Collaborative consumption

Collaborative consumption encompasses the sharing economy.

Definition

Collaborative consumption (CC) can be defined as the set of resource circulation systems, which enable consumers to both "obtain" and "provide", temporarily or permanently, valuable resources or services through direct interaction with other consumers or through a mediator.^[1][2] Collaborative consumption is not new; it has always existed (e.g. in the form of flea markets, swap meets, garage sales, car boot sales, and second-hand shops),^[3][4] but it has regained a new impetus through information technology, especially Web 2.0, mobile technology and social media.^[5] Collaborative consumption stands in sharp contrast with the notion of conventional consumption.^[6] Conventional consumption involves passive consumers who cannot or are not given the capacity to provide any resource or service. In contrast, collaborative consumption involves not mere "consumers" but "obtainers", who do not only "obtain" but also "provide" resources to others (e.g. consumers, organizations, governments).^[1][2] Overall, consumers' capacity to switch roles from "provider" to "obtainer" and from "obtainer" to "provider", in a given resource distribution system, constitutes the key distinguishing criteria between conventional consumption and collaborative consumption.^[1]

Importance

There are broadly two forms of collaborative consumption: (1) Mutualization or access systems: resource distribution systems in which individuals may provide and obtain temporary access to resources, either for free or for a fee.^[7] Marketer-managed access schemes (e.g. Car2Go, Zipcar, Bixi) do not allow individuals to source resources,^[8][9] and are therefore not mutulization systems, whereas peer-to-peer renting sites^[10] or even toy-lending libraries,^[11] which allow consumers to provide resources, are. (2) Redistribution systems: resource distribution systems in which individuals may provide and obtain resources permanently, either for free or for a fee.^[12] Focusing on redistribution systems only, the Canadian-based Kijiji Secondhand Economy Index of 2016,^[13] estimated that about 85% of consumers acquired or disposed of pre-owned goods through second-hand marketplaces (secondhand purchase and resale), donation, or barter, through either online or offline exchange channels. According to the Kijiji Secondhand Economy Index of 2015, the Canadian second-hand market, alone, was estimated at 230 billion dollars.^[14] Besides, for-profit mutualization platforms, commonly referred to as "Commercial Peer-to-peer Mutualization Systems" (CPMS) or, more colloquially, the sharing economy, represented a global market worth 15 billion dollars, in 2014; 29 billion dollars, in 2015; and are expected to reach 335 billion dollars by 2025.^[15]

Consumer two-sided role

Collaborative consumption is challenging to business scholars and practitioners alike because, as a concept, it induces a two-sided consumer role which goes beyond the classic notion of a buyer/consumer, who typically has no input in the production or distribution process.^[16] Companies have traditionally sold products and services to consumers, they now start pulling on their resources too through co-creation^[17] or prosumption.^[16] According to Scaraboto, this means that individuals are able to "switch roles, engage in embedded entrepreneurship and collaborate to produce and access resources".^[18] Collaborative consumption is characterized by consumers' capacity of being both "providers" and "obtainers" of resources, in a given "resource circulation system". A collaborative consumption systems means therefore a resource circulation systemin which the individual is not only a mere "consumer" but also an obtainer who has the opportunity to endorse, if wanted or needed, a "provider" role (e.g. Kijiji, Craigslist, eBay), as follows:^[2]

• Obtainer – The individual who seeks to obtain a resource or service that is provided directly by another consumer (i.e. the provider), or indirectly through the mediation of an organization known as the "mediator", which may be for-profit (e.g. Ikea's used furniture sales) or not-for-profit (e.g. The Salvation Army);
• Provider – The individual who provides a resource or service either directly, to a consumer (i.e. the obtainer), or indirectly, through a "mediator" (for-profit or not-for-profit).

Through CC, consumers invite themselves in the value creation process, not as formal workers, employees or suppliers, but as informal suppliers (i.e. providers), in order to successfully reconcile their personal interests.^[19] In the meantime, organizations tap into the sphere of private assets and skills, as formal organizations and not as family, friends, or acquaintances, to make profits or reach other objectives.^[5] The practices in which obtainers and providers may engage are therefore classified into:^[2]

• Obtainment – entails second-hand purchase, reception of donation, barter, temporary access to resources for free or for a compensation (excluding conventional consumption rentals), reconditioned/refurbished consumption, and to a lesser extent, recycled consumption;
• Provision – involves second-hand sale, donation, barter, provision of temporary access to resources for free or in exchange of a compensation, trade in (i.e. with an organization), and to a lesser extent, recycling.

Other actors

Consumers may exchange resources and services directly with or without the support of an "intermediary", which is an entity that facilitates the exchange between obtainer and provider^[1][2] (e.g. Kijiji, Freecycle, Yerdle). Consumers set the terms and conditions of the exchange, and this refers to pure collaboration. There are also other types of third-parties which are more heavily involved in the consumer-to-consumer relationship. These are called "mediators". They determine the terms and conditions of the exchange between consumers and may typically take a predetermined proportion of the amount of value being exchanged.^[1][2] Examples include second-hand stores to which consumers may donate or resell goods that are then subsequently resold to other consumers. Some platforms such as Uber, Airbnb, TaskRabbit or Lending Club are also included. The intervention of mediators in a peer-to-peer relationship signals sourcing collaboration and its corollary trading collaboration.

