By Sustainability Hub Reporter Adriana Olaya
Rapid product consumption is one of the main drivers of our current economy. People are often led to see consumption as the only tool to keep or increase the current wealth level. However, today’s hyper-connected world is leading the economy of the twenty-first century to change: the consumerist society with ownership at its core is starting to reshape itself into a world-wide collaborative consumption society. This business model generates long-term income from each item, rather than one-time earnings that rely upon frequent sales. It proves more sustainability than over-consumption built on debt and marketing hype. The raise of this new economy movement is enhanced by several factors, mainly the abundance of assets along with the high-tech consumer platforms. Furthermore, the digitalisation of products, a close-knit media and the economic downturn of 2008 caused many of us to reconsider our attitudes toward acquisition and ownership.
Rachel Botsman, a global thought leader on the Sharing Economy, founder of Collaborative Lab and author of What’s Mine Is Yours, defined Collaborative Consumption as “the rapid explosion in swapping, sharing, bartering, trading and renting being reinvented through the latest technologies and peer-to-peer marketplaces in ways on a scale never possible before”. Furthermore, Botsman argues that people use technology to form online peer communities to realise the benefits of access to products and services over ownership. By doing so, on the one hand they are saving resources such as money, space or time. Additionally, offline communities grow and a peer-to-peer trust is built.
The Collaborative Consumption movement is part of what is known as Sharing Economy. It operates outside of conventional capitalism by splitting the production cycle in order to share the tasks whether the creation, the production, the distribution or the consumption of goods and services by different organisations. Governments and businesses are embracing this economy model in order to revolutionise society. Thereby almost every sector is positively affected, such as, transportation (DriveNow, Car2go, Carsharing) travel (AirBnB, Lyft), fashion and food (GirlMeetsDress, FoodSharing), social to peer lending (Zopa, Prosper). But also non sectorial forms like collaborative inventing (Quirky), skills and knowledge sharing (TaskRabbit, Zaarly, Quora), just to name some.
The new form of “sharing” has allowed people to see where resources can be found and used for a time, such as a place to stay, a car to share, an aspiring chef, inexpensive office space or executive assistance. All this is happening on a scale like never before, sometimes expanding the potential of sharing beyond local networks.
By bringing underutilised resources online and connecting it to demand, these Collaborative Consumption businesses have experienced an enormous growth. In October 2015, Forbes Magazine released an article in which the projection of the Sharing Economy is to grow up to US$335 billion globally by 2025.
Besides the reinforcement of the economy, the notorious expansion of Collaborative Consumption tends to generates positive social impact in local communities and reduce the environmental impact, for example through a shift to business models that deliver services rather than products, the reduction of overproduction and the decrease of natural resources exploitation. There is some evidence that millennials (the generation born between the 80’s and 90’s) are adopting sharing behaviours that offer a broader chance to reinvent economic models and thus to reshape our identities moving away from forms of identity that rely on possessions and consumption, and towards those which are based in relationships and experiences. In contrast to over-consumption it also fosters values-related benefits, such as building communities and solidarity.
According to the University of Pennsylvania’s Wharton School of Business, institutions are raising sustainability by utilising their own form of Collaborative Consumption. Many Internet companies share the same computer servers, for example. Such practices even benefit competitors; it’s not uncommon for the same air plane to carry packages for both FedEx and the U.S. Postal Service.
Other advantages of the concept are the reduction of costs for the renter or borrower and the help to the owner of an item for the cost of its maintenance. Fewer people must assume the burden of individually paying for, maintaining and storing a possession. Like in the case of the German online platform, FoodSharing, which allows individuals, retailers, farmers or restaurants to share food they are not going to use before it becomes damaged. People can find near food and pick it up quickly when needed. FoodSharing contributes to the reduction of food waste. By now they have saved more than 3300 Tons of food in Germany that in other cases would be thrown away.
