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The Collaborative Economy Is Coming for Your Business. Are You Ready?

Screenshot_2014-02-27_12.23.47Some 80 million people in the United States have already started using online "sharing services," like Airbnb and Uber. They are young, urban, affluent, and their numbers are growing. And soon these services, which are still relatively new, will become mainstream and part of everyday life for almost everyone. Which means brands in every industry need to start paying attention to this trend. 

Those are some of the the conclusions reached in a new report based on a survey in which more than 90,000 people in the U.S., Canada and the U.K. were asked about how they use sharing services. The report, "Sharing Is the New Buying: How to Win in the Collaborative Economy," was conducted by two companies: Vancouver-based Vision Critical, a cloud-based customer community platform provider, and Crowd Companies, a San Francisco-based brand council founded by Jeremiah Owyang, a longtime tech industry analyst.

Owyang launched Crowd Companies in December after becoming fascinating with the way people are using apps to share goods and services. He calls this trend the “collaborative economy” and says it might tip entire industries upside down, from cars to banking to hotels and restaurants. 

“This is really disruptive,” Owyang says. “People are getting what they need from each other, rather than from inefficient institutions.” Others agree. Last summer, trend-spotting New York Times columnist Thomas Friedman wrote about the "sharing economy, and said, "Watch this space. This is powerful."

After all, who needs a hotel when you can find a room on Airbnb? Why stand on the corner trying to flag down a taxi when you can tap your iPhone and have Uber send a car right to your location? Why get a loan from a bank when you can get a peer-to-peer loan via Lending Club, or raise money via Kickstarter? Why own a car when you can just borrow a car when you need one, via RelayRide?

These companies are relatively young but some are taking off and becoming global powerhouses. Airbnb now has more than 600,000 listings in 192 countries, and has served 11 million guests. Uber’s car service operates in 70 cities in 29 countries, from Baltimore to Bogota, Moscow to Melbourne.

Those are the big guys, but thousands of other disruptive little companies been popping up to let people share almost anything, from bikes to home kitchens. Mesh Labs, on online directory, now lists 8,891 companies in the collaborative economy space. Collectively those companies have raised $21 billion in funding, according to Mesh Labs founder Lisa Gansky. Airbnb and Uber have each raised more than $300 million.

Screenshot_2014-02-25_14.47.31Scared yet? You should be, no matter what business you’re in. Consider the potential effect on car sales. A single “properly shared” car could meet the needs of nine people, Owyang reckons. That’s eight sales that didn't get sold. And cars are just one market among many that could be hit.  

“Uber and Airbnb are just the tip of the iceberg,” Owyang says. “This is going to every single vertical. There will be a marketplace for everything. If you thought social media was dirsuptive, you ain’t seen nothing yet.”

As always, the shift represents both a threat to established companies and business models, as well as a huge new opportunity.

Big companies are so interested in this trend that within weeks of hanging out his shingle he’d signed up 29 Fortune 500 companies as members for his Crowd Companies brand council. They include household names like Wells Fargo, GE, Ford, Nestle, and Hyatt. To conduct the survey for the new report, he teamed up with Vision Critical, which creates technology used to create "insight communities," which are "private online groups of customers and prospects," which CMOs and others can use to find out what people are saying about them.

Fight or Embrace?

It's hard to measure the threat that collaborative economy companies represent to incumbent players. In some places it’s been claimed that Uber and other ride-sharing services have deprived taxi companies of 30% of their revenues. Hotels seem to view Airbnb as a threat, though Owyang says no one has produced numbers showing how much business hotels have lost.

But threatened incumbents have started fighting back. Taxi drivers have held protests about Uber. In Paris, the government passed a law requiring that customers must wait at least 15 minutes for an Uber car. That made Uber less convenient and was seen as intended to protect taxi drivers. Amsterdam, taking aim at Airbnb, passed a law making it illegal to turn your home into a hotel, though Airbnb found a way to work around that obstacle.

Owyang says that instead of fighting the collaborative economy, incumbents would be better off finding ways to embrace change and take advantage of the shift. One way to do this is to turn products into services. Instead of selling cars, automakers could create people subscription plans for the use of cars. Or they can just get into the car rental business.

Owyang cites BMW, which started renting cars out of its dealerships under a program called BMW On Demand. GM partnered with RelayRides with a service that lets owners of GM cars rent out their vehicles using the built-in OnStar system.

Similarly, Marriott and Stellcase teamed up to create Workspring, a company that provides shared workspace. Patagonia teamed up with eBay to create a marketplace where people can buy and sell used Patagonia sportswear.

 

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