Collaborative-Consumption Markets Create New Opportunities for Economic Inclusion

Authors

• Cody Sisco

  Former Manager, BSR

The rise of technology platforms is creating business opportunities for new producers and micro-entrepreneurs.

University of Pennsylvania’s Wharton School recently published an interesting article on how technology and social media are enabling the growth of a new market coined “collaborative consumption”—a market through which consumers sell access to their property, equipment, and services.

However, this type of entrepreneurship is not new. Many individuals’ first taste of entrepreneurship usually entails investing in a residential or commercial property and then leasing it to tenants on a long-term basis.

What’s new is the flexibility and scale to sell more bite-sized services such as renting a room in your home for a few days through Airbnb, or selling a home-cooked meal to your neighbors through Gobble (currently only available in and near San Francisco).

More importantly, consumers everywhere—in both developing and developed countries—now have access to the information systems that can enable them to become producers in collaborative-consumption markets. This isn’t just a win for people who can now vacation on the cheap—it is also a new, easier route for individuals to become entrepreneurs.

Despite these new opportunities, questions remain about who will benefit from the growth of collaborative-consumption markets. At first glance, it appears like only wealthier individuals with ample (and relatively unproductive) assets as well as the companies that create the platforms to make these markets work will generate income from these activities.

But can the people at the base of the pyramid benefit from collaborative consumption as well?  Possibly. Microfinance institutions like Kiva and Vittana are already taking advantage of the opportunities enabled by collaborative consumption. These organizations are crowd-sourcing funding for individuals and communities to purchase assets (e.g. loans for cows and chickens) to generate their own income.

The rules for operating in collaborative-consumption markets are still being developed by the above organizations and others, but some key lessons have emerged to help companies—and individuals—survive and thrive in this new type of market:

1. Connect an underused asset to a new customer base using online platforms. Everything from kitchens to cars to vacation homes can be provided as a service rather than through a sale.
2. Address risks in the market through increased transparency. For example, detailed user profiles, histories, reviews, and insurance policies can better protect participants.

To learn more on this topic, join us at the BSR Conference 2011, where we’ll be facilitating a discussion on collaborative consumption with The Mesh’s Lisa Gansky.