Among consumers’ many new(ish) powers in our social, digital marketplace is the ability to reach, sell to, and share with each other directly. Sure, eBay has allowed people to sell their used items to each other for nearly two decades. But direct selling, trading, and sharing are taking off in many new ways, often serving niche needs – letting consumers serve each other’s needs that businesses once met.
This is the collaborative or sharing economy, which has already collected $2 billion in venture funding. Jeremiah Owyang defines this economy as:
“A digital system that manages the coordination of buyers and sellers who offer or exchange used products and remnant services… To stay relevant with this unstoppable trend, every corporation must evaluate a business model of renting, lending, or gifting their products and services.”
Our own Ian Greenleigh agrees:
“There’s no fighting human nature. Peer-to-peer commerce in the digital age is just a better way to do what we’ve always done, or wanted to do.”
On the surface, the collaborative economy may seem a threat to traditional, established businesses. But this sharing marketplace actually offers opportunities for businesses that recognize and jump on the trend, as many already are.
Allow consumers to subscribe to or rent products that you own
Renting out owned products is nothing new at all, but has been most common in media – look at Netflix, Redbox, Gamefly, and others. Now, many companies are expanding into more novel sharing concepts, creating something of a community.
Rent the Runway lets members rent designer clothing, essentially creating a giant shared closet full of clothing the women may not otherwise be able to afford. Zipcar lets members check out cars, paying only for the time and miles they use. Presta rents out popular electronics, with the option for members to lease to own. All of these services recognize the limited or temporary needs consumers have for the products – creating an opportunity for consumers to “share” the products by becoming members of a community.
How to get involved: Which aspects of your business could be rented among your customers – creating a community of members who buy in and share? Toyota has started letting customers rent (not lease) cars off their lot, competing with services like ZipCar and Car2Go. What products or services do you sell that could offer collective benefit when shared among a community?
Create second-hand or remnant services markets
In these markets, businesses don’t own the products or services, but simply enable consumers to share or sell them to each other. People get to profit off of items they no longer need or aren’t currently using, and the business takes a share.
Cardpool lets people sell their unwanted gift cards, or trade them for gift cards at another merchant. HomeAway and Airbnb let members rent out their unused bedrooms, homes, or vacation properties like a hotel when they’re not in use.
How to get involved: Ace Hardware is experimenting with remnant services markets that don’t charge for services at all. The store sets up weekly “Repair Cafes” which attract people with broken items to meet volunteers who offer free repairs. An Ace representative bikes back and forth from the store to the Café, delivering the needed tools for each job. The service creates an emotional connection with the brand, says Jocelyn Broyles, Hassett Ace Hardware’s brand manager:
“The cafe involves community members helping other community members, working to fix items that often have strong sentimental value. This interaction results in an amazing local connection, which our brand wants to be associated with.”
Partner with sharing services
Established brands needn’t become the collaborative business themselves – they can simply partner with established sharing companies in ways that promote the brand’s products. These collaborations, according to Ann Mack, director of trendspotting at JWT, can:
“Infuse freshness into the brand’s persona and broaden its appeal.”
Chevy, for example, partnered with mobile app RelayRides, which lets members rent out their cars while they aren’t in use. Owners of cars equipped with Chevy’s OnStar service can enroll in the program. Then, using RelayRides, OnStar shows renters available cars by GPS and lets them book service. The service encourages test drives in Chevy’s Millennial-focused cars says Cristi Landy, product marketing manager for small cars at General Motors, which positions the cars as:
“Innovative products that offer what next-gen drivers expect. The connection with RelayRides also gives us exposure with younger consumers and offers new car buyers a way to subsidize their car payments.”
In short, the collaborative economy lets businesses create connections between consumers for mutual benefit of the members and the brand. It moves beyond buying and selling, creating relationships, says Unilever CEO Paul Polman:
“It’s a business world that is moving from value-based transactions to values-based partnerships.”