Collaborative Consumption!

And, now for something completely different.

Collaborative Consumption is a phenomenon that describes a lifestyle generally associated with the Gen-Y population and has grown out of an ethos of sharing, a sense of community, and a sensibility around reuse, recycling and conservation.

The resulting economic model (and you all know how I love economic models) is based on buying, selling, sharing, swapping, bartering, trading or renting access to previously owned products. Technology and peer communities are enabling these old market behaviors to be reinvented in ways and on a scale never possible before.

From enormous marketplaces such as eBay and Craigslist, to peer-to-peer marketplaces such as Tradepal, Fiverr, emerging sectors such as social lending (Zopa), peer-to-peer travel (CouchSurfing, Airbnb and Onefinestay), peer-to-peer experiences (GuideHop), event ticket sharing (unseat.me) and car sharing (Zipcar or peer-to-peer RelayRides), Collaborative Consumption is disrupting outdated modes of business and reinventing not just what people consume but how they consume it. Collaborative Consumption is sort-of the opposite of Conspicuous Consumption, where instead of choosing to drive a new BMW, the status achievement is more associated with driving a used 1970s Volvo.

Collaborative Consumption sites are proliferating on the web, with new platforms announcing their launches on almost a daily basis. These platforms are pioneering new spaces, and while they are all tapping into the Gen-Y zeitgeist, they press human behaviors to such an extent that they are all experiencing a certain amount of initial resistance due largely to inertia.

Getting people to try an idea that might be perceived as ‘risky’, like sharing your home with a stranger, is difficult to actually accomplish over the web.

This foray into the world of Collaborative Consumption raises interesting behavioral and technical questions.  How do we use technologies to enable trust between strangers? Is it even possible? What’s the best approach for building critical mass?  How do we know when and how to scale? How do we design a user experience that gets to the essence of what people want? How do we build a trusted brand in the community?

Almost all Collaborative Consumption marketplaces depend on matching what people want with what other people have. Obviously, this raises the issue of building a critical mass of inventory (users, products or services) on both the supply and demand sides of the equation, but which side should one focus on first?

Many of these sites seem to lean on the supply-side in order to create a sufficient number of choices to both entice and retain users who are shopping for stuff. Easy to talk about, but hard to do.

One of the not so obvious pitfalls is to try and be everything to everybody, which will usually result in chaos. It is far better to limit the number of choice variables while you build up a controlled market of supply and demand. If you were offering ridesharing services, you may initially limit your offering to certain streets and routes and only during certain hours of the day. Known commute corridors during peak commute times for instance.

If you were offering to match up weekend accommodations, you might limit the locations to areas within walking distance of common tourist attractions in a given city. Or, near main subway or bus stops that serve the entire city.

This is why these marketplaces happen mostly on a local or neighborhood level, as people share working spaces (for example, on Citizen Space or Hub Culture), gardens (Landshare),experiences (GuideHop) or parking spots (on ParkatmyHouse). However, Collaborative lifestyle sharing is beginning to happen on a global scale, too, through activities such as peer-to-peer lending (on platforms like Zopa and Lending Club) and the rapidly growing peer-to-peer travel (on Airbnb and Roomorama).

In order to build a community of trust that will engender sharing and overcome the barriers associated questions like “do I really want to share my apartment with a stranger?”, successful sites will have reached out to their target community during launch and asked what the community wants the site to do and what they would like to see when they engaged. This is the first step in building a brand within the community that will support growth and expansion, based on complete transparency and honest communication.

In future blog posts, I will address the growth of the Collaborative Consumption online markets and the specific issues of critical mass, scale, user experience, trust and branding in detail. If you are interested in this topic and learning more, please drop a line to steve@ipeoplefinance.com. I am really interested in hearing about your experiences with peer-to-peer sites. Thanks.

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About Steve King

iPeopleFINANCE™ Chief Operating Officer. Former CEO of Endymion Systems, Inc. a $36m Information Systems Services company. Co-founder of the Cambridge Systems Group, the creator of ACF2, the leading IBM Mainframe Data Center Security product; acquired by Computer Associates. IBM, seeCommerce, marchFIRST, Connectandsell alumni. UC Berkeley alumni. View all posts by Steve King

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