Consumers throughout the Western world are seeking greater value from products and services, and redefining their relationship with ‘stuff.’ And with flourishing online communities engaging with the concept of access over ownership, the internet is emerging as a robust platform for sharing models to grow and thrive.
After more than 50 years of unprecedented consumption, we are overdrawn on the planet’s resources and businesses are grappling with rising raw material costs, escalating carbon emissions, pollution and waste. The commercial frenzy to sell more products has resulted in a throwaway convenience culture and a heavy dependence on mass manufacturing. Meanwhile, as product lifespans shorten and people live longer, consumers are accumulating an ever-growing mound of possessions, some of which quickly become obsolete, and many of which are rarely used. Some 80% of items in UK and US homes are used less than once a month, and self storage is now a $24bn industry in the US.
In human terms, the pursuit of ownership has seen people working harder to buy more things, hankering after the latest gadget and aligning their social status with material wealth, while loosening their bonds with the community.
Now, we’re experiencing a significant values shift, according to collaborative consumption expert Rachel Botsman, with a groundswell of people exchanging aspirations of ownership for a desire to reconnect with products in a more meaningful way, protect the environment and regain a sense of community. Many seek greater transparency and value, and more control over the way they consume, while others are prioritising experience and performance over possession. The millennial generation in particular is also cost-conscious post recession, according to the Future Foundation.
Savvy businesses are tuning into the trend, with an explosion of companies offering online access to products including cars (Zipcar, Streetcar), toys (Dim Dom) and clothes (GirlMeetsDress) as well as films (LOVEfilm, Netflix), accommodation (Airbnb) and parking spaces (ParkatmyHouse). The value of the UK sharing market was estimated by Botsman as £22.4bn in 2012, with cars, holiday homes and DIY equipment currently ranking as the top three most shared items. Sharing is also taking place among web-based peer-to-peer communities, which allow people to rent anything from products, skills and spaces (Zilok, Ecomodo) to tools (Neighbor Goods) and even land (Landshare, SharedEarth) to each other directly.
The flexibility offered by this diverse range of sharing models means consumers pay for things as and when required, with some accessing goods or services they wouldn’t otherwise be able to afford. Britons could save £12.4bn by adopting a pay-as-you-live approach, suggests Zipcar.
The unifying power of the internet is fundamental to the access over ownership equation. In a hyper-connected world where connectivity is becoming more affordable and the popularity of mobile technology and social networks continues to soar, the internet provides a stable, long-term platform for sharing models. Access-focused businesses and networks are using the web to formalise long-established behaviours such as sharing, lending, renting and swapping into new modes of consumption. Consumers are already familiar with sharing models such as laundrettes, library books and public transport. Now, they’re being offered a host of new alternatives that they can access at the click of a button.
As businesses retain ownership of products and more items are shared, companies will gradually manufacture less. One shared car replaces seven to eight owned cars, for example. And with the transition to ‘access’ comes the opportunity to build a circular economy by innovating and saving costs while conserving natural resources, cutting waste and saving energy.
Commercial ideas are starting to flow around many different concepts, whether it’s offering usage of a product or service, extending the life of a product through maintenance and repair, or selling performance.
“We’re seeing real energy behind sharing brands and more companies experimenting with service-based models,” says Sarah Tulej of Forum for the Future. “Increasingly, big companies like Walmart, General Electric and Whole Foods are teaming up with ‘sharing’ start-ups to identify opportunities for collaboration. And it’s not just about guarding against risk – companies are realising that service innovation is a strong differentiator in the marketplace.”
BMW is tapping into the shared ownership trend and creating a new revenue stream with its DriveNow car sharing service. Customers in five German cities and San Francisco can locate the latest BMWs, including electric vehicles, through sophisticated smartphone apps, pay for the time used and return the car to any parking space. Launched in 2011, the service has 50,000 members worldwide and runs 2,200 vehicles. BMW aims to win one million new sharing customers in Germany by 2020 and expand to other countries.
“As customers increasingly seek greater flexibility in their relationship with car ownership, we’re giving people the choice they require by developing individual mobility solutions,” explains Graham Biggs of BMW. “These encompass both traditional ownership and sharing options. We expect car-sharing to grow as urban areas become more congested and younger, digitally savvy customers prioritise convenience, variety and experience over ownership.”
By moving to leasing instead of selling carpet tiles to customers, carpet tile manufacturer Interface grew its business from $800m to $1bn from 1995 to 1996, while cutting its use of raw materials by 20% per dollar of sales. Providing access to the experience of watching films and TV online has allowed Netflix to grow its global membership to 44m since 1997 and attract 4m users in the last three months alone.
The popularity of online streaming has dented traditional music sales and video rental, leaving firms such as HMV and Blockbuster struggling to stay afloat. However, to put things in perspective, there are more than 30m cars registered in the UK, and just 850,000 Zipcar members worldwide. There is clearly some way to go for sharing models to challenge ownership. Moreover, making radical changes is daunting for any business.
So what’s the way forward? “Access over ownership certainly has long-term growth potential, but significant momentum and mainstream acceptance will partly depend on the ability of high profile brands to develop relevant, convenient, ongoing services,” says Pippa Goodman of the Future Foundation. “Communicating the financial benefits to consumers and establishing a clear feel good factor will also be vital. Sharing has got to become a new social norm.
“Technology will be critical to the evolution of sharing models,” Goodman continues. “Offering customers the ability to pinpoint local services on the go and personalising recommendations will help to ensure sharing services remain attractive and flexible. We’ll also see more online sharing platforms developing around specific needs or interests.”
And will millennials champion the trend? Internet savvy and quick to embrace the benefits of sharing models, they’re by no means the only demographic group interested in access over ownership. Botsman and Forum for the Future agree. People of multiple ages and social backgrounds are also engaged, and as this interest grows, the greater the opportunity for businesses to drive innovation and quicken the pace towards a circular economy.
This article was originally published on the Guardian Sustainable Business site.