Rise of the Collaborative Economy: Where what’s mine is yours, for a fee

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Peggy Roe, The chief sales and marketing officer in Marriott’s Asia Pacific division, noticed a frustrating phenomenon. Roe knows that hotel conference rooms are underutilized, yet she often saw people searching Marriott’s lobbies and restaurants for a quiet spot to work. “I thought it was crazy that our guests couldn’t get easy access to our vacant spaces,” she says. So at her initiative, in 2012 Marriott partnered with LiquidSpace, an online platform that lets people quickly book flexible workspaces by the hour or day, testing the idea in 40 hotels in Washington, DC, and San Francisco. Currently 432 Marriott hotels have meeting spaces listed with LiquidSpace—and because many of the people reserving space aren’t guests, the arrangement helps Marriott reach new consumers. Marriott is just one example of many established company that’s starting to take a serious interest in the collaborative economy.

The collaborative economy is growing stronger day by day, it is considered the next phase of social business. Jeremiah Owyang defines “The Collaborative Economy is an economic model were ownership and access are shared between corporations, startups and people. This result in market efficiencies that bear new products, services and business growth”. It is also called the sharing economy

The collaborative economy is increasingly empowering customers, and encouraging a peer-to-peer network. Consumers are now using social technologies to share goods and services such as eBay, and Instagram. This is redefining the buyer-seller relationship, power is now being shifted to consumers, consumers now share products and services with each other.
The use of smartphones and easy Internet access has certainly helped with the rise of collaborative economy. Technology has reduced the cost of transaction, making sharing assets cheaper and easier, and also possible on a much larger scale, all you have to do is just go online or download an application. The biggest  advantage is the availability of more data about people and things, which allows physical assets and services to be shared. Before the internet, renting a surfboard, a power tool or a parking space, was usually more trouble than it was worth. Now websites such as Airbnb, and RelayRides connect owners and renters.
The collaborative economy is a good thing for several reasons; Owners make money from underused assets. Airbnb says users in San Francisco who rent out their homes do so for an average of 58 nights a year, making $9,300. Car owners who rent their vehicles to others using RelayRides make an average of $250 a month; some make more than $1,000. In her iconic TED speech, Rachel Botsman, author of “What’s Mine Is Yours”: The Rise of Collaborative Consumption, reported that the average total use of an electric drill is a mere 12 minutes”.
There are also environmental benefits, there is a growing awareness about the environmental impact of our consumption habits. Renting a car when you need it, rather than owning one, means fewer cars are required and fewer resources must be devoted to making them. Freecycle gifting, a website of used goods, states. “It is all about reuse and keeping good stuff out of landfills”. Reselling, renting, co-owning or gifting maximizes usage and reduces the impact of physical goods that were once bought and discarded after limited use.
There is a big possibility for companies who don’t embrace collaborative economy to become disintermediated by customers who are empowered to transact directly with each other, which can result to revenue loss. Every car-sharing vehicle reduces car ownership by 9-13 vehicles, resulting to a revenue loss of at least $270,00 to an average auto manufacturer.Jeremiah Owyang believes companies must evolve their business models to avoid becoming disintermediated by customers who connect with each other.
In order for corporations to survive, they need to rethink their business models. With the Collaborative Value Chain, Owyang explains three ways companies can rethink their business models.
First Model: Evolve Business Model to a Company–as–a–service; Rather than sell goods in the traditional sense, companies should offer products or services on-demand or through a subscription model. Companies that adapt this model enjoy a long-term relationship with their customers, and also get their products into the hands of new customers. BMW has done this with its DriveNow electric car sharing program. BMW says this model allows them to sell one car nine times to sharers.
Second Model: Connect peer to peer buyers and sellers by motivating a marketplace; Companies must now foster a community around the brand enabling customers and partners to resell or co-purchase products, swap goods related to the brand, or even enable lending or gifting for no monetary exchange. This add a new value to transactions between companies and customers. Patagonia has used this in a partnership with eBay, where it encourages customers to buy used clothes and sell what they don’t need.
Third Model: Let them build on you by providing a platform; This is the co-innovation model. Companies must enable customers to build products and new services as partners, not just as consumers. A partnership between GE and Quirky allows people to submit ideas for products, while a team designs and manufactures them for retail. “Dyadic relationships are unstable. The best way to stabilize your relationship with customers is by creating a triad connecting you to customers and customers to each other. Empower your customers to create value together on your platform, under the banner of your brand. That’s the new of brand loyalty”. said Gorenflo, founder of Shareable.
There is a change in how we think about possessions, sharing is gradually replacing owning. “The collaborative economy could be as big as the Industrial Revolution in the way we think about ownership”. said Rachel Botsman, author of What’s Mine Is Yours: The Rise of Collaborative Consumption. As a small business owner myself, I can personally say, that I benefit from the collaborative economy. Even though, I have a website for my online clothing store, I have 3 marketplace stores; ebay, etsy, and storenvy, and I make more sales on each store, than what I make on my website. Oh yes, I utilize the collaborative economy very well, I will be stupid not to. Businesses have spent centuries making buying really easy, we are just at the beginning of making sharing easy. The sharing economy is not going anywhere, anytime soon, so keep calm, because sharing is caring.
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