The change of user behaviour and the values that drive their actions impact heavily on the environment. Another great sector of Collaborative Consumption is the so-called shared mobility. As cities continue to grow in population and land use, an increasing pressure is being placed on the reliability of urban transportation systems. Traditional transportation public policy focused on “minimising congestion” and commute times. Minimising commute time for people in single occupancy vehicles only exacerbates the use of private vehicles and the need for parking and street maintenance that besides creates an unsustainable situation due to the expensive cost of buying and owning cars and the high cost of their production and maintenance. Recently, responding to these global problematic, numerous shared mobility services have emerged to address the gap in the supply and demand for sustainable mobility in cities. Recent enhancements due to improved information and communication technologies have made these shared mobility business models possible on a bigger scale. For instance, first-generation bike-sharing models emerged in the 1960s in Amsterdam and as of December 2013, there were nearly 700 programs in cities around the globe, most of them aided by significant advances in bikesharing technology. Carsharing has also been expanding at an exponential rate. At the start of 2013, there were approximately 2.3 million members in carsharing programs globally and Navigant research estimates that this number will climb to as many as 12 million by 2020. The impact of this consumer behavior is massive. Each shared car eliminates 5 to 20 cars from circulation. DriveNow is a clear visible evidence of the carsharing model in action to improve city mobility and arise of the promotion of locally emission-free mobility in urban areas. It operates a freely floating car sharing service. The cars are to be picked up and dropped anywhere in the city. The service is a joint venture between BMW and the car rental company Sixt. The pilot project took off in 2009 in Munich, Germany, and was incorporated in 2011-2012. DriveNow has now about 3,000 cars. It is active in San Francisco, London, Vienna and some German cities, including Berlin and Munich. It is not the largest car-sharing service, but it is maybe one that has the strongest development. Norbert Reithofer (the former CEO of BMW) was announcing in March an expansion program for 10 cities in US and 15 in Europe. According to BMW company surveys, 38 percent of DriveNow customers have sold a personal vehicle as a result of using the car-sharing scheme.
The Collaborative Consumption is also a crucial agent for social innovation. Sharing (rather than owning) assets is more community-oriented. The Sharing Economy addresses a range of social problems, including isolation, over-consumption, and economic scarcity in new ways. Moreover helps individuals meet their needs and expand their universe of opportunities, it also builds social capital—the connections within a community that help boost resilience and bring people back into relationship with one another.
Like these, many companies exist in different fields, even a new concept of use of space emerged in Australia. The platform Spacer 1 allows people to offer their own available space like a spare driveway, garage, attic/bedroom or backyard to other people to store large items like cars, boats, caravans or furniture. This service is attempting to disrupt the self-storage market, valued at AU$750 million in Australia.
These are just few of the vast variety of cases where Collaborative Consumption reshapes markets in various sectors of the economy by changing supply and demand economics. These new market places shrink consumer retail demand. The public perception of shared goods has changed substantially in the past few years. The Sharing Economy is growing at an impressive rate across the globe. Increasingly cities are seeking to become smarter through the use of new information and communication technologies, causing cities to rely even more on public–private collaborations to implement a wide array of technology solutions.
The notion of sharing transportation, space, finance, consumer goods, personal and professional services on an on-demand basis creates a large opportunity in the context of cities that struggle with population growth, increasing density and over-consumption of goods. 1 Spacer is an online marketplace for space, connecting people with extra space (Hosts) with those looking for storage space (Renters). Spacer utilises and shares local resources to meet a need in the community.
In conclusion, the Collaborative Consumption may be the next stage in the evolution of fundamentally restructuring how economies work. Sharing business models have emerged in key sectors of the economy, including goods, professional services, transportation, space, and money. The Collaborative Consumption has the potential to move the needle in assisting a radial shift in global and local economies toward sustainability. The potential benefits associated with such sharing economies are interesting from a social, organisational and environmental perspective achieving a sustainable model for future development. Collaborative Consumption is increasing the usage of the main functionality of products: buildings are there to be occupied not to be empty, cars are there to drive not to stand in parking lots, and food is there to be eaten not to be thrown away. This model is achieving the reduction of social problems, over-consumption, misuse of resources, and the most important, is raising awareness in impact and importance of consumer’s behaviour.