As we have featured a number of stories on the Counsel blog about different forms of Collaborative Consumption we though it would be useful for us to provide an overview with implications for brands and marketing. The subject of our latest in depth Future Sign: Collaborative Consumption is a socio-economic movement exemplified by the explosion of sharing, bartering, gifting, lending and swapping that is transforming the way we consume, value and interact with brands.

With the growth of alternative purchase and ownership comes the inevitable question ‘why do we need to buy something outright at all?’ People are growing impatient with “idle capacity” or i.e., waste. As Mark Levine, a writer for New York Times succinctly put it , “sharing is clean, crisp, urbane, postmodern.” [1] Sites like Whipcar.com and Crashpadder.com enable people to rent out their exiting ‘big ticket’ items such as cars, skis, lawnmowers or homes.

Driven by a range of factors from the fallout from the global recession and the rise of increasing price sensitive and super-informed consumers to a growing desire for more sustainable and less wasteful living; Collaborative Consumption offers fresh solutions to many of the current frustrations people have with the way they traditionally purchase and consume products. More people are moving away from the old top-heavy, centralized, and controlled forms of consumerism towards one of sharing, aggregation, openness, and cooperation. In their excellent book Rachel Botsman and Roo Rogers outline the 3 main systems of Collaborative Consumption: product services, redistribution markets and collaborative lifestyles. They posit these alternative models offer something superior to traditional ownership-based structures, which are more in tune with the changing relationship people have with certain types of material possessions.

As media, music and film go on-demand we will continue to see a decline in the ‘status’ and value of collections. We no longer value the CD but the music, and are moving from placing a great value on the journey rather than the automobile. As we outlined in our 2010 Future Sign: Immaterial World “People will shift from wanting to own to wanting to have ubiquitous access and enjoy at their pleasure.” [2] Renting or hiring products is no longer associated with limited financial capability, but as being smart and efficient. It is this shift, which has enabled car-sharing schemes like Zipcar to really take off. The common thread of many of these new, shared ownership schemes is that ‘access trumps ownership’.

All of this means that brands will need to rethink the way they market and sell products as more people accept that consumption and ownership is likely to mean different things in the future. Many leading edge urbanites are already abandoning car ownership in favor of partial car sharing. What is impressive is how quickly the influence of this shift is being felt across different categories. Within the auto industry, the success of schemes like Zipcar show the collaborative business models to be in tune with the mindset of the post recession, eco-conscious urban consumer. Shared ownership schemes are currently being launched by many auto manufacturers such as BMW and Peugeot because they represent fresh revenue streams for the industry. Frost & Sullivan, a market-research firm, estimates that by 2016 the (car sharing) market will be worth $6 billion a year. With the growth of alternative purchase and ownership comes the inevitable question – ‘why do we need to buy something outright at all?’

With the auto industry already embracing collaborative consumption, will big home appliances and real estate be next to adopt the concept of shared or part ownership? New Real estate group buying organisation Fourth Row argue that if "you buy everything else at 10-30% off - clothes, electronics, travel, etc. Why not real estate? Sure real estate is a more complex purchase, but conceptually. Why not?” [3]

Another factor to be considered is the growing recognition of recent behavioural economics research, which challenges many traditionally held views about how and why we buy products. There is a greater acknowledgement of the non-rational motivations of shoppers and a growing recognition of the importance of the social aspect of consumption. Shopping is not just about consuming but also about personal identity and managing our public image. For this reason ‘search and social’ are emerging as the key steps in the modern path to purchase. A recent study by GroupM Search and comScore found that almost 60 percent of all consumer journeys that end in a purchase begin with a search with most people using a combination of search and social media.

The continuing success of social buying schemes is undisputed as collective buying reflects the current socially networked world. As groups are formed to make discounted purchases, retailers need to ensure they are both receptive to and capitalize on this fresh shopping approach. The Facebook ‘Buy With Friends’ feature that allows users to ‘unlock’ a deal and then share that deal or discount with friends is already gaining traction. Although currently restricted to virtual goods, this feature is soon to be expanded to include physical goods and charitable donations.

Online Group buying is also a growing trend reflecting the way people often pay for gifts in real life. Opportunities for group buying continue to expand into more categories. The arrival of new online group payment platforms like Wepay, a payment system that enables groups of users to set up shared financial accounts with varying levels of access, where as EBay GroupGifts encourages collaboration by allowing customers to share expenses on a gift via the eBay site. Collectively these schemes encourage people to interact with brands socially.

Looking forward, collaborative forms of consumption present an engaging model for communities. We expect to see more businesses operating as co-operatives with profit sharing. Examples like the recently launched in the UK People’s Supermarket, is a co-op based model for efficient local food retail. Owned and managed its members, organisation requires members to work in the store in return for credits.

Redistribution or Utilising idle capacity is another potential growth area as individuals unlock the financial capital of their possessions while they are not using them. The notion of reusing individuals ‘idle’ or unused space or energy capacity is already the basis for many new online start-ups. These schemes like Crashpadder or Whipcar have the added incentive of enabling you to meet new people and generate income. From renting out your spare room to your car or other possessions the opportunities continue to expand.

Sources:

1. Mark Levin, The Economist: http://www.economist.com/node/17249322
2. Immaterial World: A Dematerialized Future, Lowe Counsel, 2010
3. http://www.antworks.co.uk/4throw/concept.htm
4. Mark Levin, NYT insert article link


Other Links to consider:

http://www.collaborativeconsumption.com/
http://www.zipcar.com/
http://groupgifts.ebay.com/
http://thepeoplessupermarket.org/