Today’s face of retail is changing. New people behaviors and technologies are causing new business models, strategies and tactics to change beyond the traditional retail mall. Below is a list of trends I’m watching, experimenting, and adopting. As we head into the holidays, and help retailers earn their major revenue share, here’s some future trends to be tracking.
Ten Trends For The Progressive Retailer
- People desire purpose beyond profits. The 2008 recession has left a bad taste in everyone’s mouth. Powered by social media, people organized their mistrust. Today’s youth generation expects corporations to serve a greater purpose than just generating raw profits, reports this Deloitte study. New trade councils have emerged, such as Sustainable Apparel Coalition, Sustainable Brands, and B-Corporation ratings to promote brands that uphold the Triple Bottom Line of society, sustainability, and stakeholders.
- Sharing emerges as business model over consumption. The hot movements on the media’s lips are Airbnb, Lyft, and Uber, but how do they impact the regular retailer? We’re seeing thousands of services emerge that enable people to borrow, rent, gift, and get goods from their peers rather than buy them anew. Pleygo (I’m a member) enables me to get toys on a rental model, all delivered to my door. Furthermore, the gift economy, like Yerdle, threatens retailers as people give products, avoiding commerce altogether. H&M and Marks and Spencer also offer swapping used goods for in store coupon “Swhopping,” yielding loyalty and social good.
- Local neighborhood commerce enables new opportunities. Beyond popup stores, expect new business models to emerge where physical goods are ‘forward deployed’ (term originated by Andy Ruben) in neighborhoods, enabling products to be obtained on demand. Lockitron offers to make anything a secured location, accessed only by a mobile app, and, perhaps, with mobile pre-payment delivery.
- On-demand delivery sends products direct to home. Two models are emerging: Local delivery models like Postmates, Instacart, and Google Shopping Express enable local merchants to compete with Amazon by tapping delivery networks to get products to homes within hours. Also, the Subscription Economy, coined by Zuora, emerges as goods are sent to homes on a regular basis by such as TrunkClub, Dollar Shave Club, Beauty Box, and Citrus Lane. In those models, there is no longer a need for people to visit a retail location.
- Now, 3D printing offers customized products, and impacts supply chains. While in existence for over 24 years from companies like Stratasys, 3D printing is increasing in popularity along with online services like Shapeways and 3D scanning of your body. Expect retailers to experiment with these new technologies as Victoria Secret did when they hosted their latest fashion show, and with Appalatch offering 3D-printed wool sweaters perfected for your body type. See how the innovation of 3D printing can impact your business model.
- Marketplace models extend brand beyond core value proposition. Staples Marketplace, Patagonia Common Threads, and now TOM’s shoes have marketplaces that offer used goods, or goods made by other artisans or makers. This trend secures a brand in other categories beyond their core value proposition, producing a network effect. TOM’s marketplace indicates that their effort is beyond raw profits, extending to the social good of makers that are around them.
- New forms of data improve customer and brand relationship. While we’re all familiar with the internet of things, sensors, RFID, and other age-of-context data types, what matters is how they are used. Over the last 10 years, customers have been empowered to rate products and companies, but now, we’re seeing companies rate their customers, encouraging good behavior in exchange for good service.
- Alternative currency spurs new transaction opportunities. Reputation points, Klout perks, and more have been in constant discussion as marketers have attempted to quantify influence and behavior. But new decentralized currency platforms like Bitcoin have emerged, leaving regulators confused, and a handful of retailers, such as this online games and gift card retailer, adopting it. Bellwether Virgin Galactic announces they’ll be accepting Bitcoin for their $500k flights, a great coup for Bitminers the Winklevoss twins.
- Crowd funding offers the highest form of loyalty and, shared destiny. Big brands don’t need to crowd fund, but they do it for a few reasons: to identify product demand, to allow prepayment, and to harness the highest form of loyalty, shared destiny. Expect more companies to tap crowd funding as it’s caught the attention of federal regulators in recent hearings. See how Betabrand taps the crowd for commitment, and U-Haul launches the Investors Club.
