The emergence in Australia of businesses that use the power of technology to connect people so they can share information, knowledge, services and physical goods has been highlighted in a report The Emerging Collaborative Economy produced by Vision Critical.
Vision Critical partnered with Collaborative Lab to evaluate behaviours and attitudes from Australians towards collaborative businesses and the sharing economy, and the results are promising and surprising.
Around 14% of respondents have heard the term “collaborative economy”, and 43% relate this term to activities like carpooling, house swapping, crowdfunding, carsharing or coworking. Awareness of collaborative services in Australia is surprisingly high at 61%, with 27% awareness recognition for Uber, 20% for AirBNB and 16% for Kickstarter. These awareness levels are surprising given that AirBNB and Uber have been in Australia for just a few years, and rely heavily on word-of-mouth and peer referrals for growth.
Interestingly, awareness is also translating into consumer behaviour and trial. The report found that 53% of respondents had participated in some form of collaborative economy activity in the previous year. Whilst the report revealed that people are mostly sharing directly with friends and families, there is a substantial untapped market demand for technology-based platforms to enable broader sharing activities beyond our close personal relationships. Technology platforms also enable viable commercial opportunities through scaling up offerings and lowest cost of customer acquisition.
The role of technology is critical. As Rachel Botsman noted in her 2012 TED talk The Currency of the New Economy is Trust, “collaborative consumption is creating the start of a transformation in the way we think about supply and demand…but the key reason why it’s taking off now so fast is because every new advancement of technology increases the efficiency and the social glue of trust to make sharing easier and easier.”
How are people participating in the collaborative economy? Of those people who had participated in some form of collaborative economy activity, the most popular activities were:
- Carpooling 34%
- House sharing 22%
- Peer-to-peer goods rental 11%
- Car sharing 10%
- Ride sharing 10%
From a participant’s perspective, the motivations for using the collaborative economy are to save money (and make money!), try out new services or goods, convenience and a desire not to own a particular item. This last motivation is important as people often need an item or service to fill a short-term need only and may defer from owning the “asset” outright. For example, I often have no need to own a power drill yet I’m more than happy to rent one peer-to-peer when the need to drill a hole comes up. And it saves me money and space at home.
As people experience purchasing and using services and products through the collaborative economy, the social and environmental benefits also become clearer. “As well as being financially attractive to consumers, participation in the sharing economy reduces environmental impact by making more efficient use of existing resources. On top of that, participants can make new social connections with the people they share with. It’s a win-win-win proposition for consumers – they can feel good about their environmental impact, build new social relationships and save money at the same time”, according to Chris Riedy writing in the Conversation.
While the future is promising, they are barriers to overcome. Of the 63% of participants who are open to using collaborative economy platforms:
- 63% claim they have insufficient knowledge on how to get started
- 38% don’t know any users (social proof)
- 33% are concerned about scams or fraud
- 31% have general trust issues
- 22% don’t trust the reliability of sellers or providers.
Of course, trust between sharing partners is the bedrock of the collaborative economy, and with a sizeable proportion of the “willing market” claiming some sort of trust factor as a barrier to use, then the uptake may be slower than the demand drivers may suggest.
What are the lessons for your business? The report found three key insights:
- Interest in and popularity of collaborative economy services is growing steadily – how can your business positioning itself to take advantage of this emerging trend?
- Many collaborative economy ideas re-imagine how assets can be utilised and transform the relationship with ‘customers’ – how can this fresh perspective help you identify new and innovative sources of value?
- Trust and scale are critical in creating mass adoption of collaborative economy services – how can your business partner with leading brand and/or emerging start ups to validate consumer behaviours and demand, and capture brand leadership?