Our Sales Trend #3 from the Barrett 12 Sales Trends for 2015 report is about the share economy. Here’s a snapshot of this trend.
One of the worst consequences of over-consumerism has been the exponential growth in the amount of goods that end up in landfills. This is the result of a combination of many factors, such as consumers buying things that they don’t need for long – or even at all – and the manufacturing of cheap goods that break easily and are un-repairable, amongst others.
On the other hand, consumerism has also meant that the price of owning or accessing certain items or experiences has become very high and is unattainable for some people (e.g. owning or renting an office, a car, a holiday apartment, etc). Coupled with this are the individuals and companies who recognise they have under-utilised goods, and are looking for new ways of doing business.
And so the share economy ‘appeared’ as an alternative model to solve many of these problems and create a whole new market. We use the term ‘share economy’ to describe people or companies sharing with each other.
For the sake of this trend we will use the term share economy to encompass peer-to-peer sharing, collaborative consumption, models where companies own the goods and models where individuals keep the ownership. Rachel Botsman from Collaborative Consumption identifies three types of models within this idea:
- Collaborative consumption: this is when the use of assets is shared amongst many (similar to ‘renting’). A company provides the asset, and the client uses it when needed;
- Share economy: this is when people share what they have under-utilised (e.g. a parking spot, their car, etc); and
- Peer economy: this is a model based on person-to-person marketplaces
Lending and borrowing and co-owning have existed for a long time – time-sharing holiday accommodation, renting an office for a couple of days a week, sharing receptionists and other services, etc. However, over the last few years with the advancement in technology (and in particular mobile technology) these models and practices have become mainstream. So, how does it work?
There are some variations, but in a snapshot people rent what they are not using to someone who needs it. These people find each other using purpose-built applications and websites. Most of these sites include references, reviews, and ratings. This allows people lending their goods to ensure that their property will be taken care of properly, and that the people using the goods will know the state of the items and services before they rent or borrow.
There are also companies that own goods and rent them for a small amount of time like Flexicar. Flexicar rents cars per hour or per day. They have cars around the cities they operate in. They are membership based, so people who join pay a membership fee. Each member has a card (called a Flexicard) and bookings can be done online or via the phone. When members get to their booked car, they unlock it by swiping their card. This has proven to be a very successful enterprise not only for individuals, but also for companies that have employees needing to move around from time to time.
The share economy provides opportunities for new enterprises (like people investing in items that they know are going to be on demand so they can rent them out), and innovation in established businesses, where companies look for alternative ways of consumers accessing their products or services.
The ‘sharing’ or ‘collaborative’ model has many benefits for people on both sides of the equation. Owners make money from their under-used goods and users pay far less of what they would if they needed to own the item or rent it from a big company. It is also beneficial for the environment, as it reduces the need to buy things that are going to be under-used, leading to fewer goods being made, and fewer products making their way to landfill.
What does all this mean to you? Well, certainly this model is disruptive and changes the way people do business and the expectations they have around choice, price, and service. Companies will sell less the more people share what they have. So, what can you offer or develop to go with this trend? If your product or service is something that could be lent or shared, it’s a good idea to start looking into models that can provide that alternative to your customers and adjust to them. Most probably it will also bring you new clients too.
Remember, everybody lives by selling something.