Sharing is caring: how ecommerce brands can leverage the sharing economy
According to the UK Sharing Economy Consumer Survey, 62% of the UK population has participated in the sharing economy. Of these, 38% continue to use sharing platforms at least once a month – a testament to the growing appeal of this particular model.
The sharing economy – known variously as the shareconomy, collaborative consumption, collaborative economy or peer economy – has led to a dramatic change in consumer behaviour over recent years, prompting many to foresee a negative impact upon more traditional companies. While they’re not necessarily wrong – according to a PwC report, Airbnb averaged half a million guests per night back in 2015, 22% more than Hilton Worldwide – there are also opportunities for growth here.
We explore two ways that ecommerce brands can utilise the ideas, structures and even resources of sharing economy platforms to compete and thrive in the modern marketplace.
Take advantage of collaborative systems to meet consumer demand
Sharing economy businesses take three general forms:
1. Product-service systems, connecting spare capacity and freelance services with demand on a peer-to-peer basis (e.g. Upwork, Airbnb).
2. Collaborative consumption, where consumers band together to acquire and ‘share’ a product (e.g. Kickstarter, BlaBlaCar).
3. Rental and subscription services (e.g. Spotify, Rent The Runway, Netflix).
While shareconomy platforms may often operate on a peer-to-peer basis, the systems that allow them to do so can be applied to conventional B2C and even B2B models. For example, in a world where consumers increasingly want to live agile, option-heavy, possession-light lives, a rising number of established brands are now offering a ‘subscription’ model of service for customers.
In the fashion world, for example, consumers can now rent clothes from high-end labels via third-party marketplace Rent the Runway, or directly from brands as in the case of Swedish clothing company Filippa K. Such rental models enable businesses to satisfy the popular demand for increased access and decreased costs.
Of course, there is a risk that, with fewer customers buying items outright, the scale of manufacture may need to be reduced. However, with each new garment potentially earning far more over its lifetime rental cycle than on a single sale price, revenue continues to rise despite decreased product volume.
Another idea pioneered by peer-to-peer platforms such as Uber is ‘surge’ pricing. In the youth-dominated, social media-savvy collaborative economy, consumers are increasingly brand-aware. They put great value on exclusive content, deals and products – a trend reflected in the rise of social commerce.
Amazingly successful cult brands – for example, Supreme – understand this need. By specialising in time-sensitive product ‘drops’ of limited-edition items, which – following sell-out – are never again restocked, Supreme has created an entire subculture around its fashion offering. Similarly, this appetite for time-sensitive offerings has allowed collaborations such as Fenty x PUMA and Victoria Beckham x Target to dominate fashion lines in recent years; some selling out within hours of going live.
While this ‘limited edition’ approach may not seem much like an Uber surge at first glance, these pieces, available for a limited period only, typically come with a larger price tag than the stores’ standard offering. To acquire them, consumers must act fast and pay above the norm – meaning brands are effectively ‘surging’ specific lines and collections of products to demand.
The takeaway: Look to successful shareconomy processes as inspiration for modernising your offering, whether through time-sensitive ‘surge’ pricing or rent-a-product models.
Improve and modernise your infrastructure
As the typical consumer becomes less interested in owning possessions and objects outright, companies should be seeking to adopt these behaviours themselves. The asset-light business model is a growing trend, enabling digitally native or pureplay companies in particular to emerge and scale quickly.
The core operations involved in a large-scale retail business – manufacture, buying, consumer experience – are best retained under the company’s own roof. But what about non-core functions, especially those that would require large in-house teams, and for the delivery of which your business isn’t specialised?
Rather than building sprawling permanent in-house teams across every function, weighing your business down with fixed assets that can’t be flexed to time or season, consider outsourcing. While some things need to be done in-house, some things simply don’t. By outsourcing non-core competencies, businesses can tap into scalable, agile workforces of specialised contractors and freelancers. This structure allows companies to maintain large operations without the costly fixed assets that this might have once involved – all within a business-to-business shareconomy framework.
PwC’s 2015 report encourages companies to monetise and share assets to achieve greater efficiency: “On average, today’s manufacturing facilities operate at 20% below capacity. Half of all desks in the average office go unused. A quarter of all trucks traveling in the US are empty. All of these are instances where sharing platforms could move companies much closer to maximum efficiency.”
Amazon’s Delivery Service Partners programme has taken things one step further, applying its marketplace principles to its infrastructure and operations. In an effort to meet ever-growing consumer demand, Amazon is recruiting entrepreneurs to found a network of separate delivery businesses, all of which will service the ecommerce giant. Amazon’s plan enables budding entrepreneurs to establish independent operations, coordinating efforts with others to form a larger, mutually beneficial B2B network; in other words, it is creating a peer network of businesses from scratch.
The takeaway: Revitalise infrastructure by outsourcing non-core competencies to flexible specialists, reducing unnecessary fixed assets while growing agility, efficiency and resources.
At Quill, we have spent years applying shareconomy and ‘on-demand’ principles to content creation, building a global network of 2,500+ talented freelance content creators. This dispersed workforce is centrally managed through our proprietary Quill Cloud platform, a pioneering technology that streamlines and automates complex content production processes to enable a level of efficiency, speed and scale that’s impossible to attain in-house.
To find out more about the Quill model, or talk to us about outsourcing your content creation, get in touch below.