The Rise of Peer-to-Peer Sharing
MBA 583 Assignment 1 by Cynthia MacEachern-Due to Joachim Scholz October 1, 2013
The Trend in Collaborative Consumption
This growing consumer trend is also called peer-to-peer sharing, the share economy, the sharing economy, or the collaborative economy. Consumers are eschewing traditional forms of ownership in favour of cooperative forms of accessing goods, services, information, and talent.
An example of collaborative sharing would be sharing garden tools such as lawnmowers, hedge trimmers, or edge trimmers. In a traditional economic model, someone who needs any such tools would go to a hardware store and purchase everything she needs. Then she would own these tools and she could use them whenever she needed them. Unless she used them in a commercial venture, it is not probable she would ever realize their full value, and nor would anyone else. Collaborative sharing advocates that instead of purchasing the tools, the consumer engages in collaborative consumption. Openshed.com is a collaborative sharing platform where owners will rent or loan their tools to others. It is only one example of collaborative options now available for consumers. Many exist. By choosing to rent or borrow from others our consumer would never need to buy tools.
Another option for our consumer would be make use of Taskrabbit.com or a similar service provision exchange site to find someone with the necessary tools who would complete the necessary garden chores for her. She could either pay a fee for the service or barter another service that she can provide in return for the lawn care that she needs. In both cases the consumer has engaged in collaborative sharing and has foregone the existing dominant economic purchase and ownership model.
Different sharing models exist. The focus of exchange can be profit or non-profit, bartering, loans, gifting or swapping. Collaborative sharing exists for anything consumers might want use of. As the Economist magazine noted, rooms in homes are available, as are parking spaces, musical instruments, temporary storage, speedboats, and pickup trucks.
Car sharing is one small application for the new philosophy, and cars can be rented, leased, or borrowed. Alternately consumers can bargain not for use of the car but just for the ride. Consider scootnetworks.com, zipcar.com, side.cr or relayrides.com to understand the breadth of options available for collaborative transportation. As well consumers can use collaborative sharing modes to obtain capital for businesses start-ups and innovations. Capital can be accessed through websites such as Kickstarter.com and Crowdfunder.com. To use a room or space in someone’s home, exchanges or rentals are available from airbnb.com or vrbo.com.
Another important application of collaborative sharing concerns the free exchange of ideas and learning. Open platforms now exist with the idea that information, ideas, and intellectual concepts should be widely shared so that anyone may access it. Innoget.com is an example of such a platform, but so is the move towards open education by leading universities. Learners can now find open educational opportunities sponsored by leading higher education institutions that have adopted a shared model. One example of this can be found at ocwconsortium.org. It seems this new consumer trend of collaboration and sharing is broad-based, has more than one model, and crosses many industries. In the event that the trend is here to stay, it may have significant repercussions for business and industry.
Collaborative sharing has always been a way that humans have chosen to work together to serve everyone’s best needs. This model has been used on small and local community scales for generations-if not longer. For example-the concept of the community garden has always existed, where the community as a whole tends the garden and shares the resulting produce. Similarly, a small local market where individuals barter and trade goods that each other needs has also always existed in most societies. People have always been willing to work for others in exchange for goodwill, or for return efforts or in exchange for goods. During frontier times, Canadians had the tradition of barn rising, where every member of the community came together to build a barn or a sod house for a community member in need. It seems that while collaborative sharing today is a new and notable trend, it has also always existed as one method of human interaction and cooperative endeavour. It is fair to say that this trend is having new life breathed into it as a result of the advent of some of today’s prevalent social macro trends.
Technology is significant. The advent of the internet and the new potential it offers for mass communication allows collaborative consumers to have a communication platform that did not previously exist. As The Economist noted, it was always possible to rent someone’s surfboard, but practically it was never easy to find someone to barter with. Therefore, the internet as a medium for exchange has become very important in the resurgence of collaborative sharing. As was discussed earlier, a plethora of websites exist that allow exchanges of any conceivable good or service.
Technology’s role is broader than just making the internet available. For service transactions where funds are exchanged, an important enabler is the existence of secure payment mediums such as Paypal, or internet banking services. In general terms, collaboration is thriving on the internet through websites that facilitate exchanges, allow customers to post discussion and photographs of services, to set boundaries for transactions, and to provide an expected level of personal and financial security throughout the transaction.
