The new shared economy being ushered in by startups like Airbnb, Relayrides and Toolspinner is creating new marketplaces where locals can rent their own rooms, cars and tools to their neighbors. Coined “collaborative consumption“, this new trend enables the efficient consumer sharing of resources and goods that are used on occasion as an alternative to outright ownership and the garage clutter this creates.
What is Collaborative Consumption?
The first phase of the collaborative consumption business model started with B2C (Business to Consumer) companies like Netflix and Zipcars that consolidated inventories of DVDs and cars, respectively, to rent out at lower rates than local video stores and Hertz. The second and current phase introduces the new communal sharing or P2P (peer to peer) business model that leverages inventory owned by consumers (rooms for rent, cars, tools, expertise, time) to create match-based marketplaces. P2P transactions can be executed virtually like eBay where goods are transferred via mail, but the bigger implication of P2P for hyperlocal is in the rise of local social graphs where neighbors trade with and refer each other.
Consumers now have more options to rent over purchase, and this dampens retail demand. There’s literally no need to purchase a chain saw unless you’re a landscaper. Obviously, brands and retailers lose when their products are rented out or sold in the second hand market because they make no money. Yet, in the face of the shared economy, many local retailers will need to recoup lower sales volume by opening inventory to rental, just like Hertz on Demand and BMW’s Drive Now were created to counter the Zipcars concept. Adapting to radically new business models like rental will be traumatic for brands and retailers alike , and will present an opportunity for retail consultants versed in social media and social change who can connect consumers directly to these new rental businesses.
The Role of Hyperlocal Media in Collaborative Consumption
The big hurdle facing collaboration consumption startups is developing local traction. Main Street has never heard of Zaarly or Taskrabbit, and startups don’t have on-the-ground resources to educate consumers and brand in more than one market at a time. Hyperlocal media can take on the role of educating consumers; it can publish directories for consumers of the literally hundreds of services that are chasing niches ranging from dog-sitting to bike rental. Even better, media or tech companies might create aggregate sharing services center for their community in the same way daily deals aggregators filter deals sourced from hundreds of sites. And yes, there already is de facto local aggregation platform – it’s Craigslist, but its clunky user interface is inefficient and its user base has no credibility rating system.
Hyperlocal media should encourage collaborative consumption because it brings consumers, their neighbors and businesses into value laden conversations as they negotiate the errands of daily life. Media values this participation. However, there are two business reasons why traditional media companies may not immediately embrace collaborative consumption. The model won’t make them money unless they run their own shared services platform. It also threatens local advertising revenue from retailers faced with lower sales and pressure to reallocate marketing budgets to social marketing.