What to do if Collaborative Economy Marketplaces Are Disrupting Your Business

Frustration
This is part of our Collaborative Economy coverage.  Read the definitive report for corporations or peruse all my posts, which go back a few pages.  First, let’s define what we’re talking about.  Like Craigslist or eBay, we’re seeing new marketplaces emerge with a more concentrated focus on every business.  They offer features that enable sellers to offer their ware, and buyers to offer bids, exchange of information, goods, and currency in both directions.  Every stock exchange is set up in this manner, allowing for efficient trade, despite location and time differences.

 

[Definition of a two sided online marketplace: An online exchange that allows sellers to offer their goods and services, and for buyers to obtain information, often barter, and purchase offerings using internet technologies]

 
These marketplaces are disrupting traditional business.   
Here’s what we’re seeing at the trend level and what it means to corporations:

  • The Crowd Can Get What They Want From Each Other, Bypassing Corporations.  These two-sided marketplaces are actively disrupting corporations.  We have seen hotel chains fund lobbyists to influence policy to fight AirBnb.  We have seen cities that have lost taxi revenues pass ordinances that make tools like Lyft and Uber illegal.  In perspective, most corporations aren’t fully aware of this growing groundswell arising against them.
  • It’s not New.  It’s Native to The Internet.  Which Means it’s Unstoppable.
    Craigslist was one of the first, and is often attributed as a cause of the demise of the newspaper classified business revenue.  It sure has forced third-party sales teams to understand how to benefit, or be disrupted, by ecommerce.  In fact, these are just examples of the broader impact of the internet, which is disintermediating traditional business flow and forcing middle men to react as monies are routed around them.
  • Marketplaces Are Emerging in Your Market, Amplifying the Disruption
    We’re seeing these marketplaces in every niche, vertical, and segment in the market, and now they have a few things that are different:

 

[Disruption to Corporations: These marketplaces enable the crowd to get what they need from each other --bypassing corporations]

 

Nine Examples of Two-Sided Marketplaces Disrupting Traditional Corporations
To bring this to life, I want to list examples of those these marketplaces (beyond simple Craigslist) are emerging in nine distinct verticals:

Industry Startup Examples Who’s Disrupted
Transportation: The industry to be impacted the most has been the mobility and transportation space. From Uber, Lyft, RelayRide, Sidecar, and many others, these tools enable on demand access to cars or a ride as a service. Traditional taxi corporations and companies have cried foul, taxable revenue to airports and cities, and rental car companies who haven’t acquired or adopted these services
Hospitality: New startups have emerged that enable the crowd to host people in local experienecs at their guest house or individual couches or rooms, these players include original player Couchsurfing, AirBnb, and OneFineStay for luxury rentals. Even hotel room sharing has emerged, I just learned of EasyNext. The hotel industry has been disrupted. As a result, they’ve funded lobbyists to help protect their business model, public and consumer safety to educate and combat this growing trend.
Food Service: A new class of startups is emerging that enable to people to turn their own kitchens into ‘restaurants’ for friends and strangers at a cost. EatFeastly enables the crowd to host dinner parties for inspiring or off work chefs, and make a profit. While nascent, this will start to impact restaurants if people are able to self organize food events around each other at homes, parks, or offices, bypassing traditional restaurants.
Staffing and Talent: One of the early models we saw emerge was online marketplaces of staffing tapping into remote workers from opportunity markets to developed markets. This includes eLance, Odesk, and even TaskRabbit and RedBeacon at a local level. For higher level skills PopExperts enables specific experts to find buyers. Traditional business process outsourcing, consulting firms and staffing firms like Kelly Services, Manpower, and Robert Half agencies. At the local level, the Yellow pages or local listing sites like Craigslist are impacted
Office Rental: Companies with excess office space, but are locked into long leases can now offer their desks, rooms, or offices on demand, generating new contacts and revenues. Players include Sharedesk, LiquidSpace, Pivotdesk, and more. Traditional property management firms are impacted, real estate agents, hotel services for meeting rooms, and even the local coffee shop are disrupted as the crowd gets what they need from each other.
Design: Graphic and web designers can now tap into a marketplace of buyers using websites like CrowdSpring and 99Designs that enable a marketplace to connect to each other. I was covering this contraversial market a few years ago, and even participated on a panel at SXSW where long term formal designs cried foul, and even involved industry groups to comment, my coverage is here.
Consumer Packaged Goods: Rather than buy products from a store, a neighborhood can now share goods and products with each other, rather than buy. Websites like Yerdle (who are founded by an ex-Walmart executive) and NextDoor which empowers neighborhood online discussions enable people to share and gift, rather than buy Retailers are impacted as people learn to share among themselves –rather than buy. Season goods, sporting goods, transportation goods, kichen appliances, landscaping equipment and even cars are items likely to be shared rather than purchased.
Banks: Rather than go to a traditional bank to obtain money, the crowd can tap into each other to get money, websites like LendingClub, Propser, and even micro loans like Kiva enable the crowd to loan each other money, eToro is an online community of traders that enables peer to peer advice to emerge after analyzing top traders in the crowd. On the startups side, Kickstarter disrupts traditional early funding models. Traditional banks, and finanicial advisors are impacted as the crowd seeks to get what they need from each other. This has radical implications across every vertical that requires funding or loans including real estate, cars, colleges, and more.
Public Relations: The newest startup on my radar is AirPR, which is like Angie’s List for PR professionals. This site enables the clients of PR consultants to identify who the top 1% of PR professionals are for starutps and midsized companies. I’ve hosted an in-depth conversation on AirPR as this new market disrupts traditional business models in the PR space, enables some PR professionals and those that don’t make the listing are impacted.
Many more Industries: Here’s a list of over 200 startups in the collaborative economy, across dozens of industries. With the rise in VC funding on this space, expect more to emerge Nearly every industry, niche, and vertical is being disrupted.

 

The Six Strategies Corporations Can Take to Address the Collaborative Economy
Right now, I’m seeing companies react in a few different ways, each with different levels of investment and outcome.  Here are the scenarios, are far as I can see:

  1. Ignore it, and hope it goes away.  An easy solution is to avoid it or don’t look at it.  The concept is that not paying attention to this market will, hopefully, result in it going away.  The risks are that, if it doesn’t go away, then your company will be behind those that have already adopted this.
  2. Fight it with policy, lobbying, or marketing.  A common reaction is business model protection, and using lawyers, lobbyists or aggressive marketing and sales to counter this movement.  While the costs of this effort are high, it’s hard to stop a movement that’s pinned off the internet.  It’s an unstoppable force.
  3. Sponsor the startups.  Some companies have sponsored these startups.  For example we’ve seen Barclays Card sponsor London bike sharing, Citibank, and NBC in New York sponsor Yerdle.  Brands can harness this movement for marketing and recognition, not to mention profit.
  4. Acquire the startups.  To date, we’ve seen smart companies like Avis (Zipcar) and Enterprise making acquisitions, showing the value of getting into this market at an early stage.  The downside is that companies, like AirBnb, have been able to raise over $120 million in venture capitalist funding, increasing their value, making them an expensive purchase.
  5. Integrate your business model.  Corporations can work with startups by enabling their own products to be shared and passed along in these new marketplaces.  Patagonia has partnered with eBay to encourage consumers to buy used goods, and Scottevest apparel has done the same, promoting the growing eBay community from their own corporate webpage.
  6. Build your own marketplace.  In the most advanced model, I expect a new class of corporations to host their own communities that enable customers to trade, rent and resell their goods and services in a brand hosted community, enabling new value for the brand, and offering new ways to extract value from the brand.

So there you have it friends.  We’ve gone through a definition, reasons why this is important, examples of marketplaces disrupting corporations, and a six-stage maturity model demonstrating what corporations can and will do.

Image by Dez Creates, used with creative commons