- Crowd-created products tap endless innovation. The Maker Movement enables people to produce their own goods, and offer those goods to their community in online marketplaces or physical world events. Savvy brands like Nordstrom/Etsy, Ford/CustomMade, GE/Quirky are partnering with artisans and creators to develop unique, new goods. Companies that tap their own market to design, create, and manufacture products around their own brand are more connected, empowering others, and ultimately becoming more resilient.
Summary: Using powerful technologies, the people are becoming empowered to get what they need. They’re exhibiting new behaviors beyond traditional consumption, including funding, designing, and creating, which align to their goals, not those of Wall Street. This crowd-like company is a powerful force that savvy retailers can tap into to become more connected and innovative. Companies that tap these new trends will undergo significant business model change, but will then integrate the crowd into their business model, making companies resilient.
Thanks to digital business executive, Ethan Holland who provided some of these relevant links, and also cleverly coined the phrase “Mechanical Clerk” in relation to Trunk Club’s remote personal stylists.
3D design by Virtox, Dutch 3D printer designer, featured on Thingiverse.
There’s no shortage of press and media attention focused on 3D printing, ranging from manufacturing metal guns to restoration of human facial parts or jet engine parts to Victoria’s Secret angel wings. Beyond the press coverage, there is a significant, unanswered question that needs to be answered: What does this mean for traditional corporate business models?
[For corporations, 3D printing shifts products from standardized, scheduled, & at scale to customized, on-demand, & local]
I’ve taken classes at TechShop on 3D printing, visited the Shapeways factory, and own a few 3D printed goods (with more coming). I’m stunned by the many materials that can be printed, including steel, gold, chocolate, wood, proteins, and a variety of plastics. The folks at Stratasys recently left comments on a prior post, which prompted me to look into the many industry specific applications their 3D printer services provide.
This trend is only going to increase, as indicated recently by HP’s Meg Whitman’s public pronouncements about their entry into this space in 2014. Also MakerBot, a popular 3D printer, has pledged to supply 3D printers to teachers, who, in turn, will teach our next generation of students. Google Trends, which tracks searches for a term, shows a steep increase of the number of people seeking to learn more about this new technology, a strong indicator of growing interest.
But what does it mean? The relationship between the people formerly known as consumers will continue to change. Former consumers are now designers, producers, and manufactures. Or, if regular people aren’t actually using these tools, they can tap the marketplace of designers, like 3D files in Thingiverse, or use 3D printing as a service with companies like Shapeways, Ponoko, Kraftwurx or print at their local TechShop.
What 3D Printing Means to Corporations: Six Significant Impacts
||What it means
||What no one tells you
|1) New skillsets required
||3D design professionals will develop new skills, including replicating, modeling, and configuring the printers themselves.
||Students are learning these skills. Expect these to be common on resumes in a few short years.
|2) Intellectual property ecosystem disrupted
||With the advent of 3D scanners, or modified Xbox Kinnect devices, anyone can scan human bodies, or any other items, and create 3D versions.
||Like Napster, expect P2P file sharing of 3D items to only increase, including a developing black-market
|3) Rise in local production shifts supply chain
||Local production is going to cause rifts in traditional supply chain management and global logistics as products are produced on site, or near a neighborhood.
||If items are produced on site, dependency on low skilled foreign labor and global shipping are impacted.
|4) On-demand printing reduces waste and impacts inventory
||On-demand printing will effectively reduce the need for large inventories, reducing many costs from warehousing to inventory taxes.
||A reduction in warehouses filled with idle goods. Retail stores shift to experiences over showcasing.
|5) Customization of goods challenges the tenets of industrial revolution
||Personalization of goods will disrupt mass standardization. This means that body features, measurements, and preferences are saved online in a new profile.
||Having multiple sizes at a store to try on will give way to items that are designed for your body or need.
|6) Complex and unique goods created for first time
||Unique and complex goods that never existed before will be printed, including intricate structures, like this statue.
||Some 3D designs are emulating organic materials –changing design and engineering trends.