Another macro-trend important in the rise of collaborative sharing is social media. Although enabled by technology, its impacts have predominantly social and human repercussions and it can be better categorized as a social macro-trend. Social media effectively makes the world smaller and more intimate. Sites such as Facebook, Twitter, and Pinterest, along with various online communities and blog sites allow for global exchanges of ideas and interaction. Friendships and trust can form over long distances and between larger groups of people. It is the elements of friendship and trust that are at the base of collaborative sharing, and which allows it to be effective. Social media allows for recommendations about individuals, goods and services to be widely available. Most, if not all of the collaborative sharing web exchange platforms provide the functionality to offer reviews and commentary about any good or service. It is this ability to share views that builds trust essential for successful collaborative sharing.
For example Airbnb, a bed and breakfast collaborative sharing platform, where homeowners offer space in their residences ensures that each transaction is rated by both the guest and the homeowner. All parties are behoved to be on their best behaviour, since they will be publically rated and the ratings posted permanently. In most cases, in order to participate in collaborative sharing sites, participants must already have an established and respected online presence. Airbnb demands full access to prospective guests’ Facebook profiles so that hosts might use it to decide whether or not to accept the request. Similarly, tripadvisor.com allows for a direct rating by customers of their experiences while staying at hotels or partaking of tourist activities.
While someone’s reputation has always been important, social media makes it even more so. Today, due to the rise of social media it is necessary to establish a reputable online presence in the same way that former generations have needed to establish credit histories. This same social media is fueling the growth and potential for collaborative sharing to rise as an alternate economic model.
There is a cultural aspect to the rise of collaborative sharing. Collaborative sharing represents a way of living together that is more respectful of each other, and which turns its back on the relentless consumerism and pursuit of possessions that has up until now lately characterized society. Collaborative sharing espouses community based values and cooperative behaviour. There have been back to the land and community activism movements in North America in the last thirty years that have been instrumental in spawning new cultural trends. Collaborative sharing is one product of these cultural adjustments, and fits nicely with the new idealism of other community activist trends such as the search for fair-trade products, or the agricultural share movement-where local farmers are provided with financial and labour assistance in return for a regular share of produce during the growing season. It also has an environmental perspective, where the idea that something already in existence should be fully used, rather than society continuing to produce and sell so much of everything. The collaborative transportation movements are one clear example of identifying an environmental purpose in the activity.
Finally, collaborative sharing has also increased in prominence in response to the economic downturn that has occurred since 2008. With less financial resources available, consumers need to find more cost effective ways to gain goods and services. Recognizing that often it is not as necessary to own something if the usage associated with it can be made available-thrifty consumers are embracing this new trend.
Implications for the Service Industry
Collaborative sharing has implications for traditional service industries. In particular, the hospitality industry is at risk, as is the home maintenance industry and taxis services.
In the hospitality industry, traditional models for both food and lodging now employed by hotels and restaurants will have new competition. Travellers that would likely have stayed at hotels may now instead choose to stay at someone’s home. This is not difficult to arrange. Two well-known platforms exist with established business presences that offer this alternative. Airbnb.com, allows homeowners to offer simply a room or alternately the whole home to interested travellers. VRBO.com allows homeowners with vacation homes in desirable tourist destinations to rent out their accommodations to others. Both services provide for a personalized, differentiated service from traditional hotel and resort stays that can easily undercut prices.
Restaurants and food service industries will be at risk through the rise of the ‘supper club’. Interested individual hosts and amateur chefs are now offering dinner services in their homes for a fixed price through homedine.com. They set the time, the menu, and the price, and post their offering. Kitchensurf.com and mealsharing.com are competitors. A peer-to-peer sharing with no funds exchanged can be experienced through Mealku.com. With Mealku, meals are simply exchanged for others. No one knows each other personally-meal exchanges occur through bike couriers in the City of New York. Mamabake.com encourages mothers to come together with others and cook in bulk. Through these new and innovative models, restaurants have more competition and will need to adapt by perhaps rationalizing services and prices, and certainly by increasing efforts towards customer service.
