What is Collaborative Consumption?

Collaborative consumption is an important groundswell which is changing the very nature of ownership and consumption. People are sharing the ownership and use of products, services and spaces with others in their communities, or around the world, using community-driven marketplaces that facilitate sharing, renting, swapping, bartering and gifting.

The rise of collaborative consumption can be attributed to three broad trends. First, the widespread adoption of online social networks like Facebook, Twitter, LinkedIn and Weibo has deepened connection between people and communities and created new types of trust mechanisms based on friend-of-friend relationships. Second, the increasing density of cities has made it both possible and necessary for people to save space and money by sharing instead of owning. Third, the combination of the continuing recession and the climate crisis has made people more mindful of what they buy and how they use what they own, prompting them to save money and reduce their environmental impact by sharing instead of owning.

Courtesy: seyed mostafa zamani via Flickr

As a result, people, especially millennials, are becoming more value-conscious and using online, mobile and social platforms to choose products based on peer reviews, search for the best deals, and win discounts and freebies. More radically, they are prioritizing access over ownership, and choosing sharing, renting, swapping, bartering and gifting over buying.

In response, we have seen the emergence of a wide range of platforms to enable collaborative consumption, including renting services, peer-to-peer marketplaces and sharing communities. Some of the most popular categories for collaborative consumption are mobility, spaces, products and services.

Within mobility, the most popular sub-categories are car sharing (Zipcar (video), BlaBlaCar (video), GetAround (video),RelayRides (video)), bike sharing (Velib, Bixi (video), B-cycle (video), SpinLister), ride-sharing (Sidecar (video), Lyft (video),Zimride (video)), and parking services (ParkatmyHouse (video), ParkingPanda (video)).

Zipcar

Within spaces, the most popular sub-categories are vacation homes (Couchsurfing (video), Airbnb (video), Wimdu (video)), office spaces (DeskWanted (video), OpenDesks), and gardens (SharedEarth, Landshare (video)).

Airbnb

Within products, the most popular sub-categories are clothes and accessories (thredUP (video), Rent the Runway (video), Bag Borrow or Steal (video), PoshMark), books (Kindle Owners’ Lending Library, Lendle, BookCrossing, PaperbackSwap), and movies (Netflix).

Rent the Runway

Within services, the most popular sub-categories are errands (TaskRabbit (video), dogsitting (DogVacay (video), Rover (video), education (Skillshare (video), WeTeachMe (video), italki (video)), lending (Prosper, Zopa, Lending Club) and crowdfunding (Kickstarter (video), Indiegogo, Crowdrise, Razoo (video)).

TaskRabbit

In addition, several multi-purpose collaborative consumption platforms enable people to sell (Facebook Marketplace, eBay,Craigslist, Zaarly (video)), rent (Zilok, Rentoid (video), Uniiverse (video)) and donate (freegle (video), Zealous Good (video), FreeCycle) all types of products, services and experiences.

Uniiverse

Some of these collaborative consumption platforms have achieved significant scale and success. Airbnb has 4 million people who have shared 300,000 listings in 39,000 cities and rented 10 million nights. Rent the Runway has 3 million members who have rented dresses from 170 designer brands.

The scale and success of these collaborative consumption platforms demonstrates the shift in consumption from ownership to access, and signals the resurgence of trust-based peer-to-peer marketplaces.

Rachel Botsman and Roo Rogers, authors of What’s Mine Is Yours: The Rise of Collaborative Consumption, said:

“Collaborative consumption is not a niche trend, and it’s not a reactionary blip to the recession. It’s a socioeconomic groundswell that will transform the way companies think about their value propositions—and the way people fulfill their needs.”

TEDx Talk: Rachel Botsman: The case for collaborative consumption

How does Collaborative Consumption work?

Collaborative consumption platforms can be classified into renting services, peer-to-peer marketplaces and sharing communities. Each of these three models has distinctive characteristics across four dimensions: the nature of ownership, the type of transaction, the role of the platform and the possibilities for community-building.

In the renting service model, an organization owns the products and creates a platform to rent them to people, instead of selling them (Zipcar, Rent the Runway). This model is a direct extension of the business model that hotel rooms, vacation time shares, airplanes and taxis have been built on, and sets a precedent for all products to be converted into services over time. These platforms use technology to make the renting experience more user-friendly, and add a community layer to drive viral growth (Rent the Runway: Our Runway).

In the peer-to-peer marketplace model, an organization creates a platform to enable people to sell or rent spaces, products, services or experiences to each other (eBay, Airbnb, TaskRabbit, Skillshare). These platforms can be particularly disruptive because they use technology to directly connect people and eliminate the need for service organizations like hotels and universities. The platforms invest in creating a community and build trust between users through social connections (Airbnb Social Connections), meetups (Airbnb meetups), verified profiles and peer reviews, and typically make a margin on the transactions between users.

Finally, in the sharing community model, an organization or changemaker creates a community to connect people and enable them to barter, swap or gift spaces, products, services or experiences to each other (FreeCycle, CouchSurfing, BookCrossing). These older communities tap into people’s desire to do good and connect with likeminded others, and build trust through the same mechanisms as the peer-to-peer marketplaces.