Solutions: There are five roles companies can choose to play in this powerful movement. Companies that make goods, ship goods, store goods, or sell goods are in for change. Supportive industries in design, customization, materials, logistics, and marketing are also going to be impacted by this growing technology. Rather than fight this new technology, companies must determine which of the five roles their company can play in this seminal post, ranging from: Financial Backer, Manufacturer, Supplier, Marketplace, Service Provider, and develop a strategy to implement this trend – rather than fight it or ignore it.
The crowd is bypassing traditional companies by sharing goods, services, space, and money with each other in the Sharing Economy. People are being empowered to build their own goods in the Maker Movement by crowd funding, tapping global marketplaces, and preparing to accelerate this with 3D printing. You see, the crowd, is starting to perform like a company: self-financing, self-designing products, self-manufacturing, and self-selling to each other.
So, what does this growing trend mean for traditional businesses?
In my closing slides to corporate audiences about the Collaborative Economy, I attempt to tie everything together on this one summary slide. While it’s best understood after the full presentation, the slide can, hopefully, stand on its own. I’ll try to succinctly summarize how we achieved each of these insights, so you can quickly grasp the changes that are occurring. Let’s break down these specific five points into further detail.
1) People are empowered to get what they need from each other. The Sharing Economy empowers people to get products from each other – without have to buy new from traditional retail or wholesale sources. Whether they’re sharing cars, homes, or money, they’re depending on each other to get information. Further, they’re making their own goods and products by tapping a global marketplace of individual makers. Soon, 3D printing become a force that will catalyze this at scale. It’s not new. We saw this ten years ago with social media – people were bypassing corporate communications, marketing, and customer care to obtain information from each other.
2) The crowd is becoming like a company – bypassing inefficient corporations. Of course, this is forcing business change, as the internet tends to bypass intermediaries that don’t provide lasting, value added services. Rather than buy vehicles, people can rent or borrow cars from each other. We’re also seeing the rise of peer-to-peer lending in LendingClub (funded by Google), which has served up $2.8billion in loans in a few short years – bypassing traditional banks. Watch this LendingClub chart carefully. This growth rate is starting to take a significant bump in a vertical line.
3) Corporations must use these same tools and strategies to regain relevancy. Just like we did in social business, to match customers launching blogs, video, and social networking accounts, we saw corporations apply the same strategies to engage in the same channels. Taking a cue from the first phase of sharing, which we call social business, we’re already seeing over 50 corporations that have transitioned into the Collaborative Economy, with significant upward rewards.
4) This requires business model change. No one said this is going to be easy. Significant new mindsets and business investments will be required to satisfy this paradigm change. BMW now rents cars in addition to selling them. Toyota is giving away 1,000 cars for the social good. TOMS shoes now offers a marketplace selling other people’s products beyond their own. Nokia voluntarily gave up their specs to their phone cases to allow 3D printing to occur. U-Haul allowed the crowd to fund their own vehicles. We will need internal champions (whom I call catalysts) who are able to lead this change inside of big companies and turn those large gears a different direction.
5) The crowd will become the company, making corporations resilient. We’ve seen the crowd become the media and the communications in the first phase of social business: Customers became the marketing and customer support departments. Just as we saw companies integrate customers into their media and communications, expect them to integrate them into their business models. Expect new models to emerge where the crowd is augmenting traditional business processes. They will co-fund, co-ideate, co-design, co-build, co-support, co-deliver, co-market and more for a growing variety of products. We’ll also see new forms of marketplaces emerge where products that customers make will be sold alongside those of big brands.
Companies that do this will achieve Resiliency: They’ll be agile, innovative, connected, empowering others, built to last, and profitable.
