Just recently, the darling of the sharing economy industry, Uber, celebrated its fifth birthday. And with this auspicious milestone has come serious questions about the way in which collaborative consumption companies are operating. Yet still for some businesses (and their agencies), the value of the sharing economy remains a mystery. What benefits could be extracted from introducing sharing features for consumer products? How feasible is it as a market growth strategy? To answer these questions we need to take a step back and consider how the sharing economy developed and why research consultancies have predicted its growth to be so massive.
In retrospect, the sharing economy was always going to happen.
With brands increasingly under pressure to discover new audiences and markets for products, and with only limited growth in the traditional market population for any product, it was inevitable that brands would decide to reach beyond their traditional audiences, and to think about ways to make their products appealing to these new consumers.
And it is not as though they did not have a model to follow. For generations, libraries have allowed members to have limited access to content that could be enjoyed and then passed on to other members. And for even longer, the rental market allowed property owners a chance to generate an income from their investments. Why, then, can’t owners of all kinds of properties make their goods available to audiences willing to pay a nominal fee to use or consume?
Enter: the sharing economy.
The first companies that offered goods for occasional use were car companies. ZipCar and its clones around the world allowed users to have a regular rental vehicle that was easily accessible, and could be booked online or by a mobile app. Then Airbnb emerged as a community marketplace for renting property on a short-term basis, a spare room, a whole house, or even a castle to tourists and short-stay customers. Eventually a whole range of sharing economy businesses began to emerge: equipment rental, music and video streaming services, even staff resource sharing and peer-to-peer lending.
The value proposition is always the same: make products easy to access, and available on demand. And do it in a way that is more affordable and more transparent than existing rental services.
But while the sharing economy continues to grow, capitalizing on the growing consumer desire for immediate gratification, the majority of enterprise-size businesses have observed the growth with a degree of contempt. The sharing economy has been perceived by many enterprises as pandering to low-value consumers, and a race to the bottom in terms of quality consumer experiences.
To be frank, I think that is a very short-sighted perspective.
If you go back to the value proposition of the sharing economy - easy access to goods on demand - then enterprise businesses should be considering the sharing economy as a huge opportunity. This is marketing, made simple.
Everyone understands that try-before-you-buy markedly impacts consumer intention to purchase. When consumers can experience a brand or product, they are more likely to remember the brand, they are more likely to value the product, and they are more likely to talk about it. Now what if you could make your big business products available as experiences that are accessible within a few meters of a major office block, employing thousands of workers? And unlike a pop-up store or a short-term street campaign, what if you could just leave your products permanently available for occasional use by the workers in that office block?
For enterprises, the cost of an experiential marketing campaign in a city center could be thousands of dollars a day in staffing and permits, but a permanent sharing-economy marketing strategy of low-cost access to product experiences, facilitated by a digital booking system, has a very low daily cost of operation, and can profoundly impact brand awareness, appeal and intention to purchase among new audiences. And even if those workers do not end up buying your products outright, you get another income stream through hiring those products out to customers on an ongoing basis.
Of course this kind of strategy works best for tangible goods. Car companies like AUDI are already beginning to explore these sharing economy options for their businesses. But as has been shown by the resource sharing services like oDesk and Freelancer.com and peer-to-peer lending services like Society One and Ratesetter, enterprise-sized businesses should be considering their options for facilitating collaborative consumption.
As part of a growth strategy, sharing economy-oriented marketing is a winner. And businesses of all sizes should be considering it.
I am interested to hear stories of businesses that are embracing sharing economy strategies for growth. Do you have examples? Please share here in the comments.