Written by Julia Sonnelind
How come I, along with thousands of others, suddenly have the urge of living in strangers’ homes while travelling? I am a person who gladly avoids taking unnecessary risks and the bare thought of doing something ‘bad’ makes me quite anxious. Despite all of this, I have put my money and trust into people I have never met, multiple times, in the hope of getting to experience a good living accommodation during my travels. As a matter of fact, the number 1 facilitator of accommodation rentals, Airbnb, claims that more than 25 million people (!) have used their services since the launch in 2008 (Airbnb, 2015). So that sense of uniqueness and coolness I felt while using this non-conventional housing service, is no longer there..
Despite the interest one might find in reading about my personal life and self-image, I will try to avoid the subject from now on. Instead, this post will discuss collaborative consumption and the reasons for its existence. As well as trying to answer the question of why we feel the need of using house-renting services, such as Airbnb. But before we jump-start to addressing the actual questions, a short description of the concepts will be provided. What is actually meant by collaborative consumption and how does Airbnb fit into all of this?
Collaborative Consumption and Airbnb
According to Malhotra & Van Alstyne (2014), the sharing economy as a whole is estimated to be worth 26 billion dollars and it makes up for about one-sixth of the total US economy (P2P Foundation, 2012). So it is fair to say that this concept is highly up-to-date. As with other dear things, the sharing economy has been given many names; collaborative consumption, peer-to-peer economy, and mesh (Larsson, 2014) to name a few. The actual definition of collaborative consumption has been expressed in multiple ways and one example is of Belk (2014), which is formulated in the following way:
‘Collaborative consumption is people coordinating the acquisition and distribution of a resource for a fee or other compensation’ (p.1597)
Image 1: Collaborative Consumption (Schwartzman, 2012)
By taking Airbnb as an example, it becomes clear that the company is a part of collaborative consumption based on this definition. They facilitate the means for people to coordinate sharing activities while at the same time requesting compensation for their services. Airbnb serves as the middle-hand that connects people wanting to rent an accommodation with the people who want others to rent their place in exchange for money.
But why now?
So we now know what collaborative consumption is, but why is it that these sites has emerged now and not earlier? Well, there is no simple answer to that one but reviewing the literature as well as using a logical reasoning gets you quite close. One of the more important factors that have helped boost the emergence of sharing sites like Airbnb, is the development of Internet with a certain focus on Web 2.0 (Belk, 2014). The latter refers to sites that provide a two-way dialogue for consumers that enable them to connect and exchange information (Belk, 2014). Because of these progressions, Airbnb was able to take the part as the moderator that connect people who posses means that are not being used with the people who want to use them (Cusumano, 2015).
Another reason could be the financial struggle that was seen in the early 2008, in other words the financial crisis. To prove a point, many of the sharing sites happened to emerge between the years of 2008-2010 (The Economist, 2013). Karin Bradley, a Swedish researcher at KTH (The Royal Institute of Technology), believes that the progression of the Shared Economy has much to do with the high levels of unemployment and overall financial uncertainty that has spread across Europe and the US in recent years (Larsson, 2014). Her conclusion is that it has “forced” people into being creative to secure their own future becoming micro-entrepreneurs. This could also imply a sense of consumer empowerment (Jain, 2015).
A less hands-on approach is the occurrence of a “cultural shift” from gaining status by ownership to a more access based consumption pursuit (P2P Foundation, 2012). The change is also connected to the evolution of web 2.0, which is emphasized by Nate Blecharczyk, one of the three founders of Airbnb, when saying “We couldn’t have existed ten years ago, before Facebook, because people weren’t really into sharing,” (Economist, 2013, p.2). Off course, it is not like we all woke up one day realizing that we wanted to share our things with others. But slowly, the thought of it got a little less frightening and more feasible in our minds.
The previous discussion also concerns trust. In this situation, it has served as a barrier for consumers to use shared services since the one renting out their flat is unknown to you and vice versa. However, something that has helped sharing sites in this matter is the availability of control by making use of other services such as Google Street view and Facebook to ensure oneself (Larsson, 2014). At the same time, Airbnb has worked hard to overcome these trust issues by for example creating secure review and payment systems for their customers (Tanz, 2014).
So why do we share?
Now that we have a more clear view of the concepts, along with potential reasons for its existence, it is time to discover what motivations might drive consumers to engage in collaborative consumption. Or if we get personal again, why do I feel this need? What is my reason for using Airbnb? After having devoured multiple studies in the line of motivation for collaborative consumption, I have been able to identify a few common themes that re-occur in the literature; Sustainability, Social Interaction, Financial reasons and Convenience.
One strong benefit of sharing is that instead of buying the item when you need it, you can just rent it or share it, which would extend the products life-cycle and therefore not contribute to waste in the long run (Tomalty, 2014).
→ Social Interaction
By for example staying in an unknown persons apartment and communicating with them, one can gain new social experiences and friendships and that is one of the advantages of the shared economy according to Karin Bradley (Forsberg & Holmin, 2015). It enables for new meetings to occur between people who naturally wouldn’t have met, since many often come from different geographical areas.
→ Financial Reasons
Another motive that drive some to use these services is the lower price that it often provides than if one had to buy the item instead. So it helps people who normally couldn’t afford to purchase the house, car or other to experience it (Tomalty, 2014). In that view, it could create a sense of belonging now that some experiences no longer is as unfeasible as before. An additional positive aspect related to monetary means, is that collaborative consumption serves as an income for many people (Larsson, 2014).
Sharing things rather than purchasing it can in many ways serve as the simplest solution, especially today when the ability to connect with people from around the world is easier to do than going to the gym. Or as Tomalty (2014) expressed it “you want the hole, not the drill” (p.19). Why go through all the trouble of buying a house or a drill when you don’t have to?
With the previously presented knowledge in mind, it is fair to say that collaborative consumption has quite a few things going on for it self. The possible reasons for its existence were according to the literature due to the development of Internet and Web 2.0, the financial crisis in 2008 as well as current financial struggles across the world, a cultural shift towards a more access-based approach where people are more keen to share their life online as well overcoming the trust-barrier. Based on literary findings, I was also able to identify four motivational themes regarding why people engage in collaborative consumption. Those are sustainability, social interaction, financial reasons and convenience. However, it is possible that there are additional motivations guiding consumers than these four and that they vary depending on what kind of good that is being exchanged.
So while the identified motivations are many, this article has not brought up much of the downfalls that collaborative consumption could with-bring. However, in the long run, I believe that sharing things and experiences with other people that initially are strangers to you, could help create a more united world. For me, one of the main reasons for using sites like Airbnb is that it makes me feel more at home and like a local during my travels. I want to experience the area that I am in just like the “real” residents do and hopefully gain a new friend or two.
Despite whatever view one might have upon the sharing economy and collaborative consumption, is not important. The thing that is of interest is however, to know how other non-sharing brands should respond to this continuously growing phenomenon. By understanding the motivations that drive consumers to engage in these activities, brands can adapt and make use of that information to attract customers. So instead of seeing collaborative consumption as a threat, it should be looked upon as an opportunity for businesses to evolve. Because the ground rules are changing, and if you stay in the past, chances are that you will lose. Obviously some industries are more affected by collaborative consumption than others but that does not mean that it is going to stay that way forever. So before you dismiss the importance of collaborative consumption for your business, ask yourself, what might be the future needs of your consumers? And what can you do to reach them?
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