I’m co-hosting a conference called the Resilient Summit in Kansas City this Feb with Ben Smith, focused on this core topic, see you there.
Above photo: Showcase collection of intricate and moveable 3D Printed goods in acrylic, stainless steel. Designs by famed Dutch designer, Virtox, using Shapeways, 3-D printing-as-a-service and marketplace of designers.
One Liner: The crowd is becoming like a company in the Maker Movement. 3D printing rapidly accelerates it. Find your company’s place in the ecosystem with these five business models.
This is the next phase of social business.
Just as many people who have published blogs, videos, and pictures have become media companies, we’re now seeing people make physical things and personally become like traditional companies. In both phases, the rules are the same: those who stand in the way will get pushed aside. Those who enable, will benefit. Welcome to the Maker Movement, where communities crowd-fund, design and produce goods, then host their own global marketplaces for trade. New technologies like 3D printing will quickly accelerate this trend. The industrial revolution is repeating, but at a personalized level.
The movement is accelerating as 3D printers enable Makers.
Here’s a few cherry things that have happened in the last few weeks: Printing giant HP has announced they will enter the 3D printer market next year. A metal gun was 3D printed in Texas last week. A Paris fashion show was dedicated to 3D printed apparel. A father takes medical care into his own hands, and 3D prints a hand for his special needs son. If those examples don’t get you, you can now print in wood, salt, ceramic, gold, proteins, and most magically, chocolate. Yes, I said chocolate!
There are significant changes coming to business models.
I’ve taken classes at TechShop, visited Shapeways a 3D printing factory, and have a number of 3D printed objects at home. I don’t consider myself an expert at the technology itself, but I am focused on the impact to business models and the relationship between customers and companies. What will be the impact of 3D printing on business? There are five business impacts: 1) 3D printing is going to force changes in business models and commercial laws, including liability and IP rights. 2) Local production is going to cause rifts in traditional supply chain management and global logistics. 3) On-demand printing will effectively reduce the need for large inventories, reducing many costs from warehousing to inventory taxes. 4) Personalization of goods will disrupt mass standardization. 5) Unique and complex goods that never existed before will be printed.
With these many changes coming, companies need to develop new corporate strategies. To help, I’ve simplified the five business opportunities, which large companies can tap into now. Here’s a helpful guide to get your company on the right path now.
The Five Business Models for Companies to Leverage 3D Printing
||What no one tells you
|1) Financial Backer
||Invest in startups, sponsor them, or acquire players.
||Philips was an early investor in Shapeways which continues to grow as a 3D printing service. Autodesk, Intel, and Lowe’s sponsors TechShop, a maker studio across the United States.
||Corporate development investments have exceeded venture capitalist investments over the past years. Many startups are seeking monies direct from large companies.
||Produce 3D printing hardware and components or create the software that makes them work.
||Autodesk, a leader in 3D printing software has lead thought leadership, built an amazing gallery in SF, and hosted events on this topic. Intel, Google both feature 3D printers at their developer events.
||Even if you don’t manufacture 3D printers or their software, integrate how those can be tucked into your business model for employees, and new services for customers.
||Produce and distribute filament composite materials that will be used in the process on an ongoing basis. Become a supplier of 3D printed files (STL) or IP.
||Companies who currently produce goods can refunnel supply chain to produce spools of materials used by 3D printers. Also see how Nokia served up digital files so communtiy could 3D print cases for phones.
||Companies who seek to release 3D printed files should release files that don’t cannibalize their own revenue as an unintended consequence. Nokia’s release actually disrupted their partners.
||Host an online marketplace of designers, printers, products and service providers.
||Currently, the largest marketplace is Thingaverse where STL files are being uploaded and shared. New 3D scanners are emerging, enabling people to scane physical goods then re-print them out to their liking.
||Remember how Napster met quick federal walls and new models, like iTunes, emerged, shifting Apple to hardware company to value-added media marketplace.
|5) Service Provider
||Provide education, printing as a service, customization, design services, or delivery in this broader ecosystem.
||Shapeways (backed by Philips) is a printer as a service. Techshop (backed by Intel, Autodesk, and Lowes) teaches Makers new skills. Retailers can create customized, value-added products that expand their brand and product offering.
||Just as Target and Walmart have photo services in retail stores now, expect to see 3D printing services emerge there for customized goods on demand.