Collaborative Consumption for Brands

Branded programs can be classified into three models: collaborative consumption platforms that connect people with products, social commerce tools that empower people to create their own catalogs or store fronts, and programs that mobilize people to re-use & recycle their products.

Auto companies have taken the lead in creating their own car-sharing platforms, enabling people to rent available vehicles online, via mobile apps, or through local dealers. Daimler Car2Go (video), BMW Drive Now (video), Volkswagen Quicar (video) and Peugeot Mu (video) have all created their own car-sharing service. Avis has bought car-sharing services Zipcar, Ford has partnered with German car-sharing service Flinkster to launch its own service Ford2Go, while Toyota Rent a Car has created a more traditional car rental service. Dodge Dart Registry (video) has taken a different approach to collaborative consumption and has created a crowdfunding platform to help customers request friends and family to sponsor parts of the new car for them. Auto companies are also partnering with collaborative consumption platforms to promote their own technology, provide additional services to their customers, or create possibilities for the future. For instance, GM partnered with RelayRides (video) to enable customers to rent out OnStar equipped cars easily, and BMW i has partnered with collaborative consumption platform Park at My House (video) to enable users to rent their vacant parking spots.

This is an extension of a wider trend in which auto companies are creating mobility services, which go beyond selling, or even renting, cars. BMW i, for instance, has entered into several partnerships to provide mobility services to its customers, inside and outside the car, including electric vehicle charging network ChargePoint (video), parking spot finding service Park Now (video), urban experience discovery service My City Way, location-based family network Life360 and mass transit app Embark. Daimler has created transit planning service Moovel (video) to help users plan their travel across shared cars, taxis, shared bikes, buses and trains. Volkswagen has partnered with Google to create Smileage (video) to help VW customers record and share their riding experiences with their social networks.

Riding on the popularity of car-sharing and bike-sharing services, other companies are also beginning to create or sponsor such services, to strengthen their brand (Barclays Cycle Hire (video)).

Going beyond mobility, apparel brands have created a number of collaborative consumption tools and platforms.

Some tools enable customers to customize products, create their own storefronts, and sell products to their own networks. NIKEiD (video) and Converse – Design your own enable customers to customize and sell their own shoes. Vancl Star in China created a Pinterest-style network to enable customers to showcase and sell their own styles to their social networks and earn a commission. Magazine Voce (video) in Brazil created a similar platform to enable people to create social storefronts on Facebook and Orkut to share tips and sell products to their friends.

Other platforms enable customers to resell, reuse or recycle their used products to reduce their environmental impact. Marks and Spencer Shwopping (video) encourages customer to donate their used clothes to Oxfam, so that they can be resold, reused, or recycled, and rewards them with discounts. Aeropostale partnered with Do Something to create the Teens for Jeans (video) campaign and asked teens to donate their old jeans for charity. Nike Reuse-A-Shoe encourages people to donate their old athletic shoes so that they can be recycled in the production of athletic equipment or athletic facilities.

Patagonia and eBay Common Threads (video) combined these two models by enabling customers to sell their used Patagonia clothes and gear to others on eBay.

Finally, other types of businesses are also experimenting with collaborative consumption. Google started renting out Chrome notebooks to businesses, and Walmart is considering incentivizing customers at its stores to deliver online orders to other customers.

Collaborative Consumption Case Studies

Branded program: Vancl Star

Source: star.vancl.com

In 2011, Chinese e-tailer Vancl launched the Vancl Star platform, which enables people to create their own personal stores online, featuring their favorite Vancl styles and photos of themselves wearing Vancl products.

Blogger Alia wrote:

“Star.vancl.com is a photo blog + brand advocate community site for VANCL fans. Fans of the brand can register to open a “store”, which is more like a photo blog, and then they can showcase their VANCL purchases and upload photos of how they mix and match.”

According to AdAdge:

“Visitors can buy featured items by clicking on the photos; Vancl handles the sale and shipping. Account holders get a 10% commission, with some Stars reportedly earning thousands of dollars.”

trendwatching points out the convergence of curation and co-creation in this model of social commerce, which it calls (M)etailing:

“Driving the (M)ETAIL trend is a shift towards more personal recommendations (from real people if not other consumers), along with ever more personalized products and services.”

Branded program: Magazine Você

Source: apps.facebook.com/magazinevoce

In 2012, Brazilian retailer Magazine Luiza launched social commerce platform Magazine Voce, which enables people to create their own store fronts on Facebook and Orkut. People feature their favorite products from the Magazine Luiza catalog along with personal opinions and recommendations. Then they promote their store within their networks and earn a commission on each sale.

Magazine Você

Marketer Eric Smith points out the power of social influencers in the world of collaborative marketing:

“Social influencers are generally powerhouses online. They’ve successfully built a core group of dedicated followers of their posts, updates, stories, etc. By partnering with these influencers, brands gain access to the influencers’ avid followers. This access allows brands to reach a larger audience while developing deeper relationships. Fostering the relationship between brands and social influencers enables brands to gain advocates with enormous social reach and stay connected to their target consumers.”

