The notion of ownership is changing. Consumers, particularly young ones, are more interested in experiences than possessions. That’s led to the explosion of the Sharing Economy, a catchall term for new business models that allow regular people to share property, possessions, skills and knowledge.
This sounds amazing for customers, and a nightmare for brands. But it doesn’t have to be that way, so long as brands open themselves up to new ways of thinking, new ways of doing business, and new ideas about what value truly is.
The first step is to recognize the sharing economy isn’t going anywhere. Total revenues in the collaborative economy sector were estimated at $3.5 billion in 2013, with growth of 25%, according to Forbes. Rachel Botsman assures us that P2P rental market alone is worth $16 billion. The Economist got so smitten that it proclaimed 2013 “The Year of Collaborative Consumption.” Mary Meeker, the queen of Internet trends, decided that sharing economy was one of the trends for 2012. Some go as far as to predict that collaborative economy is potentially a $110 billion market. Uber alone is valued at $3.3 billion.
This is more than a symptom of venture-capital-inflated Silicon Valley. It is rooted in human behavior. It is a combination of value-seeking, convenience, instant gratification, quality control, and looking for a less-mass, more unique experiences.
Brands don’t provide this. They don’t provide this superior experience. They don’t even compete on the basis of customer experience. Their marketing doesn’t concern itself with experience. Their value chain is devoid of it. Traditionally, brands were mediators between producers and consumers, making producers more attractive to consumers and convincing consumers that they will be prettier, stronger, smarter because of products and services that producers create. Today, all we need to make a decision is a review, a photo and a community endorsement.
This is where digital can help brands. Collaborative economy startups have value chains that optimize a marketplace. Uber created a flexible incentive system for drivers to go out on the road, which created a public backlash, but actually very effectively solved the problem of supply-and-demand in the taxi cab marketplace.
A brand’s traditional, legacy business is going to be more valuable to consumers if it adds an existing marketplace to it. TaskRabbit is a marketplace for time, skills and knowledge, and, not accidentally, the most popular task there is assembling Ikea furniture. Many people fear and loathe Ikea manuals. They would rather pay someone to go through the ordeal. Right therein lies an opportunity for Ikea. Ikea should own the “Ikea-assembling skills” marketplace on TaskRabbit. The option of having a TaskRabbit individual should be part of every online and in-store order, all bidding already done by Ikea. The retailer then delivers to your door both the furniture and the person who will assemble it.
A brand is going to be more valuable to consumers if it creates some sort of new value that did not exist before. New value usually comes out of connecting supply, provided by the brand, with customer demand in some new way. A few years ago, Peugeot unveiled “Mu,” a rental service available in 70 European cities. Peugeot rents its customizable vehicles, along with scooters and bikes. This car manufacturer realized that its customers are engaging in car sharing behavior, with this brand or without it. In a savvy move, it adjusted its supply to its customers’ shifting demands.
In a slightly different vein, Patagonia partnered with eBay to create a redistribution market for its pre-owned jackets, fleeces, gear, shoes, sweaters, and other outdoors items. Patagonia customers can sell their ski pants, or buy a ski helmet on eBay, under Patagonia’s brand. By expanding its product offerings into pre-owned goods, Patagonia effectively expanded its market, reached more consumers, and encouraged more economic transactions around its products. Since then, retail brands are starting to embrace the trend: H&M and British retailer Asos created their own online marketplaces.
A brand is going to become critically valuable to consumers if those consumers invest their own time and resources in it. In this scenario, consumers define their brand experience by re-making brand product and services more according to their own needs and likes. Big, upscale U.S. retailer Nordstrom partnered with Toms shoes to inspire its customers to design new Toms. Nordstrom attracts affluent customers who are looking for something more than just mass-produced clothes. They seek unique, elevated designs that are going to set them apart from their peers. Intimate knowledge of its customers allowed Nordstrom to come up with the initiative that responds to their needs in the best possible way. Nordstrom inspired its customers both to express their creativity through shoe design (and to own it), and to feel good about being part of a larger, meaningful humanitarian initiative.
All these new branding directions are aimed to one, single-minded goal: amplify customer experience. Make it better. Make it more complete, A to Z. Close the value loop. Provide consistent quality. Put customer convenience first. Be useful. Be interesting and stay clear of one-size-fits all experiences. Allow people to share. (People love sharing!) Add value in every customer interaction. Focus on unmet needs, and be one step ahead.
Brands that implement this kind of thinking have nothing to fear in collaborative economy. They already behave according to its principles of generosity, transparency, sustainability, and utility. Marketplace, design, and disruption are the new branding playbook, and with it, collaborative economy can only make your brand grow.
Ana Andjelic is head of digital strategy at Spring Studios.