeding 18-month subscription revenue
• Sharing platforms in low-value categories without proprietary logistics infrastructure

Action Checklist

1. Assess your product portfolio for PaaS suitability by evaluating asset value, utilization frequency, maintenance complexity, and depreciation curve
2. Calculate total cost of ownership including reverse logistics before committing to a service model
3. Implement IoT-enabled tracking on all shared assets to monitor utilization, condition, and maintenance needs in real time
4. Design products for durability, modularity, and repairability to maximize the number of use cycles per unit
5. Build or partner with reverse logistics networks before scaling PaaS offerings
6. Publish transparent utilization and lifecycle data to differentiate from greenwashing concerns
7. Evaluate emerging market entry through equipment-as-a-service models that reduce customer capex barriers
8. Monitor EU ESPR and Digital Product Passport requirements for compliance readiness

FAQ

What product categories work best for product-as-a-service? High-value, low-utilization products with long useful lives perform best. Industrial equipment, construction tools, and specialty sporting goods achieve the strongest unit economics. Products that depreciate rapidly (consumer electronics) or have high cleaning and logistics costs relative to value (low-cost furniture) tend to struggle in PaaS models.

How do PaaS models affect revenue recognition? PaaS shifts revenue from lump-sum sales to recurring subscription or usage-based income, spreading recognition over time. This improves revenue predictability but requires higher upfront capital investment in product fleets. Companies transitioning from sales to PaaS typically experience a 12-24 month revenue dip before recurring income catches up.

Are sharing economy platforms genuinely better for the environment? It depends on the category and implementation. Platforms that achieve high utilization rates (above 50%) and reduce net production of new goods deliver real environmental benefits. However, platforms that increase total consumption or generate significant transport emissions from logistics may have a net negative impact. Lifecycle analysis is essential for verifying claims.

What is the biggest operational challenge in PaaS? Reverse logistics consistently ranks as the primary operational and cost challenge. Collecting, inspecting, repairing, cleaning, and redistributing products requires infrastructure that most companies lack. Successful PaaS operators either build proprietary logistics networks or partner with specialized providers.

How are emerging markets adopting PaaS differently? Emerging markets often leapfrog ownership models entirely, particularly in equipment-heavy sectors. Lower labor costs make repair and refurbishment economically viable, and limited access to capital makes pay-per-use models more attractive than purchase. Mobile payment integration is a key enabler, with platforms like Hello Tractor and Infra.Market building on widespread mobile money adoption.

Sources

1. Ellen MacArthur Foundation. "Product-as-a-Service: Circular Business Model Insights." Ellen MacArthur Foundation, 2025.
2. McKinsey & Company. "The Circular Economy in Consumer Products: Reverse Logistics Economics." McKinsey, 2025.
3. European Commission. "Ecodesign for Sustainable Products Regulation Implementation Report." EC, 2025.
4. Union of Concerned Scientists. "Ride-Hailing's Climate Risks: Shifting from Increasing Pollution to Reducing It." UCS, 2024.
5. Hilti Group. "2025 Annual Report: Fleet Management Performance." Hilti, 2025.
6. World Economic Forum. "Sharing Economy in Emerging Markets: Access Over Ownership." WEF, 2025.
7. BloombergNEF. "Product-as-a-Service Market Sizing and Forecast 2025-2030." BNEF, 2025.