Understanding collaborative consumption

Marketers need to understand consumers' growing acceptance of sustainable and shared forms of product ownership and use, writes Jane Bainbridge.

Collaborative consumption may feel like a business child of our times, crafted in a period of digital development and austere living, but its theories have been around much longer. In 1978, Marcus Felson and Joe L Spaeth introduced the term in an article in American Behavioral Scientist discussing car-sharing… although some would argue that sharing has been entrenched human behaviour since time immemorial.

It is thanks to technology that collaborative consumption has emerged as such a potent force in the past few years – in particular, the interconnected nature of our smartphone- and social-network-oriented lives, which has provided the perfect platform for ease of access to a shared economy.

Disruptive digital start-ups from Zopa to Zipcar, Taskrabbit and Airbnb use collaborative-consumption principles to offer people alternatives that do not involve big brands and mass consumption. Fed up with big banks? Zopa offers better interest rates with peer-to-peer lending. Bored of sterile corporate hotel rooms? You can find yourself a quirky room in a city-centre home with Airbnb.

How big brands can tap in

Nonetheless, as with so much of business, where the entrepreneurial pioneers tread a new path, big business follows. So is it possible for big brands to move into collaborative-consumption territory, or is it instead counterintuitive to the modus operandi of corporations?

Marie Stafford, planning foresight director at ad agency JWT London, thinks there are elements they can adopt. "Big brands are advised to take a hard look at the traction this new economic model is gaining," she says.

"While it may not be realistic to redefine their business models, they can reflect on the core principles of collaborative con­sumption – community, trust, fun, flexibility, authenticity, a personal touch and great value – and show their customers how they too are engaged in the trust economy."

The drivers that will make it go mainstream aren’t in the hands of marketers; they are societal, economic and tech-driven.

Phil Dearson, head of strategy and user experience at digital agency Tribal Worldwide (London), contends that not only is it possible for big brands to do this, but important.

"These trends are not going to go away, and there’s a real risk to bigger businesses that they end up totally bypassed by peer-to-peer networks and become irrelevant to an emerging generation," he warns.

There is no doubt this generation of digital natives is more comfortable operating within this technological paradigm. Collaborative consumption is further boosted by the macro global trends that help its principles thrive: factors such as unemployment levels, personal debt, globalisation, sustainability issues, population density and demographic shifts, combined with widespread increased connectivity – mobile, real-time, all based on social interaction and with built-in payment systems.

"The drivers that will make it go mainstream aren’t in the hands of client-side marketers at all; they are societal, economic and tech-driven. For marketers it’s a bit ambitious to think they are ever going to be in control of this, it’s bigger than that; it’s CEOs and CFOs that will change significant components of their business, and then it’s not about marketing any more – it’s about providing new services," adds Dearson.

We are seeing some bigger brands dip their toes into the collaborative waters. Perhaps not surprisingly, as car-sharing was where this phrase first reared its head, car manufacturers have been testing and building businesses in this area. BMW DriveNow is a car-sharing scheme run with Sixt, and Peugeot’s mobility service, Mu, allows people to lease cars, bikes, scooters and vans.

Mainstream opportunity

Even the relative success of car-sharing does not mean collaborative consumption is a dead cert for success, however. Launched in 2010 in London, Whipcar’s peer-to-peer car-lending scheme – drivers could borrow their neighbour’s vehicle for a small fee – expanded nationwide, but closed this year, citing  "barriers to widespread adoption". Maybe the competition with Zipcar, Car2Go and City Car Club was too intense.

The success of a collaborative-consumption platform is dependent on reaching a critical mass. big brands have a leg up on start-ups.

"The success of any collaborative-consumption platform or business is dependent on reaching a critical mass, at which point users can easily find the goods, food or skills they seek. In this way, big brands have a leg up on start-ups," says Stafford.

