When the Internet burst on the scene around 20 years ago, one of its much touted possibilities was a boom in consumer-to-consumer or C2C commerce.
But aside from the early successes like eBay, relatively little has happened in this space since. But could all that be about to change? Trendwatching.com recently refreshed the concept of what they term the”Sellsumer” – consumers making money on the side.
To judge by the amount of venture capital going in this direction and the fact that it now has the obligatory catchphrase “the sharing economy”, the second wave of C2C commerce may just be upon us!
Why now? The combination of three things may all just be coalescing to give the sharing economy a new lease of life:
1. technology (users can find services and pay via an app)
2. social media (ease of sharing reviews)
3. and changing consumer attitudes (users’ attitudes to concepts such as ownership are changing)
Airbnb is a classic example of a sharing economy pioneer. Like many great start-ups, its founders stumbled on the idea when, tight for cash, they decided to rent out a room in their apartment to delegates attending a design conference in San Francisco. Incorporated in 2008 and still privately held, Airbnb offers members an opportunity to rent all forms of accommodation to those travellers looking for a place to stay. Very popular in major cities where accommodation can be scarce, the site has grown rapidly with offices around the world including Dublin. Current estimates put it as having found accommodation for 11 million guests in 34,000 cities. As it takes fees of circa 3% from hosts and 6%-12% from guests, it has a significant revenue stream. In the spirit of the social media age, the community regulates itself as profiles of potential users can be checked in advance and all users can post reviews of their experiences. One of the unique aspects of Airbnb is that it shows how we as humans have tended to trust brands more than people in that we will be comfortable staying in a strange hotel but not (up to now, at any rate) comfortable letting a stranger into our home!
Another key insight relates to the issue of ownership. To date our consumer society is predicated on the idea of ownership of goods but this could be about to change. Not only can we share our houses for an income but what about our high-end household items such as cameras and musical instruments (SnapGoods/Simplist), our cars (RelayRides, Lyft), our time (TaskRabbit) and even our cash (LendingClub)? As the idea gains traction, the possibilities are endless. The threat for many established businesses such as hotels/motels and taxi services are very real.
One study in Texas, found that while Airbnb was not having much impact on the business or luxury hotel sector, its presence had cut revenues in the budget sector by 5% in the two years to 2013. Incumbent sectors like these have been complaining loudly and have found a receptive ear among the regulators who are looking at issues like insurance and taxes. For example, Airbnb’s host city of San Francisco charges a hotel tax of 14% which those renting their properties are effectively obliged to do.
Once again opportunities and threats abound!
John Fahy currently teaches about marketing resources and capabilities and how these factors impact on organisational performance on IMI’s Diploma in Marketing Strategy with Digital Marketing, Diploma in Strategy and Innovation and MSc in Management Practice. He is Professor of Marketing at the University of Limerick in Ireland and Adjunct Professor of Marketing at the University of Adelaide, Australia.