The impacts to 3D Printing has broader ecosystem impacts.
So who will be impacted? People who make physical goods from any material will be impacted. Any company that makes widgets or parts without a broader value-added service or prestige brand or community will be impacted. While the physical goods manufacturers are certainly at risk, there’s an ecosystem impact that shifts: global shipping, and thus need for oils, could be radically altered as goods are printed at local level. If complex goods can be printed – instead of assembled – there will be significant impacts to emerging markets in Asia, South America, reducing the need for even expert manual labor. Of course, this has broader impacts to oil usage of shipping, and even military bases protecting investments. It’s bigger than it looks.
Mature software companies allow a “thousand flowers to bloom” as 3rd parties would build and sell new wares around their online marketplaces. Now, every company can tap this strategy.
Make no doubt it, the Collaborative Economy continues to grow. At the start of the year, I was tracking just over a dozen examples of big companies engaging in the change. Today, just over six months later, there are over 50 examples of big brands who have moved into the collaborative economy. That is a 76% increase!
What is the Collaborative Economy? It’s where people are sharing goods among each other, or making them on their own. Existing, traditional model companies are beginning to realize that the way to join this trend is to enable these behaviors, using the three business model shifts, we’ve outlined here.
One business strategy is for single brands to shift to a marketplace strategy, thereby enabling a community of buyers and sellers around them to gain on a brand platform. In the past week, we’ve seen two new examples, in addition to two older ones. Let’s take a look:
TOMS commits to social good, allowing makers to resell on their platform. This week, Toms launched a marketplace for 30 makers to resell their own goods, items that are not Toms’ products. This means that they are willing to support the growing community of mission-driven makers around them. What’s really striking is their homepage banners says, “We believe commerce can be about more than just profits,” which aligns with the theme that “purpose matters more than profit” to a growing number of people.
Staples launches a collaborative marketplace, increasing their SKUs by 500%. A few hours ago, Staples announced they will expand their number of SKUs 500% by launching a marketplace. This new marketplace will take Amazon head-on, by enabling them to move from 200k SKUs to 1,000,000 SKUs, expanding their total market offerings.
GM tapped location technology to activate a car sharing marketplace. An earlier example, GM partnered with RelayRide, which allows people to rent their own cars to strangers (I tried it, and let a stranger drive my family car). Using their OnStar technology, GM could identify where idle cars are parked and develop that ability to activate a collaborative marketplace of car owners and car renters.
Patagonia encourages selling used goods –proving commitment to sustainability. The prime example that most people know is Patagonia’s big partnership with eBay for the CommonThreads program. They encouraged people to purchase used goods – instead of buying new – with the profits from the transactions going to non-profits. This bold move proved Patagonia’s commitment to sustainability, and also showed they had quality products that could withstand secondary ownership.
Right now, we don’t see enterprise-class, white-label marketplace software. There’s an opportunity for software vendors like Bazaarvoice, Lithium, Adobe, Salesforce, IBM and Ariba to create these to enable brands to quickly launch their own marketplaces, rather than building custom from scratch. A few months ago, I put out a call out to the market for this blue ocean opportunity, and was contacted by ShareTribe, who’s enabling marketplaces for anyone to launch.
What’s the big trend?
Savvy companies know that branded, online communities are shifting to thriving online marketplaces. Not only can they achieve social good, offer more products to sell, activate used goods, but they centralize commerce, community, and people around their brand.