Branded program: Dodge Dart Registry

Source: dodgedartregistry.com

In January 2013, Dodge launched the Dart Registry, a platform which enables people to request friends and family members to help fund their new car. The process is similar to crowdfunding – people share their story, set funding tiers and recruit support from their social networks – while generating word of mouth around the Dodge Dart and drawing attention to the car’s parts.

Adweek’s Tim Nudd explains the process:

 “You sign up for the program, configure and customize a Dodge Dart (choosing from 12 exterior colors, 14 interior color and trim options, three fuel-efficient engines, three transmission choices, safety features, aerodynamics, etc.), and set a goal for the amount of money you want to raise to fund it. The site then itemizes components of the car—like a steering wheel, shifter, seat or engine—and allows friends, family or anyone to sponsor the parts.”

Forbes contributor Matthew de Paula notes that the program should help get the Dodge Dart “on the radar of potential buyers”:

“The way the Dodge Dart Registry ties in social media could prove helpful in that regard. As would-be car buyers post updates on their fundraising, they’ll be helping to boost awareness of the compact sedan.”

Dodge: How to change buying cars forever

Branded program: Patagonia and eBay Common Threads

Source: campaigns.ebay.com/patagonia

In 2011, Patagonia and eBay partnered to launch the Common Threads store on eBay, encouraging Patagonia customers to use the eBay platform to buy and sell used products, and thereby maximize the value of their goods while helping reduce their environmental impact.

Here’s how it works:

“A customer who lists a used Patagonia product on eBay will be asked to take the Common Threads Initiative pledge and become a partner. Membership will make the customer’s listing eligible for inclusion in the Common Threads Initiative store on eBay and on Patagonia.com. Patagonia will not receive any of the profits associated with the Common Threads Initiative storefront.”

Patagonia + eBay Green – Common Threads Initiative

The Common Threads initiative has achieved quite some scale, and has expanded to the UK in 2013. Fast Company’s Christina Chaey shares:

“Patagonia got 24,000 people to pledge to buy less and buy used; it also partnered with eBay to make it easy for people to take the pledge and then buy and sell gear from one another. Customers have resold 15,000 Patagonia pieces for $500,000 so far. “

Future of Collaborative Consumption

We believe that collaborative consumption is a social movement that will become even stronger in the coming years. We expect renting services, peer-to-peer marketplaces and sharing communities to proliferate as smaller niches attain critical mass. At the same time, we expect to see consolidation in the larger niches, with city-focused players being acquired by other players or product companies.

We expect that new services like TrustCloud will aggregate users’ trust scores across collaborative consumption platforms, just like PeerIndex, Klout and Kred aggregate social influence across social networking and content sharing platforms. These trust networks will be context-specific and enable users to quickly establish trust for specific verticals and tasks.

We expect that sensor-enabled products and spaces will dramatically improve the collaborative consumption experience, by making the service experience more seamless, making social sharing more easy, and making trust mechanisms more robust, driving the growth of platforms which first adopt them. We expect players like Social Bicycles (video) to create such sensor-based solutions for each collaborative consumption vertical.

We believe that all companies will need to respond to the collaborative consumption groundswell, by converting their product-focused selling-oriented business models into service-focused renting-oriented business models, building peer-to-peer secondhand marketplaces for their products, and providing additional services to their customers through peer-to-peer service marketplaces.

After mobility and spaces, we expect many product brands to create renting services and peer-to-peer secondhand product marketplaces, or see third-party platforms disrupt their industries. Luxury fashion and home electronics brands, which have high price tags, high idle times and short planned obsolescence cycles will be the most impacted, but we expect this trend to cut across product categories.

Similarly, we expect many service brands to create peer-to-peer service marketplaces, or see third-party platforms disrupt their industries. We expect consumer-focused industries like hospitality, education, professional services and financial services to be most impacted (platforms like Skillshare (video) have already begun disrupting the education industry), but also expect to see more B2B oriented service marketplaces.

Therefore, we expect that many large product or service companies across will partner with, invest in, or create their own collaborative consumption platforms, and use these to provide unique value to their customers and differentiate themselves from smaller players.

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This is the tenth report from our upcoming People’s Insights Annual Report titled “Now & Next: Future of Engagement,” to be published as an interactive iPad app. The report will highlight the ten most important frontiers that will define the future of engagement for marketers, entrepreneurs and changemakers: Crowdfunding, Behavior Change Games, Collaborative Social Innovation, Grassroots Change Movements, Co-creation Communities, Social Curation, Transmedia Storytelling, Collective Intelligence, Social Live Experiences and Collaborative Consumption.

In each of these reports, we start by describing why they are important, how they work, and how brands might benefit from them; we then examine web platforms and brand programs that point to the future (that is already here); then finish by identifying some of the most important features of that future, with our recommendations on how to benefit from them.

Do subscribe to the People’s Lab email newsletter to receive each report and also an invite to download a free copy of the interactive iPad app.