Date: 7th March 2014
An emerging trend is both disrupting and creating business. It’s the sharing economy, sometimes referred to as collaborative consumption. Put simply, it gives people the option to hire access where before they could only buy a product.
What’s new, you say. Rental business is well established. However, driven by new technologies, the sharing economy is connecting people using social media, peer to peer sites or mobile apps. It’s a new marketplace. People are behaving differently within it. And in some cases, the products are new.
The explosion of digital goods created new industries. Social media accustomed us to information shared rapid-fire. Where iTunes revolutionised music purchases, Spotify has disrupted the whole notion of buying music, giving customers access to a shared music library. Netflix have done it with movies. While the e-reader market is based on ‘buying’ a book in electronic form, this model may already be changing shape with proposals to launch all-you-can read books for one monthly fee.
The risk associated with lending things to strangers was a barrier to the share economy. In the past, businesses overcame it by marketing themselves as reputable and reliable, with safeguards in place such as contracts and bonds. Social networking and peer to peer sites such as Trademe have changed the game. For online consumers, research indicates that recommendations from personal acquaintances or online customer opinions are now the most trusted forms of advertising.
The sharing economy also appeals to eco-conscious consumers. They may have a lighter carbon footprint sharing a tool or a vehicle than consumers who each purchase that tool or vehicle for themselves. And, if you work out that you only use that power drill eight or nine days a year, maybe sharing makes more sense.
In New Zealand, space hire saw early buy-in to the sharing economy. Sites such as bookabach and airbnb unlock the holiday home or the spare room to travellers. More diverse spaces for business use are available through sites such as sharedspace which offers shared access to meeting rooms, office facilities, studio space, kitchen, pop-up retail, event space, and parking. Shared boat ownership seems like the odd man out here but sharedspace offers that too.
Service-based businesses in New Zealand are using sites such as Pocket.Jobs. Overseas, consumers are connecting with people in their community to share tools, vehicles, equipment, toys and designer clothing. The UK’s BorrowMyDoggy matches dog owners with local borrowers for walkies, play days and holidays. Around the world bike-sharing schemes have livened up the tourist landscape.
Locally we have many local not-for-profit examples, Wanaka Time Bank, Wanaka Babysitting Club, carpooling, seed swapping and many other collaborative Facebook groups and websites. New businesses with a sharing mentality are on the rise, for example, geniewallet, born in Wanaka is about local businesses sharing one loyalty card scheme.
Peer to peer lending and crowd-funding are relatively recent phenomena, bypassing traditional financial institutions as another option for startups and seed funding. Sites like pledgeme are helping businesses and organisations around the country, and certainly many in Christchurch, raise funds for new ventures.
3News business commentator Rod Oram believes there’s a growing market for businesses to make a profit from sharing and renting, as a social shift towards dematerialising increases interest in collaborative consumption.
“This is very much more obvious in younger generations, particularly Generation Zero – those people in their 20s and perhaps upwards into their early 30s, who first of all want who want a less cluttered life,” he says.
And he warns businesses need to get on board, or risk being left behind. Mr Oram says while it’s early days for the shared economy, more businesses are looking to make a profit from the new consumer trend, which he says will take flight in the next few years.
The potential for tie-ins with innovative businesses is wide open. Some businesses are threatened by newbie competitors without traditional overheads, while others may find a raft of opportunities. How will the sharing economy touch your business?