Collaborative intensity

Collaborative consumption can be best conceived in a perspective of "resource circulation system"^[7] incurring different levels of collaborative intensity, namely: (1) pure collaboration (C2C, or Consumer-to-Consumer); (2) sourcing collaboration (C2O, or Consumer-to-Organization); and (3) trading collaboration (O2C, or Organization-to-Consumer). The organization may be a for-profit or a not-for-profit:^[2]

Pure collaboration

• Pure collaboration^[2] involves direct P2P exchanges, in which consumers directly exchange a specific resource or service. For example, on online platforms such as classified ads or auctions websites, consumers directly provide and obtain resources or services. Although these online platforms are intermediates they are not "mediators", because consumers are free to devise the terms and conditions of distribution and consumption of the resource or service together, whereas mediators interfere in the devising. In sum, mediators are intermediates but not all intermediates are necessarily mediators. For example, the Canadian-based ridesharing website Amigo Express does not allow obtainers (carpooling obtainers) and providers (carpooling providers) to get into contact to arrange the terms of the ride. Rather, each agent needs to separately contact and pay a fee to the website in order to, respectively, obtain and provide the service. Amigo Express is therefore an intermediate that is a mediator. Conversely, using TheCarpoolingNetwork enables consumers to arrange themselves the terms and conditions of the exchange and the website acts as a facilitator, not as a mediator. Most C2C websites are online platforms and operate on the freemium model, where the use of the website is free, but premium features must be paid for (e.g. Craigslist).^[18] Others have a donationware mode of exchange, whereby website use is free but financial donations are requested or accepted to offset production and maintenance costs (e.g. The Khan Academy).^[18]

Sourcing collaboration

• Sourcing collaboration^[2] New technologies have sparked entrepreneurial creativity to develop new breeds of intermediates. They claim to challenge conventional business, and they do so, because they operate business differently, without delivering or producing anything by themselves, but by capitalizing on the logics of crowdsourcing to do so. Sourcing collaboration therefore means that organizations do not provide a resource or deliver a service to consumers by themselves, but rely on providers (i.e. consumers) to perform any of both. They benefit from the Internet to mediate, at a cost and more efficiently, exchanges that would otherwise be authentically C2C exchanges. As an example, sourcing collaboration may refer to refurbished or reconditioned products, sold by conventional organizations, but provided by consumers (i.e. providers) who were, for some reason, dissatisfied with the products in question. Other examples include consumer provision of resources to antique dealers, consignment shops or Amazon's Fulfillment By Amazon (FBA) program. Similarly, online platforms which take a percentage off the transaction cost in supposedly C2C exchanges (e.g. Uber, Instacart, TaskRabbit, Airbnb), actually outsource the fulfillment of specific tasks or jobs to consumer A in order to efficiently redistribute those to consumer B. Also, a tangible resource may circulate across multiple organizations (intermediates) from the provider to the obtainer. For example, a car sold by a consumer to a professional car dealer may then be sold and resold by several other car dealers, before being eventually resold to a consumer.

Trading collaboration

• Trading collaboration^[2] is the symmetrical opposite of "sourcing collaboration", in that it refers to the obtainer who enjoys a resource mediated by an organization but originally provided by another consumer (i.e. provider) via sourcing collaboration. The obtainer thus benefits from a resource that has been originally sourced by a provider to a mediator. The mediator, in turn, offers the providers' resource to the obtainer, usually-but not exclusively- at a cost, which will be fully, partially or not at all returned to the original provider. In contrast to conventional consumption where the resource being enjoyed, even temporarily, originates from a company, trading collaboration presupposes that the resource enjoyed by the obtainer has originally been sourced by another consumer. For example, trading collaboration occurs when consumer B obtains a cheaper refurbished iPhone that has been traded in to Best Buy by consumer A. Or it occurs when consumer B enjoys the delivery of her groceries by consumer A, through the Instacart crowdsourcing application.

Examples

Hospitality

• 9flats – social travel in private houses & serviced apartments
• Airbnb – room sharing within private houses
• Wimdu – room sharing within private houses

Languages learning

• Italki.com – online platform that connects language teachers and students

Classified advertising

• Craigslist – online marketplace

Services

• Taskrabbit – service marketplace (i.e. woodworking, fix a kitchen sink, ...)

Transport

• BlaBlaCar – single trip car sharing
• Easy Taxi
• GrabTaxi
• Haxi
• JustRide
• Lyft
• Mondo Ride
• Sidecar
• Summon
• Turo
• Uber
• Zipcar
• Ola Cabs

References