Collaborative Consumption – Firm’s threat or opportunity?

Collaborative Consumption – Firm’s threat or opportunity?

I am exploring the concept of "collaborative consumption", because I would like to find out whether it is a concept that should be implemented by firms increasingly in order to enhance their operations.

A lot of people are talking about the new way of consumption – the sharing economy. In Berlin a conference took place just about a month ago, so there are discussions going on. What are opportunities, what are challenges, is it even possible?`

In this post, I want to lay the focus on the companies’ perspective.

Challenges/Disadvantages

Collaborative Consumption does not only seem to be the best alternate way to corruption for everyone.

There’s a consumer movement afoot that could make traditional marketers nervous. The emerging “collaborative consumption” trend, marked by “access to” versus “ownership of” goods/services, might seem like an outright sales killer – after all, if people are sharing your product/service, how will you sell more of it?

Obviously it illustrates a threat for the companies that people are increasingly considering to share instead of to buy. Thus sales might decrease and firms would face trouble to cover expenses.

Another important point is that there is a great possibility that the economy as a whole slows down. Demand has to meet Supply in case of a stable economy. If demand would decrease due to increased sharing, supply would have to decrease as well. However this requires time, so that a drastic change in consumer behavior could harm the economy.

Opportunities/Advantages

Still companies can benefit from the sharing economy.

Firms can profit longer from one single asset by lending it out several times instead of selling it directly.

Besides if people decide to buy an item collaboratively, they might be willing to spend more on it because it will be used more often.

Additionally new customers enter the market who e.g. could not afford a certain service before but do now because it is cheaper to share. The AirBnB enterprise for example offers rooms to travelers. A scientific study revealed that a lot of those people who rented a room would not have used the service if it had been more expensive due to not offering the possibility of sharing.

Threat or Opportunity?

It is an ongoing discussion whether collaborative consumption is more a benefit or a loss.
Form the producer’s position it is dependent on the company’s concept. How is it structured? Who are its main customers?

Thus it can only be answered individually, whether a firm should implement this concept or adjust its processes to the new way of consumption.

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