The new sharing economy - The next era of the social web
Sharing is an industry thanks largely to new technology. And it's one that we still don't know much about BUT one that holds important implications and opportunities for marketers and business alike as we journey headlong towards a new era of the social web.
Not too long ago, we got eBay and Craigslist, more recently we haveCouchsurfer Airbnb, Free cycle, Zipcar and kickstarter. What do they have in common? They ask people to share in one way or another and are part of a growing trend where access to of goods and services trumps ownership.
(Illustration by craig Robertson)
In 2010, Latitude Research and Shareable Magazine conducted the first-ever comprehensive sharing industry study 'The New Sharing Economy 'to establish benchmarks for awareness and adoption of existing sharing services, as well as sharing attitudes and behaviours.
What they found was that:
•75% of participants predicted that their offline sharing will increase in the next 5 years.
•The most popular perceived benefits of sharing (67% each) were “saving money” and being “good for society,”
•45% of participants liked the idea of sharing services that felt smaller and more accessible like local or grass root communities.
Download the report here
The rise of the new sharing economy
In her memorable TED Sydney keynote last year Rachel Botsman co-author ‘What's Mine is your's: The rise of Collaborative Consumption' outlined what has happened is that there has been a profound shift in the way we do business and how we consume goods and services, we have moved from a purely consumption based society to a new sharing economy. This combined with an economic crisis, environmental concerns, and the maturation of the social web, have given rise to an entirely new generation of businesses.
To put things in context take a look at the following figures:
•Bike sharing is the fastest growing form of transportation in the world which grew 200% in 2010
•Two billion dollar’s worth of goods & services were exchanged on Bartercard in 2009 world’s largest B2B business network
•Freecycle an online site that circulates items to reuse had 5.7 million members across 85 countries
•Couchsurfing a global website connects travellers with locals in more than 235 countries was most visited hospitality website in 2010 with over 3 million visits .
According to Lisa Gansky, author of The Mesh: Why the Future of Business is sharing. "We're at a point where online, shared interest communities and advancements in mobile, real-time and location-aware technologies have created a perfect storm for sharing in the physical world. " The net effect of which is that sharing is becoming a "disruptive psychology" for existing businesses who'll need to evolve and adapt if they're to survive.
See her Jan 2011 TED speech "why the future of the business is the mesh" below for a more in-depth analysis.
Watch out for the key quote "a brand is a voice and a product is a souvenir"
The new business models
Traditional businesses follow a simple formula: create a product or service, sell it, and collect money. But in the last few years a fundamentally different model has taken root - one in which consumers have more choices, more tools, more information, and more peer-to-peer power. In this new climate typified by terms such as sharing, bartering, trading and swapping, Botsman outlines three systems to arrange these new collaborative business models:
1. Product Service Systems: Pay for the benefit, not the product (think paying for the hole, not the power drill that makes it) Example: BMW's new premium car sharing service Drive now
Redistribution Markets: Exchanges that move used goods to where there's new need (think the stretching of product life cycles for things like DVD's) Example: Swap Treasures
3. Collaborative Lifestyles: People with similar interest's band together (think co-working) Example: AirBnb
The benefits are hard to argue -- lower costs, less waste, and the creation of global communities with neighbourly values.
BUT what are the implications for brands and marketers?
1. Businesses need to redefine their roles as purveyors of stuff to purveyors of services and experiences and think about what the changes in relationships are between customers in the new collaborative business model.
•Why will people participate?
•What are the right activities and outcomes to focus on?
•What expertise is required?
•What can organizations offer in return?
•How do we quality control?
The below business model design from the board of innovation outlines the roles and relationship of pioneering commerce marketplace site Etsy.com from which It is possible to use these building blocks to design your own business model.
2. Brands need to evaluate how their products are used. Marketer's must consider if their products should be disposable or reusable, and if they can't make them reusable then how to make the benefits worth sharing more broadly.
3. Brands should facilitate sharing and become active participants in communities and think how they can help that community to do what it wants to do. Furthermore if sharing online is a good predictor of offline sharing, it is important your product is shareable on and offline which in turn could lead to new types of engagement or advocacy around your product.
4. Trust & reputation-It makes sense if there is a drift away from buying new goods and services that brands should also focus on reseller's commercial reputation in secondary markets to ensure brand consistency. It is these new reputation systems that facilitating trust between strangers that could possibly form future credit mechanisms.
5. Ratings & reviews-If it's easier to share based on trust, then the power of a recommendation must be part of your business planning. Furthermore when consumers don't "own" and "share" instead, ratings, and reviews will have more importance in the decision funnel. Reputation will therefore be a bigger filter.
6. Find Value in social and alternative currencies sharing culture makes it possible for virtually anything, including specialized skills or knowledge, used goods, and social reach, to become currency.
7. Become a we based brand-it is not enough to just sell products and services. If the "we + me" equation is a sweet spot of benefits to consumers, then are your products or issues properly positioned especially to millennials?
8. Moving from monopolies to market places-By simply selling the same products, in the same way, how can we enable entrepreneurial consumers to sell their own products through our platforms? The ASOS marketplace Is a great example of this trend.
9. Listen engage & experiment-Lisa Gansky contends that "with web-enabled mobile devices, social networks and our ability to track and manage physical assets, it's an imperative to listen, engage and experiment."
Based on the data from the new sharing economy report the top opportunity areas for new service offerings were as follows:
1. Time-Marketplaces that use network technologies to enable the exchange of less tangible assets such as time, space and skills.
