I am from a small town called Ceuta in Spain. Due to its peculiar location at the tip of Africa overlooking the strait of Gibraltar, many families depend on wholesale businesses selling mainly to the North African market. My family has owned one of these businesses for the last 40 years or so, but we’re no less than others as we have all been suffering the consequences of the global economic recession. Furthermore, as Morocco (our “neighbour country” separated by a border) developed very rapidly and opened up more to the rest of the world over the past 10 years, plenty of our old clients started importing directly to Morocco for obvious reasons. This has caused fierce competition among local businesses narrowing down profit margins to minimum levels, causing plenty of businesses decay in the local economy and some of them being forced to shut down.
In our case the outcome was slower stock rotation because we wouldn’t accept selling new items at a loss. So goods were sitting idle at warehouses for another season and in some cases this would be even 2 or 3 years at exactly the same spot of the warehouse, collecting dust. As I walked along the warehouse one day I thought to myself… “We’ve invested money, time and resources for this excess stock right in front of me and here it is… just sitting at the warehouse”. Of course this always happens in any business and most consignments that we still import till today (though much less volume) are being sold throughout the year which keeps the business going, but the pile that I was seeing right in front of me at the time represented the “dead stock”. Gradually we had to accept lower margins and these items moved.
So after coming back from the warehouse and seeing unsold goods, I would also start noticing excess stuff stored at home that we no longer use: electronic equipment no longer used (mobile phones, dvd players, mp3 players, etc), certain clothes that we never wear, etc. As I thought to myself and I asked people whether they would consider reselling those items in online marketplaces (such as ebay, which is so widely known to be safe) I noticed that some people often still have a lot of attachment for certain things, even if it’s an item that they may never wear again. Their answer to why they would keep it would often be “just in case I need it someday… you never know if the fashion will come back”, another factor is laziness (I include myself in this case) – you basically need effort/time to do it and in addition to this you don’t know what the response for your item will be like – sometimes not feeling confident about it.
But really due to its devaluation to us after being used (for instance with electronic equipment, dvds, books, etc) or seasonality/fashion factor, I believe that in the vast majority of cases these items are never used again and if used, it would be very rarely. However, there must be people out there for whom these items are valuable… so selling on ebay or other marketplaces make perfect business sense in many ways, as you’re directly making cash from a resource that’s basically sitting idle.
Next I thought about mutual benefits of exchanging and bartering goods. In a barter, both people get what they want at zero cost, which makes huge business sense at times of crisis. Of course it’s really hard that 2 people find exactly what they want from the barter between both of them, but building an online community for bartering makes perfect business and sustainability sense too. So I went online to look for whether a barter marketplace existed, and wasn’t surprised to find some online bartering marketplaces that are getting increasingly established in different parts of the world (ThredUp & Swap.com in the US, Bartercard in Australia, etc). Powered by the internet, online marketplaces such as these have enormous growth potential across the globe.
But as soon as I started researching I realised that all this is something much bigger than simply swapping your excess stuff with other people or selling something second hand. As I googled I found out about Rachel Bootsman & Roo Roger’s book “What’s mine is yours – How collaborative consumption is changing the way we live” as well as plenty of blogs, technology press and even videos of conferences and interviews all relating to this concept that is nowadays known as “collaborative consumption”. Lots of information and great work regarding this trend is also available to read in many blogs such as collaborativeconsumption.com and shareable.net. Sometimes the concept is also referred to as the “sharing economy”.
This whole concept is very broad, but it could be summarised in three words as “access over ownership”. Basically people are looking to simply access goods in order to gain what they want from them, for instance as Rachel Botsman pointed out in one of her conferences “you don’t want the DVD – you want the film it carries”. Similar reasoning can be applied to other items such as power tools, clothes that you wear on special occasions, etc. So rentals of course make a lot of sense from a business perspective, but if powered by technology in peer to peer marketplaces – anyone could really make extra cash out of their possessions are often sitting idle (or in other words have “high idling capacity”). Of course the more consumers go ahead in these marketplaces, the more variety and choice would be available – resulting in a greater chance for success.
In addition, collaborative consumption business models add plenty of value to their communities, which can be summarised as the following.
- Boost for local businesses – as businesses have an additional window through which they can reach additional clients that are unaware. At zero additional cost.
- “Access over ownership” inreases sharing within the society and introduces a concept which many believe can change the world, described as the “culture of we”. (Source: Collaborative consumption has been highlighted by TIME magazine as one of the top 10 ideas that can change the world)
- Creates bonds between strangers – thereby strengthening local communities
- As you’re extending the life cycle of items or adding extra value to resources, it can be said that most collaborative consumption businesses/transactions are green and environmentally friendly.
- Reputation Capital – As we are interacting more and more online, we’re gradually moving to a phase where online reputation could the future of ecommerce as people are judged more and more according to their online reputation.
For instance, in the future the sum of ebay, airbnb, zipcar, rentcycle, sharemyride & relayrides could be used to estimate a person’s overall TRUST rating. Trust between strangers is key issue behind collaborative consumption marketplaces and plenty of very talented entrepreneurs across the globe are looking into it. It’s the key aspect to consider and in future posts we will discuss how collaborative consumption marketplaces are combating trust at the moment.
The core concept as such has always existed, but today this whole movement is powered by internet, technology, portable devices, 3G coverage in mobile phones, social media, cloud computing, etc. It’s clear to all of us that in the modern world we’re constantly connected nowadays, as we have tools to contact anyone, anywhere and at any time… almost no matter which corner in the world people are in, as long as they have access to a device with internet connection. And by getting connected through the internet, people are being stimulated to go off the internet and interact with each other. This can be whether it’s a lending, borrowing, exchange or purchasing of goods and services.
With the potential of these online marketplaces being powered by social media, they’re gradually gaining relevance, users, brand-awareness, attention from media, investors interested in the collaborative consumption movement, etc. Companies such as Zipcar for carsharing are nowadays major corporations and Airbnb for rentals, TaskRabbit for errands and Skillshare for education are highlighted as hot startups to watch in the US. But the movement spreads across the globe in smaller scale too – for instance bikesharing, carsharing and ridesharing are growing in cities across many countries in the world. Bicing and Fesedit in Spain, Mitfahrzentrale in Germany, Springwise in Australia (growing worldwide) and Citycarclub in the UK are some examples. Services such as these provide economical and environmentally friendly experiences which are growing worldwide, enabling people to save money at the same time as they are, in one way or another, contributing to a cleaner planet.
You may view Rachel Botsman’s famous TED talk below – “The case for collaborative consumption”