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A New Economic Model: Collaborative Consumption & the Sharing Economy
Posted on June 27, 2013 by Stephanie Castro
Named by TIME as one of the “10 Ideas That Will Change the World,” collaborative consumption describes the shift in consumer values from ownership to sharing. The premise of this emerging trend is that sharing can be a desirable alternative to owning. It’s no longer mine, or yours, it’s ours. Humans have been swapping goods and services even before money existed. Now, entire communities around the world are using network technologies to do more with less by renting, lending, swapping and sharing products on a scale never before possible. Technological advances like social networks, mobile and GPS have accompanied this shift by reducing costs, enabling reliable services and quick and efficient connectivity.
As an Account Director working at Text100, a global communications agency, I get the opportunity to work with clients who are innovators and disruptors in their fields. I work on Airbnb, a trusted community marketplace for people to list, discover and book unique accommodations around the world. Often credited as a leader in this space, they stand alongside other companies also creating markets for goods and services not monetized in the past. These companies include RelayRides, EatWith, Rent a Toy and swap style. They provide opportunities to rent your home, share your car, temporarily rent toys and trade clothes. By taking this route you often get a better deal for these services and can potentially generate extra income. This is reshaping business models and building a multi-billion dollar platform.
From a straight forward economic rationale- there is also a lot of money to be made. The Gartner Group estimates that the peer to peer financial lending market will reach five billion dollars in 2013. What’s even more impressive, Forbes estimates that revenue flowing through the share economy directly into people’s pockets will surpass 3.5 billion dollars this year, with growth exceeding 25%.
In addition to the economic advantages for all parties involved, you may be asking yourself why this is exciting for public relations and communications professionals?
The author Lisa Gansky, one of the main supporters of this movement states: “Sharing businesses are based on turning the waste into value. These businesses generally offer a greater feeling of connection and community. They are more trustworthy because they have to be and they are also better for the planet.”
These are companies that perfectly combine the virtual world to reap benefits that are hard to argue – lower costs, less waste and the sense of value-sharing that comes with belonging to a community. These benefits can provide fulfillment for your audiences when communicating with them. They embrace the concept and believe in the product creating an emotional link. On the other hand, Jeremiah Owyang and The Altimeter Group recently released a new analysis highlighting the need for businesses to adapt to this new consumer mindset or “companies may risk becoming dis-intermediated by customers who connect with each other.”
This means we find ourselves in an interesting position as our skills are critical to help both start-ups and brands when they embrace this shift. In PR, we’ve experienced the impact of technology on businesses in many ways. Now it seems like a social layer is being added to everything. We have an in-depth understanding of a company’s target audience along with tools to help us leverage listening, drive response and fuel engagement. As brands begin to adapt their business models to align with consumer’s preferences, all of these skills will be necessary in building and maintaining these new relationships. It’s important to note that while this model continues to evolve and gain popularity, insurance regulations and taxation policies remain obstacles. As this industry continues to grow I am a firm believe that these are the business models of the future.
What are other examples of collaborative communities have you been seeing? Do you think larger, more traditional corporations should embrace this shift?
By Julian Chow, Text100 Singapore
By Lee Nugent, Text100 APAC Managing Director, Consulting & Strategy