The new economy – Collaborative Consumption

As mentioned in an earlier blog post, I am a big fan of airbnb.com.

It’s a winning combination for both the ‘host’ and the tourist. The site provides property owners with a global forum in which to secure bookings and earn an income, while at the same time offering travellers choice, a unique alternative to the traditional hotel room or backpacker hostel and the chance to live an ‘authentic local experience’ in their destination of choice.

Even better, it is social – full of user generated content with reviews, recommendations, links to Facebook and curated ‘wishlists’ from travel bloggers helping the tourist select their ideal accommodation based on the experiences and photos of others.

Airbnb has reportedly grown by 400% over the last year and I can understand why. It is so simple to use.

But what I have only recently realised is that airbnb is just the tip of the iceberg of a new economic phenomena known as ‘collaborative consumption‘. Enabled by web technologies, it is a contemporary and social form of consumption that involves bartering, sharing, renting, lending or swapping resources instead of buying or owning them.

Rachel Botsman is the co-author of the book, “What is Mine is Yours, How Collaborative Consumption is Changing the Way we Live” and explains the concept in this TED talk:

Perhaps the most fascinating aspect of collaborative consumption that Rachel Botsman outlines is the fact that “technology is enabling trust between strangers.” As she explains, the combined effect of social networking and technology is creating a global village where people can mimic the traditional bartering behaviours of old in a new and evolved way. As a result, we are seeing far more peer-to-peer sharing and reuse of resources thereby extending the product lifecycle for some items.

There are numerous examples of organisations who have adopted the collaborative consumption business model. Some of the more well known include:

Getaround is a carsharing community. This site provides a portal for car owners to rent out their cars short-term to others. The renters can locate and book a car on their smartphone, pick up the keys from the owner and then drive away for the agreed time.

Need an office space? Loosecubes provides a portal in which independent workers can rent out a ‘cube’ within an office or workspace. Not only do you receive the hot desk, but the chance to meet and work with other professionals.

Snapgoods is a site where neighbours can borrow or rent items from each other – from lawnmowers to backpacks. The owners simply post an image of their good and a neighbour can reserve and borrow or rent it when required.

Swapitbaby is an Australian site that offers parents the chance to swap toys, clothes, prams or other baby/kids merchandise via a credits/points system.

These online communities are a fabulous example of how social media and new technology has connected and empowered consumers, allowing them to sidestep the traditional B to C (business to consumer) channel and create a whole new network of consumers sharing their resources. Green, affordable and fun, their credibility and trustworthiness is boosted by the reviews, ratings and links to other social media platforms such as Facebook.

So what does this mean for brand managers and marketers who are traditionally focused on stimulating individual demand for the purchase of new products and services rather than sharing or recycling? Does collaborative consumption shrink the marketplace? Is this something that marketers should be scared of?

I don’t think so. In the current environment of rapid technological advancement and increased consumer empowerment, the best marketers need to be adaptable, forward thinking and innovative. While collaborative consumption may seem a little intimidating or challenging, marketers need to consider the fact that it also offers a number of opportunities including access to new markets – ie. people who may not have initially purchased a brand’s product but ‘trial’ it via collaborative consumption – and a powerful source of word of mouth advertising.

Perhaps the biggest challenge for marketers will be changing their paradigm and rethinking how to promote products and build brand reputations in line with an extended product lifecycle, new emerging key influencers and a ‘we’ versus ‘me’ mindset.

An interesting challenge!

Have you used these sites to rent, share or swap? How do you think think marketers can adapt? Love to hear your thoughts.

Until next time.

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