Four Ways the Crowd Gets What they Need From Each Other –Without Buying from Companies

Gift

Above image:  The collaborative economy empowers people to get what they need from each other –without even having to go the store.   Read about four of the many startups that are enabling this behavior below.

I’m a little worried this morning. 

I’m in Minneapolis, the capital city for consumer packaged goods, durable goods, and some of the top retailer brands in the entire world.  I’m here to speak to 300 corporate folks, at an event hosted by Magnet 360, Salesforce, and Marketo.

What am I going to tell them?  That people are shifting their behaviors and, enabled by internet tools, that they can share products with each other – rather than buy them.  I’m going to tell them that people can buy once and that then they can share the products that they have acquired with each other many times over.

I’m going to tell them that the people in the crowd can get what they want from each other, and that their reliance on corporations can be reduced.  I’m going to tell them that they could be facing reduced revenues.  I’m even going to tell them that they could potentially lose their jobs.

As I prepare to head to the stage in a few hours, I must admit that some ominous thoughts are racing thoughts my mind.

I’m going to deliver some bad news.  How will they react?  Will they tune me out and surf Instagram, ignore me or tweet bad things about me?  Or, maybe, throw those little Italian hotel candies at me?

I’m here to tell them there are many reasons why this sharing movement is happening.  Not only does social technology make it super easy for people to connect, but, for some people, sharing used goods is often just as good as buying new.  I’ll tell them that a new class of “Conscious Consumers” wants to reduce needless consumption.  I’ll also tell them that, due to the rapid increase in world population, we really don’t have a choice as a planet, but must be more careful with our fixed resources

I’m even going to tell them that I, myself, have become a Conscious Consumer.  Aside from consumables, like food, gas, and personal health items, I can count on one hand the physical goods I’ve purchased in the last two months:  A fancy hands-free phone for my home office, a fancy purse for my ever-deserving wife, and a pair of customized Nike ID running shoes.  I may even read my heartfelt letter to brands, telling them how my lifestyle is starting to change.  That means my relationship with brands will change along with it.

You’re probably wondering, who does this?  Is it just Asian-American Industry Analysts with four-syllable first names and impossible-to-pronounce last names that live in Northern California?  It could be, but if you read, “Share or Die, by Neal Gorenflo of Shareable magazine, he talks about how this “asset-light” movement is common among Generation Y, people who are accustomed to sharing on the internet, yet are saddled with an enormous burden of college debt.  They really have no choice.  Or I may tell them about internet leader Andrew Hyde who reduced his personal goods inventory to 39 items and experienced the feeling of freedom.  I might tell them about my trips to Europe and Asia, where this practice has been common for a quite a long time. Or about how is becoming more prominent in densely populated American cities like New York and San Francisco with sharing of bikes, cars, houses, gardens, and even food.

I’ll share with them these four examples of startups that will ultimately reduce their revenue:


  1. Yerdle taps Facebook to find and share goods.  This clever website, which uses Facebook connect with your friends, enables you to share goods and products with people already trust rather than with than some stranger on Craigslist or eBay.  It was founded by Andy Ruben, the former Chief Sustainability Officer at Wal-Mart (shocker!).  I had the chance to have breakfast with Andy a few weeks ago and learned how he believes products can be easily gifted to each other, which ultimately also put a drain on corporate revenues.  I quickly realized this idea also has profound impacts for governments who depend on taxable revenues.
  2. NextDoor connects you with your local neighborhood.  Startups popped onto my radar thanks to Viv Wang who’s actively watching this space.  This is a local social network.  And by local, I mean very local.  After you verify your identity and location, it connects you with your geographic local neighborhood.  Your local community becomes a place to exchange ideas and sell, or even gift, goods and services to each other.  Need sugar?  You can get that from a neighbor you haven’t yet met just a block away.  Need to get rid of some old skis?  Sell them on NextDoor or gift them to that college kid down the street.  Need to borrow a lawn mower?  That should be there too.
  3. Stokebox provides for the sharing of collections of goods.  The newest one, which was placed on my awareness list by Liz Philips, allows people to get a box of hand-me-downs from strangers rather than family members.  You can do things like offer a box of clothes and toys for an infant, and in exchange, or for a very low fee, get a box of clothes and toys for a toddler.  Imagine how this can simplify the lives of already overwhelmed parents by reducing trips to the store and increasing their disposable income.
  4. GiftFlow empowers people to ask for what they need.  What if you need something, but don’t have something to offer?  The “gift economy” enables people to ask for what they need. Those who have can give within this new form of economy.  People who continue to give and gift are rewarded by their own intrinsic satisfaction.  Reputation reporting systems may eventually emerge to show who the digital Mother Teresas are in this generation.

That’s just a small list.  If you want to see more, I have compiled a list of over 200 of these startups (with the help of a Taskrabbit, I might add) that are emerging in every vertical and sector around the globe.  In each case, the crowd can get what it needs from each other, without having to go to corporations, brands, retailers, or merchants.