Image by Vainsang, creative commons licensing
In just the last few days, the market has noticed how P2P sharing and customer collaboration is picking up. From my vantage point, this indicates that the market is realizing that the Collaborative Economy is the next phase of sharing. It bears repeating that the first phase of sharing is in the realm of media and ideas, which we call Social Media. The next phase of sharing is in the physical realm (goods, services, space, and money) which some call the Collaborative Economy. Because of my corporate focus, I use this broader term, as it encompasses the Maker Movement, crowd-funding, and co-innovation, which are all parts of companies sharing with the people –beyond P2P
This transition doesn’t come without pain. The heat from friction is an indication that the balance of economic power is changing. A silicon valley cab company – you know, the old style kind that are yellow, not a sleek, tech-enabled black town car – claims that Uber and Lyft have eaten away at 30% of their business. The battle continues between NY and Airbnb, where advocacy group Peers.com has obtained 88,000 signatures in support of restrictive legalization. We see market forces reacting to each other, as enablers of this movement and companies who want to leverage this force, adopt the same strategies:
- Salesforce plants an enterprise software flag. Salesforce has published the four business opportunities that remove barriers to the sharing economy. I shared the stage with Peter Coffee at the Magnet360 event in Minneapolis a few weeks ago, where we focused on the Collaborative Economy with a large hall filled with marketers. Peter does a fine job bringing a tech perspective that focuses on how mobile devices, big data, and analytics can fulfill these market desires. I anticipate that enterprise software vendors like Salesforce, IBM, Ariba, Adobe, and Lithium are well poised to help large companies enter this space.
- Accenture explores new insurance revenue models. Accenture has published a three part series on sharing and insurance. They explore untapped opportunity for new insurance providers to offer new forms of coverage as people continue to borrow goods instead of owning them outright. Lisa Gansky’s “Access trumps ownership” Mesh mantra focuses on how power changes as more things become interconnected. Now, large financial institutions can benefit from this new opportunity by providing new ‘asset-light coverage policies’ that protect both owners and those who borrow goods, space, and more.
- Motorola and others embrace the crowd. Motorola has forged ahead with cross platform Phoneblox, while other examples of co-innovation are emerging. This radical phone is modular, made to last, and designed for the whole world. It makes currently dominant Apple feel like ‘the man’ shifting the “Think Different” moniker over to Motorola’s court. Imagine a product that’s community built, community designed, with components that can be 3D printed, shared, or modified, similar to the characteristics of the internet. In addition, Innocentive has launched a thought piece showing how many large brands, like Anheuser-Busch, Coke, General Mills, Nokia and Unilever, are embracing co-innovation. They aren’t the only ones. FON is even launching a product that shares its Wi-Fi signal with others, making sharing intentional and increasing its value.
- Ikea enables a marketplace of used goods. Like eBay, Ikea encourages people to exchange second hand goods rather than buying new. People are sharing, selling and renting products in a second hand market. Savvy brands will enable this practice. Ikea collected used furniture, did a media blitz promoting it for sale, and launched a marketplace using online tools, Facebook, and media buys. All of the used furniture was sold. Why would a company encourage the sale of used goods rather than selling new? The answer is simple: commitment to community, environment, and driving deeper engagement that can yield return sales later. A few months ago, I identified this as a software market waiting to be fulfilled. Thanks to Juho Makkonen for the link.
- HP commits to 3D printing. Meg Whitman announced that the company will have 3D printer solutions at the industrial or enterprise level by 2014. Although there are numerous examples on the consumer side, HP makes a play for the mid market. This enables creation of complex parts, from medical to devices to become highly personalized, built at local level, and all on-demand. Manufactures, suppliers, and retailers who are focused on centralized production, scheduled shipping of standardized parts need to revaluate their business model. Because of HP’s client footprint, and existing supply chain relationships, they could scale the roll out of these printers, quickly. (Added Oct 31)
- The government grants crowd-funding. The SEC allows Crowd-funding . Certainly this is not a ‘company,’ but the SEC weighing in on crowd business models holds weight. In support of boosting the economy, small businesses that struggle to get support from traditional funding institutions can now more easily tap the crowd. The SEC has reduced the friction of crowd-funding by allowing those who seek to raise capital from the crowd to “bypass the traditional costs of going public, which usually involves hiring costly investment bankers and accountants.” This means that innovation will come from the smaller companies and will be heavily supported by the crowd, who will fund them, further shifting power.
