If you’re still trying to get a handle on social business, hang on to your bootstraps. According to a new report from the Altimeter Group, the emerging next phase of social business features consumers buying and sharing products and services, not just media and information, between themselves. In other words, welcome to the Collaborative Economy.
The report, The Collaborative Economy, defines such an environment as an “economic model where ownership and access are shared between people, startups, and corporations.” One example of the potential disruption noted in the report: car sharing businesses that reduce car ownership, impacting all levels of the car industry.
The Net’s Evolution
Some adventurous companies are experimenting with new, collaborative economy models. NBC, for instance, is working with sharing site Yerdle on peer-to-peer sharing. A company called Bookcrossing allows students to exchange or rent books with each other, Toyswap offers swapping of children’s toys, and Airbnb provides a marketplace for renting rooms or homes in cities around the world. The report looked at more than 200 startups in this collaborative space.
The Collaborative Economy, according to the report, is the next step in the Internet’s evolution of e-commerce. In the first phase, dubbed Brand Experience Era (Web), the Net made information available to a wide audience but retained much of the “one-to-many” model. In the second phase, the Customer Experience Era (Social Media), online users could more readily publish their own opinions and media, a “many-to-many” model that has led to the current boom in social marketing.
We’re now entering a Third Phase, the Collaborative Economy Era (Social, Mobile, Payment Systems), where customers have the ability to readily share or sell goods and services, and power shifts to the consumer.
Of course, we’ve heard the “power shifts to the consumer” mantra many times before, most commonly in our current, social media era. If the Collaborative Economy concept bears out, it may turn out that the Second Phase, when social media really emerged as a force, retrospectively will be seen as the time when marketing power shifted to the consumer, while, in the Collaborative Economy, actual purchasing and selling power did.
The report contends that the convergence of several market forces are driving this Collaborative Economy. On the societal front, they include increasing population density, which propels such businesses as car-sharing services, a drive to minimize environmental impact and a desire for community. And, in a salute to the incoming generation of adults, a rise in altruism among young people.
Economic factors include excess or idle inventory, a Net-fueled boom in micro-entrepreneurship, a wider acceptance of access to goods or services that trumps outright ownership and an influx of venture capital funding. But not all forces are aligned. There are regulatory hurdles, legal battles, insurance and health issues, a lack of trust between some buyers and sellers, and other challenges.
The biggest potential disruption of this customer-to-customer model is that companies get left out of the value chain involving their own products or services. Altimeter offers several new buzz phrases to encapsulate possible models for existing businesses to climb aboard the new economy, including Company-as-a-Service, Motivating a Marketplace or Providing a Platform.
Company-as-a-Service, or CaaS as it may soon be known, offers products or services on-demand or via subscription, not unlike Netflix or Enterprise Rent-a-Car. The report suggests that the model may move into other industries, such as Rent the Runway’s offering of clothing rentals or Citibank’s sponsoring of New York City’s bike sharing program.
Motivate a Marketplace involves creating a new community -- or adding value to an existing one -- that encourages re-using a company’s products past its point of first sale, such as Patagonia’s partnership with eBay to encourage resales of its used products. The third major model, Providing a Platform, goes one step further, providing the tools and the environment for consumer-to-consumer transactions to take place, such as the crowdfunding site Kickstarter.
Overall, the report is overflowing with interesting ideas and examples about the emerging picture of new consumer-to-consumer e-commerce, with insights about how this could lead to a major disruption in the way goods and services are bought and sold.
But the report also includes some older business types in its new landscape, such as marketplaces for freelancers or rentals of streaming movies. At the moment, it’s difficult to tell whether this kind of commerce will become a major component of the economy, or if it will simply remain a side-market that only applies to some kinds of consumers and some kinds of goods.