The world of collaborative consumption

Back in 2007, I wrote an article for Leisure Report Journal titled: ‘Collaborative Consumption’. I coined the phrase ‘Collaborative Consumption’ because it perfectly described the way in which the web was allowing people to connect and harness their collective wisdom to search, compare, review, select and consume a vast array of goods and services.

I’m unconvinced that the leisure industry quite ‘gets’ the sea-change that is underway.

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Here is an excerpt from the article. If you want to read more, then you can read the full article here at the bottom of this post:

Leisure Report Journal April 2007: Collaborative Consumption: Oxygen Consulting’s Ray Algar says consumers are growing ever-more aware of their collaborative power… is your business ready to meet their demands?

Spare a moment for those poor retailers who still insist on putting ‘things’ in windows, accompanied by a fixed price tag. How quaint. In bygone times when asymmetrical information flourished (when the retailer knew far more than us), this method of trading was appropriate. Consumers were guided by the marketer’s pen. They set the price and we chose to pay, or not. Individually, we as customers lacked both influence and bargaining power. However, what happens when pricing insight becomes accessible and consumers begin to share knowledge? Welcome to the world of collaborative consumption.

A growing global movement 

Collaborative consumption is a phenomenon that is sweeping across the globe. Global ‘Wikipedians’ continue to build Wikipedia , the world’s biggest on-line encyclopaedia. The English version has 152,000 contributors, 609 million words and is 15 times larger then Encyclopaedia Britannica. It is also a goldmine of well-presented information for the savvy web user. Consumers collaborate on-line to exchange goods and services through web sites such as eBay and Gumtree, they share hospitality experiences through Trip Advisor (five million reviews and rising) and pool their collective purchasing power to co-own (fractional ownership) high-value assets such as prestige cars, property and aeroplanes (www.12thshare.com).

Collaborating to leverage discounts and incentives is an inevitable reality of ‘connected living’. Individuals are learning that it is better to be part of a crowd and the crowd is fast becoming very wise. United Consumers is a Dutch company with 250,000 members and negotiates discounts on petrol, insurance and electricity. Crowdstorm is a new website that aggregates the ‘buzz’ surrounding a product. Aggregating recommendations in one place engenders confidence in the product. Presently, many of its members are recommending the new Apple Macbook. The inevitable next step is for those purchasers to organise themselves into a buying group. In China, team buying or ‘Tuangou’ is a fast-growing consumer-buying phenomenon.

The World of Tuangou 

Originating in China, Tuangou harnesses the ‘connectedness’ of the Internet to cluster groups of like-minded consumers who then descend on a bricks and mortar outlet to negotiate a group discount. Are you in the market for Sony’s new ultra-portable laptop computer? It’s yours for a fixed price of just £2,000. Alternatively, use the Internet to team up with 20 other buyers on Saturday, April 27th at 5 pm on Tottenham Court Road, London and it is yours for just £1,640, 18% off the list price. It is also 8% cheaper than the best online deal, based on purchasing a single unit. Consumer savvy retailers do not see this as lost margin, but as the millennial way to move stock and lower customer acquisition costs.

Websites such as Team Buy in China are now popping up to coordinate a series of team buys for electrical goods, cars and furniture. Some team buying groups number 500 ready-and-willing consumers; they have finished their pre-purchase deliberations, identified the store and are now ready to buy. Rather than consumers, ‘mobbing’ a store unannounced, Team Buy and other Chinese web sites are negotiating bigger discounts on behalf of members and even arranging special closed viewings. The website takes a small trading commission on purchases. Tuangou synchronises with the co-creating trend where consumers are now demanding to play an active role in how products and services are designed, communicated and procured. The notion of on-line consumer ‘team-buying’ has been seen before with websites such as Mercada and Letsbuyit, but these businesses faltered because the buying cycle was sometimes too long. In this ‘I want it now’ world in which we now reside, waiting three weeks for an extra 5% discount on a plasma television was never a viable business proposition. Also, smaller buying groups (when there were fewer people on-line), meant that price leverage could not match the larger retailers.

Interested in reading more?

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Collaborative Consumption, Leisure Report

 

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