Clothing has proved another territory ripe for big brands to enter. Marks & Spencer introduced its "shwopping" service in April 2012. Part of its "Plan A" sustainability programme, the aim of the initiative is to reduce the amount of clothing going to landfill, and fits into M&S’ wider, long-term remit of creating a sustainable business model as raw materials become more costly and scarce. Adam Elman, head of Plan A delivery at M&S, says: "It started with people taking unwanted clothes to Oxfam, and they would get an M&S £5-off voucher in exchange."

The scheme has since been extended to include wardrobe clear-out days, where shoppers can bring unwanted clothes to M&S stores or dispense with them via collections at workplaces, although Elman says it is "trying to move away from the drug of incentives and normalise it". In all cases Oxfam handles the sorting – in one year it has collected 3.8m garments worth more than £2m to Oxfam.

"We now make a men’s and women’s coat from recycled fibres from shwopped clothes not fit for resale. It’s sustainable and cheaper to make than from virgin raw material," adds Elman.

Expanded vision

Meanwhile ASOS Marketplace provides a platform for individuals and small businesses to sell their own label, branded clothes and vintage collections directly by "renting" a shop window on its site.

Outdoor-clothing company Patagonia has long established its sustainable credentials with a "reduce, repair, re-use, recycle" philosophy to its offering, including a product-repair service and, when its items are absolutely at the end of their life, the option to recycle them. Furthermore, as part of its "Common Threads" pledge, consumers can buy and sell used Patagonia gear on eBay.

Many examples involve bigger brands embracing secondary markets. "If consumers will sell your product on anyway, why not get involved and ensure your brand is a visible part of the process?" asks Stafford. "In Sweden in 2010 IKEA launched an online platform allowing consumers to resell IKEA-brand goods, asserting the redistribution initiative supports the company’s environmentally friendly ethos."

She adds: "Another way is to consider becoming a service brand. A company like Unilever could be a great match for a service such as Taskrabbit, which matches busy consumers with others with time on their hands and willing to perform simple tasks for extra income."

Lauren Andersen, chief knowledge officer at Collaborative Lab, thinks there are clear ways in which brands can explore collaborative consumption. They can identify where the idling capacity in the business is – the untapped social, economic and environmental potential – and explore ways to maximise this. Another way is to create unique and meaningful experiences for customers, because "people are looking for human connection and individuality in everything they do". Finally, brands can go the way of IKEA and Patagonia and explore ways to harness the "recommerce" market and give their own products a second life.

Experimental mindset

In some sectors the idea of sharing has become ingrained, and even if big brands want to fight against it, they come up against trouble – as Microsoft discovered when it tried to limit the lending, sharing and resale of games by users of its forthcoming Xbox One console, and was forced into a U-turn after gamers worldwide emphatically expressed their displeasure via social media.

There may also be cultural considerations in how collaborative consumption takes off in different countries and regions. In developed markets, for example, there is a growing consumer interest in goods that provide value for money and environmental benefit, whereas in emerging markets people see greater value in conspicuous ownership than the temporary possession of goods.

However, Graham Hales, chief executive of brand consultancy Interbrand, views the differences as less regional and more cerebral.

"It requires people to have a more experimental mindset and be less regime-orientated. You have to free your mind that you don’t need to own a car, but this applies more to urban than rural areas."

So where will collaborative consumerism trends lead us? Taken to its extreme, it would spell the end of ownership. With music and ebooks we are moving into an arena of leasing, rather than purchasing. But can this extend further?

"Some (like the Ellen MacArthur Foundation) suggest that this model should address the full breadth of household items, from washing machines to computer equipment to clothing," says Stafford. "Coined the ‘circular economy’, this model has also been suggested by the German clothing manufacturer, Puma. The company has imagined a future in which it will not sell shoes, but instead sell access to shoes, on the condition that people return their old ones. The idea is that raw materials are re-used in the most efficient way."

Big brands hoping this is a passing phase may be in for a nasty surprise. The value of the market in sharing goods and services has been put at £310bn and shows no sign of abating.

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