So there you have it, in just a few short days, we’ve seen a proliferation of business-focused articles emerge, with a focus on how large companies will develop new business models in the next phase of sharing – or else be disrupted by it. If you’d like to learn how these business models must change, see my Slideshare on the Future of Business Models, or read my larger body of work on what this means to business, or peruse my running list of brands that are moving into this space.
Images used with creative commons license by Andrew Stawarz
Above image: Intertwined strands bonded together share the
same shared fate of pulling a heavy load.
“Why Do Big Companies Crowdfund?” Suprinsingly, it’s often not about the money.
That was the very question that was asked at Crowd Conference hosted in San Francisco yesterday. I had some stage time, but also listened into the panel where my contact Syndey Armani from CrowdFundBeat was speaking.
What’s crowdfunding? Instead of turning to traditional investment institutions, you can turn to regular people from around the globe to contribute money towards a good, services, or experience.
It’s pretty easy to guess why people crowd-fund, I see at least five reasons: A sense of ownership, revenue sharing, equity growing for resell later, access to goods before others, and of course, an opportunity for a better return than placing money elsewhere.
While this makes a lot of sense for scrappy startups, indie artists, and impoverished villages, why would a wealthy big company do crowd funding?
Why Do Big Companies Crowdfund?
Certainly, big companies have plenty of money, so why would they crowdfund? here’s a few reasons why:
- Market testing: A great way to test if your future product will sell is to see if the crowd is already interested. While there are dozens of social software tools that measure organic social media sentiment and online community services that act like focus groups, these don’t ask for commitment in terms of money. Expect social analytics firms to start aggregating data from Kickstarter and Indiegogo to find out what the market wants. Also expect white label open source versions of Kickstarter to integrate with enterprise social business software platforms.
- Pre-Payment: In some crowd funding programs, it’s simply a form of pre-payment. Where the crowd funders will get access to early products as the first beta users, or receive specialized premium versions. This tactic is heavily used in the online gaming space where early registrants receive customize characters to play that others don’t get. While a startup, the Pebble watch raised funds on Kickstarter, offering early versions to investors.
- Keeping members engaged: Keeping potential customers and prospects engaged is a hallmark goal for many marketers. Now you can send your crowd investors frequent updates on project progress, early sneak peaks, and rally them to advocate for you. The great thing is, it’s opt-in for everyone. See how Dodge Dart Registry tapped the crowd to get your friends and family to pay for parts of your car, a brilliant maneuver involving a whole social group. Also see how Barclay Card tapped a community for good.
- Shared Fate: To me, this is the most important reason. Marketers have often said the highest form of engagement is word of mouth and advocacy. I believe that crowd-funding, where the crowd investors actually share an end result with the company is the highest form –they’re in it together till the end. See how U-Haul Investors Club has really lead the way by living the DIY mantra, and allowing their own customers to own trucks and equipment as crowd investors.
So there you have it, big companies may crowdfund, not just because of money, but because: 1) Market testing 2) Commitment to pay 3) Deep engagement 4) A Shared Fate.
(Creative commons image by Eryn)
The first phase of sharing was of media and ideas, we call this social media; the second phase of sharing is the sharing of the physical world, we call this the collaborative economy.
Using powerful technologies like smart phones, mobile apps, payment systems and social networks, people can easily share the following things from the physical world: goods, services, space, and money.
