Marketing & Advertising

Collaborative Consumption Can Help Your Ecommerce Business

“Collaborative consumption” refers to the matching of suppliers with consumers in a large-scale manner. It could involve bartering services, renting resources, selling products, and more.

The Internet has greatly facilitated collaborative consumption, by offering online platforms for like-mind suppliers and consumers to consummate transactions. An example of this is Airbnb, the online portal where residents of homes and apartments offer sleeping accommodations to travelers. It now operates in 19,000 cities and 192 countries.

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Airbnb pairs travelers with nonstandard vacation rentals.

Airbnb pairs travelers with nonstandard vacation rentals.

Another example is Zaarly, which connects buyers and sellers — such as finding a graphic designer, getting coffee delivered to your office, selling used furniture, buying a new iPad, or helping find a band for your daughter’s wedding. It’s all on a user-friendly and safe platform.

Small Business and Collaborative Consumption

Collaborative consumption is an excellent fit for small businesses for the following reasons.

  • Reduction in costs. Small businesses can purchase products and services from companies using the collaborative consumption model. This could be space for an office, office furniture, packaging tools, and skilled resources, as examples. Lower investments reduce the risk to expand your business. Using shared resources could help you get started quickly and could lead to potential tax savings by converting some of your capital expenses into operational expenses, such as renting a copier instead of buying one. Examples of collaborative consumption companies that can help reduce costs are (a) LooseCubes, which helps find shared office space, (b) Zilok, where you can rent office equipment and computers, and (c) TaskRabbit where you can find affordable temporary office help.
Rental services can help you start projects with lower up-front costs.

Rental services can help you start projects with lower up-front costs.

  • Increase in revenue. You can generate additional revenue by renting out idle capacity to other businesses or consumers. This could include spare office space, skilled resources that are available for a period of time (e.g., setup shopping cart for someone), office supplies, and equipment. Before offering these options, set goals for acceptable returns on investment. Avoid situations where the cost of renting your idle capacity exceeds the revenue generated from it. If collaborative consumption starts generating consistently good revenue, then you can explore how it can be added directly to your ecommerce site, versus using third party sites and paying them a fee.

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Selling or renting your unused equipment can be a good source of revenue.

Selling or renting your unused equipment can be a good source of revenue.

  • Become socially responsible and attract more customers. By enabling collaborative consumption, your business will become more socially responsible as it will generate less waste. This can be used as a marketing technique to attract customers who prefer shopping with environmentally sensitive businesses. A study by Latitude, a global research consultancy, validates that people are not just sharing to save money. An equal number say they share to make the world a better place.
  • Build new relationships. Sharing resources as part of collaborative consumption introduces you and your business to a different set of customers and partners, resulting in new relationships. For a small business, new relationships bring new opportunities and can help further grow your business.
  • Get quick funding. Collaborative consumption can also helped with financing and investment needs. If you have an idea for a product or a service, you can use crowdfunding sites like KickStarter and Peerbackers to get funding quickly. Every crowdfunding site has a slightly different process. For example, KickStarter uses an all-or-nothing model. It requires every project to have a funding goal and a deadline for raising that amount. If the project hits the goal by the specified date, KickStarter charges the backers’ credit cards. Otherwise, the project expires with no charges. KickStarter is very successful. In three years, it has funded more than 24,000 projects.

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Crowdfunding sites are a good way to finance a project while gaining community involvement.

Crowdfunding sites are a good way to finance a project while gaining community involvement.

Another way to get quick funding is to use social lending sites like Prosper and Zopa. These sites demonstrate the power of trust in business transactions, which is one of the driving forces behind collaborative consumption.

Summary

CollaborativeConsumption.com can help explain the concept further. Another site, Mesh, contains a directory of more than 6,000 companies worldwide that are part of the shared economy. With so many options, your ecommerce business can likely benefit from the collaborative consumption model.

 

Gagan Mehra
Gagan Mehra
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