The home maintenance industry and individual service industries are also affected. Service companies such as lawncare and cleaning companies now face competition through the addition of small local workers who offer individual services through websites such as Taskrabbit.com. At Taskrabbit, anyone who has some free time and will offer to complete chores, or cooking, or errands can make their services available. These people can offer one-time or recurring services. Services can be personalized to an extent that a larger commercial firm will have difficultly duplicating. It is fairly simple to find someone to complete exactly what chore is needed at exactly the right price through collaborative consumption. The situation is the same for commercial taxi services. Relayride.com provides for ride exchanges by individuals at prices that will undercut taxi rates.
In general, existing business models will see increased competition and need to deal with services that are able to differentiate much better than they can. Established services also are subject to more business and sales taxes and the requirement to adhere to regulations and to obtain permits than is necessary at the moment in the collaborative economy.
This brings up the subject of some issues/challenges that are present within the new collaborative economic model. Established business services are fully integrated into economies. They pay taxes, are subject to health and safety regulations, including inspections, and must pay workers at established minimum rates. Measures to ensure guest safety and security are in place at established hotels and resorts that do not exist with peer-to-peer sharing. Until government regulation catches up to the collaborative economy, existing and established businesses will be handicapped by competing with peer-to-peer companies that do not have the same obligations. It is likely that a meal offered in someone’s home will be of great quality, but it may cause food poisoning. The freedom to operate without many constraints or much oversight will does allow collaborative sharing members to be different and charge less, but health, safety, and security remain more of a concern. The idea of ‘caveat emptor’ must be considered when partaking in the collaborative economy to a much greater extent than with established firms. It seems that there is not yet a level playing field. That is both a potential benefit and perhaps a cause of concern. In either case, it is clear that collaborative consumption is a significant consumer trend that has changed the nature of competition in many fields and will require adaptation from traditional business models in order to sustain operations. Clearly still in the early stages of its growth cycle, collaborative consumption has potential to yet expand geometrically into markets and communities worldwide. The adaptation is likely to be positive for consumers participating in both the traditional and new collaborative sharing economies.
Having discussed the implications of this trend within the service industry, collaborative consumption has the potential to impact other markets as well. This model can be applied to education and learning. At the moment, higher education is the purview of regulated universities and colleges. While there is growth in online learning, the traditional educational model is still focused on the classroom. Students pay significant fees to study under the tutelage of a professor and in return, on completion of a course of studies, are awarded an educational qualification-perhaps a degree or a diploma. The view of education that follows a collaborative consumption model would stress open exchanges of information and sharing of ideas. Some large universities have already responded to the demand for more open access to knowledge and ideas by offering free course on the internet. YouTube is a haven for free educational videos, and on sites like the Khanacademy.com, most subjects can be freely accessed. Ted.com offers Ted talks-insightful lectures on a variety of subjects. Ted talks in many ways mirror the type of lectures that have, up until now only been available through universities and colleges.
Faced with the increasingly collaborative approach to learning and information sharing, traditional educational models will face pressure and lose market share. As educational costs continue to increase, and the exclusivity of the product decreases because of the many alternatives the collaborative approach makes available, it is likely that education offering will need to adapt.
Collaborative sharing is just in its infancy. There will be opportunities using this model to challenge most if not all existing traditional business models. This consumer trend requires attention from entrepreneurs, academics, government, industry, and certainly-everyday households.
The Economist: http://www.economist.com/news/leaders/21573104-in...
The Zietgeist Movement Official Blog: http://blog.thezeitgeistmovement.com/blog/stuart-...
Collaborative Consumption/Sharing Reinvented Through Technology: http://www.collaborativeconsumption.com
The Rise of the Sharing Economy-Peer to Peer Hotels: http://www.torbenrick.eu/blog/strategy/the-rise-o...
The Collaborative Consumption on the Rise: Why Shared Economy is Winning Over "the capitalism of me": http://popsop.com/2013/08/the-collaborative-consu...
Sharing Economy-Collaborative Consumption-Peer to Peer: Next Big Business Model-Access vs. Own-Disruptive or Fad: izshifts-trends.com/2013/03/25/sharing-economy-collaborative-consumption-peer-to-peer-access-vs-ow-next-big-business-model-disruptive-or-fade/
The Master List of the Collaborative Economy: Rent and Trade Everything: http://www.web-strategist.com/blog/2013/02/24/the...
Wikipedia-the free encyclopedia: Collaborative Consumption: http://en.wikipedia.org/wiki/Collaborative_consum...
Note: Wikipedia is considered a collaborative consumption product.