This has upsetting impacts as people can now get what they need from each other, and often without buying it anew, this collection of stats shows how this is spreading across many markets.
It also creates intense friction as power changes hands, as regulators, governments, unions and lobbyists grapple with the power shift that’s powered by the internet. See this simple news query to see the many stories.
Back to the first phase, social media. If your business card or LinkedIn account lists social as part of your title, congrats, you’ve been a leader in change. Yet we must advance our careers to the next phase of sharing as the physical world starts to be shared –beyond media and ideas.
To prepare for this shift in society, and our careers, we must ask and answer the following question:
“What role do companies play if people get what they need from each other?”
I’m betting my next company on answering that bold question. If you work at a big company that wants to be part of the answer, you can email me at firstname.lastname@example.org to discuss more.
So there you have it: 1) the next phase of sharing is of the physical world, 2) it has radical impacts to companies, 3) prepare your career now.
(image credits Emmanuel Catteau)
The business landscape is radically changing, as new technologies, economic uncertainty, and strain on earth’s resources are changing how companies go to market. In partnership with Slideshare (part of the LinkedIn family) I’ve created a vision of the future of business models, based on new market drivers. Also, you’ll notice the new brand for Crowd Companies, a company I’m building to help corporations with the collaborative economy. I hope you’ll enjoy this slideshare which goes through
- How have business models been disrupted?
- What are the changes companies must make?
- Which brands are leading with new business models?
In the end, corporations will collaborate with empowered people, making brands resilient.
You can learn more about Slidehshare’s “#FutureOf” campaign, and check out a few other slideshares of note that were part of this launch, see the Future of Work and Future of Marketing.
A series of significant monetary events have occurred.
In prior posts, I’ve covered the investment leaders by frequency and looked at funding in a category of 200 startups. I found that 37% had been funded, with some receiving very large cash injections. In the recent past, there have been some significant material events in the Collaborative Economy, including the following:
- Avis secures a place in the ecosystem by buying Zipcar. Zipcar to Avis for $491 million, January 2013. To expand and defend mobility-as-a-service, Avis snaps up Zipcar.
- PayPal spends $800 million on mobile payments player. On Friday, PayPal bought Braintree for $800 million. This startup provides the mobile payments power for Uber, Airbnb, and other sharing startups.
A quick tally shows that funding-wise, that’s $444m (not including other startups, and additional Uber funding) and acquisition-wise, that’s $1.291b, not including the unknown Topcoder purchase. So why are big companies like Google, eBay and top investors like Andreessen and Menlo Ventures putting into this market? Here’s a simple logic flow that helps to understand why this market matters to them.
Logic flow on why investors and tech companies are betting big on this market:
- They have ample technology. These well-funded sharing startups, like Airbnb and Uber, leverage cheap, but powerful, technologies like Facebook Connect and Apple and Google hardware and mobile apps platforms.
- They’re efficient. Using these startups, people are getting what they need from each other, often at a local level – rather than getting those things from corporations.
- They’re scalable. Since these startups match idle inventory to buyers and renters at a local level, it means their operating costs are lower than traditional corporations, as there’s no overhead or inventory to manage. These are scalable, two-sided marketplaces with low operating margins
- They shift power. This, of course, spells disruption to inefficient institutions like corporations who pay no attention to this growing trend by which individuals are getting products, services, time and space from each other.
This means, the crowd is becoming like a company. Airbnb is a hotel, Uber is transportation, Lending Club is a bank, Cookening is a restaurant, Yerdle is a retailer, Lockitron is a warehouse, Postmates is supply chain, and social networks are marketing. Savvy investors and big tech companies are paying close attention to this market, injecting resources and acquiring en masse. Corporations must pay attention, as many of these startups are directly aimed at better serving market needs – often unintentionally disrupting corporations. The more successful they are at meeting market needs, the wider the disruption of corporate businesses will become.
Photo used with creative commons attribution by Epsos.