New Collaborative Economy Report Shows Importance of Price, Convenience and Brand

Last year, we had the opportunity to review the first annual report produced by Crowd Companies, titled Sharing is the New Buying. This introduced the concept of the sharing / gig / collaborative economy to the world, with some definitive numbers to demonstrate that the use of consumer-powered, shared and collaborative resource was more than a fad — it was a certifiable trend and brands had an opportunity to get on board.

Crowd Companies, an innovation council founded by Jeremiah Owyang, has continued to thrive, attracting some scores of large companies and startups. In fact, they just introduced the Crowd Companies Awards for excellence in the collaborative economy. The five recipients were BMW, Intuit, Whole Foods, Swisscom and Autodesk. The council provides valuable services and outlets for its members, connecting them with each other and industry experts as they grapple with the opportunities that the collaborative economy affords. [Disclosure: I signed Ford up as an inaugural member when I worked there and now I an an advisor to Crowd Companies.]

A New Report

Crowd Companies has partnered once again with Vision Critical, the leading customer intelligence platform provider, to release the 2015 report, "The New Rules of the Collaborative Economy," which maps the growth of the collaborative economy over the last year and the opportunities the movement offers for established global businesses.

This year's report is based on responses from over 50,000 people across the U.S. and Canada, focusing on three key areas that companies have the power to address as competition heats up from more nimble and disruptive startups: price, brand and convenience.

As consumers can whip out their phones to get instant, on-demand access to products and services they want, we're seeing a shift in thinking from ownership to access. It's almost expected at this point. If your business can't offer something to compete with this nearly frictionless effort, you're vulnerable.

And while there is growing concern around sharing startups' lack of regulation and aggressive global expansion, it hasn't slowed the growth of the collaborative economy (especially behemoths like Uber), making it critical for established brands to understand consumer sentiment, learn their preferences and capitalize on these shifts now more than ever.

By 2017, eight in 10 Americans will participate in the collaborative economy. [Tweet this]

Every single area of the collaborative economy is attracting greater participation, with pre-owned goods, custom products, professional services, online learning, personal services, transportation services, places to stay and crowdfunding each attracting at least 10% of the North American population in the past year. 

Participation doubled across transportation services, places to stay, crowdfunding and office space with categories including professional services, loaner products, custom products and personal services growing 60-80%.

A three-pronged opportunity has emerged for large companies — but it isn't necessary to pursue all three simultaneously; there may only be one strategy that suits each brand. The point is that it's no longer an option to sit by like a fat cat and assume that might makes right. These are the three strategies mentioned in the report.

Price

• Financial savings is one of the top drivers of the collaborative economy with 82% of sharing transactions partially motivated by price.
• People default to traditional buying for actions such as staying in a hotel when visiting a new city (77% would stay at a hotel) or buying a wedding gift for a close friend (71% would look for a gift in a local retail store).
• 70% of people in the overall population who initially choose the sharing option would consider buying instead, if the buying option were less expensive. A 25% savings would make traditional purchasers consider moving their business to the collaborative economy. 
• The opportunity for big brands is to use price as a lever to retain or win customers in the collaborative economy by creating peer-to-peer marketplaces, allowing customers to purchase and sell pre-owned goods from established brands, or developing offerings that help people maximize the financial benefits of sharing, such as rental models.
• Established brands are well-positioned to offer greater value to providers in the collaborative economy, of whom barely 60% were “very” or “extremely” happy with their latest transaction. 

To see what the customer benefits are for companies that use the collaborative economy to reach price-sensitive customers, get the full report from Vision Critical.

Convenience

• Convenience poses a major challenge to established companies, because it's exactly where sharing startups have a structural advantage.
• However, convenience is a factor that established brands can compete on, with value-added services that create efficiencies, on-demand access to products and services, mobile apps, and even the sale of locally-sourced and crafted products.
• Across all age groups, about a third of would-be buyers are swayed to consider sharing services if they offer conveniences like next-day delivery or a concierge to provide advice. 
• Technologies that underpin the collaborative economy decouple convenience from location to an unprecedented degree, yet the desire for local goods was more powerful in driving sharers to buy than in driving buyers to share. 
• 78% of sharers indicated that convenience is the most popular reason for using shared services.

Brand: Driving Business with Trust

• There’s a close relationship between brand recognition and market dominance. More than 40% of North Americans have heard of big collaborative economy players like eBay, Craigslist, Etsy, Uber and Kickstarter, and many of the top sharing players have positive reputations.
• Yet more than 25% of would-be sharers will consider traditional buying if it means doing business with a reputable brand.
• More than a third of traditional buyers will consider home sharing or pre-owned home furnishings if it comes with certification from a reputable brand.
• The role of brand in the collaborative economy presents an opportunity for large brands to take advantage by marketing on trust or partnering with sharing services to leverage their brand. 

Trust is not to be underestimated as a motivator. And the skepticism that so much of this industry is met with — think assaults or destroyed homes with Airbnb; Uber ignoring regulations or dealing with criminal drivers — is damaging the basis of so much of that trust. Jeremiah Owyang from Crowd Companies agrees:

"But even as the collaborative economy has taken off, it’s been plagued by recurring criticisms. Some of the top players in the market – brands like Uber and Craigslist, and even peer-based Bitcoin – now face significant negative sentiment. The bigger they get, the more they’re vulnerable to a backlash from consumers who’ve had bad experiences, or observers who worry about the impact on employment, taxes or safety. To that end, with this year’s deep-dive report, we’ve looked at the opportunities the collaborative economy offers to established businesses and how to successfully combat, complement and compete with sharing startups."

There's much more in the full report, including statistics about adoption, recognition, preferences and more, as well as suggestions and ideas for how to meet the challenges and opportunities of the collaborative economy head-on. If you'd like a copy, visit the Vision Critical website to get yours now.

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