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Will The Sharing Economy Destroy Brands?

There's a consumer movement afoot to buy less and share more. Here's how your company can innovate to keep up.

A lot, but not enough, has been written about the success of new models such as Zipcar, Airbnb, Lyft, and Neighborgoods.

These services, which allow consumers to share their cars, homes, or possessions with one another, or to pay for a car only at the time they use it, are part of a new movement called "the sharing economy." This move to an economy where consumers buy less and share more represents a big change for brands and also for jobs.

Of course brands have been negotiating big changes in their relationship to customers for the past couple of decades. And each change has been fraught with anxiety. But the disruptions are coming at a faster and faster pace: first the Internet, then social media, and now—according to the gloomiest prognosticators—the potential end of the consumer economy.

Obviously the consumer economy will not come to an end overnight, and probably it won’t end at all. But brands will still have to adapt to even bigger changes, or risk early death. The ones with the oldest structures and the least innovative leaders are at the greatest risk.

According to recent research conducted by the Altimeter Group, the disruption of brands has come in three waves:

  1. In the brand experience era, the brands were expected to put all their marketing messages online, communicating them to customers through a new channel. Although somewhat disruptive, this change still had the brands in control, broadcasting the same messages, yet through a different, potentially global channel. In this era, brands were forced to hire digital specialists—web masters, web developers and designers, and content managers.
  2. But then came the customer experience era, in which social media allowed consumers to "talk back" to brands—to give them insights about the customer experience, to complain, and to force better products and customer service. The messages now flowed in both directions, and indeed many conversations about brands went unnoticed by the brands themselves until they "went viral," at which time there was probably a crisis. Brands in this era had to build social media dashboards, and hire community managers and social media gurus to forestall adverse publicity. With this came the "discipline" of reputation management. Many brands don’t have this era mastered yet.
  3. Too bad. Altimeter thinks we’re evolving beyond the customer experience era to the collaborative era, which will be even more challenging. As consumers collaborate (or in some instances even conspire) to work around further consumption by sharing their goods and services, brands are fearful they may have no place in the future.

A future in which car-sharing and ridesharing become the dominant forms of transportation has major implications for the automobile industry, for example, with its hundreds of thousands of manufacturing and sales jobs. Likewise, Airbnb and VRBO (vacation rental by owner) have big implications for the hospitality industry, another large employer.

So what is the answer?

Altimeter, which has done really ground-breaking research into this new movement, proposes three possibilities for rethinking business models to contend with what’s coming. The first is called Company-as-Service, and car companies who timeshare their assets following the ZipCar example will go this way. The second, Motivating a Marketplace, involves getting out in front of the trend, and helping your customers buy your goods used and resell what they’ve finished using. Patagonia already does this with outdoor equipment. And the third, Provide a Platform, is what sites like Etsy and eBay, newer brands, already do. They encourage customers to connect with each other.

Small moves in these directions can be found in automotive brand forums, such as BMWUSA’s list of car clubs, or in Starbuck’s support of home coffee brewing. But most brands have a long way to go to disrupt their existing models before customers do it for them. They must develop a new value chain in which they put advocates front and center, and allow marketing people to fade into the background.

[Image: Flickr user Niklas Freidwall]

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  • Sudhir Desai

    Since when did brand become synonymous with business? Do Zipcar or airbnb not have brands? Then again why is everything an all or nothing proposition? Will the entire economy become a sharing economy all of a sudden? 

    The mobilization of spare capacity through advances in technology certainly creates new opportunities. If we want to label this emerging economy, we can call it a sharing economy (yet another label that will fall away by the wayside in a little bit). 

    Certainly we can expect emerging businesses that capitalize on this opportunity to cannibalize the market share of existing business. In some cases however, these are incremental opportunities which were not viable before. However, under no circumstance for example, will all the people who use hotels today move to the sharing model. 

    To the extent that cannibalization hurts some existing businesses, such as car rentals, they should certainly consider the opportunity and see whether they can come up with business models that align with their overall mission. As long as they have a viable business model, their brand will be under no threat. 

    A more reasoned argument would be, emerging opportunities and shifts could potentially cannibalize some of your existing businesses. If you do not revisit your business models, they could possibly become unviable.

  • Tom Foremski

    Plus, I don't see how the fact that people are using a product (sharing) can disrupt a brand... Not sharing, not using a brand would be disruptive indeed.

  • Tom Foremski

    Sharing is a good thing, it gets more people to experience a product. And it might even grease the mental wheels in justifying a purchase, I might not get much use of something but it I might get pleasure from sharing it with my friends and neighbors.

  • Elizabeth Olmedo

    Very true! There are a couple items I'd be interested in, but they are a bit on the expensive side and I can't bring myself to spend the money when I don't know if I'll like them. Sharing allows people in those situations to try out a product and then make a more educated decision--or like you said, justify the purchase.