2. Transportation-There's still a large amount of unfulfilled demand for car-sharing. More than half of all participants either shared vehicles casually or weren't sharing currently but expressed interest in doing so.
3. Household goods -Many people already share occasional-use household items (such as power tools, kitchen appliances, party supplies, and sporting goods) with friends, but few services exist yet to organize these sharing efforts. There's a lot of opportunity to share things we don't need to own.
4. Living space - is a valuable commodity, which is why more co-working and peer-to-peer lodging services are popping up and doing well. Moreover, new models of sharing like fractional ownership are refreshing how we think about accessing a variety of different spaces.
The benefits of peer-to-peer sharing are that it allows for potentially unbounded scalability, access to more resources and often at closer proximity to us. Because peer-to-peer companies aren't subject to the overhead cost of purchasing and maintaining a "fleet" of cars all their own, the cost to renters is often lower; moreover, members have the opportunity to monetize their own possessions.
Building brand loyalty and generate more actionable marketing data through sharing-based offerings it is possible to find out more about their customers than ever before. E.g.Zipcar members log into their account every time they need a car. And in the process build a transaction history which translates into highly valuable information about how and where customers interact with services over time.
This wealth of data can be used to target and identify future opportunities & potential new services. Likewise this data could prove useful with selling ancillary services such as apps to monitor petrol consumption might prove useful to these new service companies.
Growth can also be achieved by partnering with businesses who share your customers' interests. For example, last year Zip car teamed up with Zim Ride , a popular ride-sharing service, to match car-sharers with those just looking to catch a ride.
Incorporating a game layer into sharing services may also mean a way for brands to get involved where it makes sense. If brands could provide a reward for sharing and doing more for the greater good, it could spur quicker adoption of sharing.
Sharing industry opportunities are not just for big brands, they can happen in small, but highly passionate communities-even if those communities are circumventing buying more of the brand's product by sharing. Passionate communities are doors to social engagement for any kind for a brand, and collaboration may be the answer'
The new sharing economy Ecosystem
Lisa Gansky talks about a future of business thats about sharing all kinds of stuff, either via smart and tech-enabled rental or, more boldly, peer-to-peer. The challenge she say is to make sharing irresistible. What we have seen to date is a radical restructuring of business in sectors like banking, where Wall Street's behaviour has led to immense consumer distrust, and as a result companies like Zopa have benefited enormously from the banking crisis going from early adopters to a more mass-market crowd.
As more people are exposed to peer to peer sharing systems they will become more receptive to other community based solutions, the result being a deep shift in consumer mindset towards to sharing in general. Indeed It is these growing P2P marketplaces that are the driving force behind many a VC investment portfolio right now and the question is how big will the sharing industry go on to be.
Gartner Group researchers estimate that the peer-to-peer financial-lending market will reach $5 billion by 2013. Frost & Sullivan projects that car-sharing revenues in North America alone will hit $3.3 billion by 2016. And Botsman says the consumer peer-to-peer rental market will become a $26 billion sector, and believes the sharing economy, is a $110 billion-plus market.
Umair Hague's The new capitalist manifesto delivers a bold framework for what he calls 21st century ‘constructive capitalism' with new corporate values focusing on meaning, happiness, sustainability and radical innovation. In the book he sites examples of companies who are the leading the way to help recalibrate the "unbalanced scorecards' of most big corporations today and having a unique purpose in people's lives. He cites Google as an example of a value-driven business with a celebrated commitment to do no evil, its preoccupation with speed and its commitment to open data. He cites companies like Threadless, LEGO and Starbucks for commitment to co-creation. And he cites companies like Apple, TATA and Nintendo for their radical innovation and ability to redefine the music, mobile phone, game and car market.
It is companies like that have figured out how to create value and earned our efforts in the process hence the term earned media who will be the corporate business models of the future.
Alongside these new corporate values there will be an exponential increase in the number of peer to peer market places with new forms of currency and reputation systems that will allow for the exchange of good of services. People will have a reputation bank account alongside their normal bank accounts and a reputation rating that will measure their contributions to communities.
Start-up TrustCloud is already building an algorithm to collect the trail you leave as you engage with others on social media and calculate your reliability, consistency, and responsiveness. The result would be a contextual badge you'd carry to any website, a trust rating similar to the credit rating you have in the offline world.
Peer to peer marketplaces will form accepted forms of secondary income and instead of paying for cash barter talents skills and ideas and virtual social currencies will be the norm. We have already seen the beginning of virtual goods online and who's to say that Facebook credits in the future won't become an everyday way of doing business with each other.
Whether we realise it or not we are in an era of rapid technological change which is having far reaching economic and social effects. The new sharing economy has heralded the birth of the peer to peer marketplace that is revolutionizing the way we do business the world over. Not only are we making better use of resources but we are now moving towards a society that is less focused on economic growth but also focused on social well-being. This has led to initiatives by French President Sarkozy to examine what we interpret as wealth and how this is measured being redefined. Indeed we are already seeing this in the UK, France and Canada with the introduction of the happiness index.
As Botsman talks about in final chapter of collaborative consumption it's as though we have woken up from a dream and whilst there has been much discussion over the last 12 months about new sharing platforms and collaborative business models, I really wonder if we realise the significance of the period we are in and the far reaching impacts it will have for the next decade and beyond. We may not be headed directly towards the new socialism, but it feels that we are almost certainly headed towards a new era for the social web.
See the following resources for a more comprehensive listing
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