The good news is that our research has found a solution for brands, retailers, and corporations.  The hard part for the companies is that it requires them to let go of trying to control the market.  But, in exchange, they’ll actually gain more of the market!  Here’s how it works:

We call this the “Collaborative Economy Value Chain” (try saying that fast, five times), and we’ve identified three business models where companies can work with the startups and the crowd:

  1. Company as a Service:  Where companies offer products on demand for rental, rather than for sale.
  2. Motivate a Marketplace:  Where companies enable their customers to sell used goods.  The companies can make a percentage, or profit from value-added services.
  3. Provide a Platform:  Where companies collaborate with the crowd to reduce costs and promote innovation.

If you want to know more about this subject, you may read the full report on the collaborative economy value chain (available to anyone) and watch the video, which delves into deeper detail about how companies can use this movement to their advantage, rather than be displaced by it.

I leave you with this final thought:  When the people in the crowd begin to collaborate to get what they need, it means that corporations must join in, or risk serious disruption of business.

 

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  • ronaldvandenhoff

    As you may recall I concur with everything you have published on this subject, and my company is into the hearth of the sharing economy over here in Europe …How ever I cannot agree with the term ‘collaborative economy value chain’…we are moving from the value ‘chain’ to value ‘networks’…why do you keep using this archaic word ‘chain’?

  • http://warrenwhitlock.com/social-media-expert Warren Whitlock

    Brands would do well to start imagining a world where distribution is not a straight line from wholesale and retail to consumer. I notice that in all the examples of sharing and trading, even craigslist and eBay, it’s easy to find gaps where a connection to a helpful brand would benefit all.

  • Francine Hardaway

    I think you’re getting deeper and better into this subject. There does seem to be a lack of interest in consumer goods on the part of younger shoppers, and of course older ones already have most of the ones the need. But in addition, the recession hit younger people hard. Every young person I know is underemployed, not employed where they thought they would be, or working as a free agent. Wages have not grown along with living expenses, and I can see that these young people have very little choice; they just can’t afford much, and their credit is shot from the last five years. Pile on that the student loans, and you get a recipe for consumer disaster. If the CPG people don’t know this already, they’re destined for a real wake up call.

  • Carlos Abler

    Well for my part I loved the talk, and pocketed the little Italian candies. An act of opportunism that indicates my resilience for surviving the market disruption. Personally, I love the disruption ahead. What could be better than our products being the oil the lubricates the gears of more complex community formation. Through those re-used, hacked, re-purposed, re-sold products, we have a foot in the door of evolving social relationships that we can continue to add value to; if only we have the wherewithal to continue to get over the learning curve of customer centered design. Now we need to practice Community Centered Design.

  • http://web-strategist.com/blog Jeremiah Owyang

    Also see Neighborgoods and Poshmark

  • http://web-strategist.com/blog Jeremiah Owyang

    Carlos, thank you! I’m glad you’re leading the charge for community centered designed.

    Enjoy those candies.

  • http://web-strategist.com/blog Jeremiah Owyang

    In Neal Gorenflo’s book “Share or Die” he talks about how some youth must share, as they’re saddled with college debt, and the jobs they were ‘promised’ never materialized.

  • http://web-strategist.com/blog Jeremiah Owyang

    Thanks Dominiq, I’ll check out those examples.

  • http://web-strategist.com/blog Jeremiah Owyang

    Warren, there are multiple new business models to explore, we found at three major buckets from ) Company as a Service (allow customers to rent your products 2) Motivate a marketplace (encourage sharing, and take a cut while selling value added services) and 3) Provide a platform (the crowd does your work, reducing costs, and hopefully raising profits)

  • http://web-strategist.com/blog Jeremiah Owyang

    Ronald, that’s a great question. The Value Chain concept is a term already known in business. I’m catering to a business audience, and am translating for them how to think, learn, then activate in this space.

    You’ll see a lot of terms that I use closer for the business audience –than at the fringes of the startups. That’s my role, I bridge.

  • http://warrenwhitlock.com/social-media-expert Warren Whitlock

    There’s never been more opportunities. Funny how often there’s talk of getting manufacturing jobs back. Efficiency in manufacturing (profit per employee) is at an all time high. The profitable jobs are likely still expanding while traditional stakeholders hope for the old style manual jobs.

    And this is without all these innovations.

    I cringe every time I hear media, politicians, leaders talk of going back to any of that. I imagine there will be a paradigm shift as the dinosaurs die off, creating more opportunities to fuel an even better future.

    Painful for those that don’t embrace innovation. Wonderful when they do.

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  • http://www.neverstopmarketing.com jer979

    I am a few days behind reading your blog, but looking forward to hearing how the reaction was…particularly if anyone blogged a reaction.

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  • http://web-strategist.com/blog Jeremiah Owyang

    Jeremy, the reaction was generally good. Some were stunned, but most saw the changes coming.

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