The age-old philosophy of ‘sharing,’ preached to kindergarten classes across the country is disrupting services, assets and possessions as we know them. This notion of sharing, otherwise known as ‘collaborative consumption,’ has really taken off over the past few years. According to the book What’s Mine is yours: the Rise of Collaborative Consumption, collaborative consumption is defined as “a class of economic arrangements in which participants share access to products or services, rather than having individual ownership.” This model is often made possible through technology and peer communities. What has made collaborative consumption so popular from a customer standpoint is it allows for people to enjoy the convenience of an asset or possession without having to purchase it outright. As an owner, sharing an asset or possession allows the owner to receive additional income and reduce their ‘bottom line.’
Pioneered with Ebay and Craiglist, collaborative consumption has evolved to develop industries including: social lending, peer-to-peer accommodation, peer-to-peer travel experiences and peer-to-peer car sharing amongst many others. Companies including Uber, FlightCar, RelayRides and AirBnB are some of the more prominent examples in this space that were once considered startups but have quickly turned into global entities that are showing no signs of slowing down. Uber, for example, which was conceived four years ago, was recently given a valuation of $3.5 billion dollars and is only in 43 cities around the world. Many experts have forecasted that when all is said and done, Uber’s $3.5 billion dollar valuation could explode by 10X.
Today, the majority of the individuals who are using these services tend to be younger. Generally speaking, the younger the customer, the more susceptible they are to collaborative consumption. This is partially true because younger users are less likely to have an abundance of wealth, but more importantly because they have grown up in an internet-dominated society full of peer-to-peer sharing companies like Ebay and Craigslist. Further, this is the first generation that has grown up exposed to social media allowing individuals to publicly share their hobbies, thoughts and photos more easily and more publicly than ever. This makes sharing an apartment, car or even a house not nearly as far-fetched.
The most recent evolution of collaborative consumption is in the luxury travel sector. Companies including Inspirato and Exclusive Resorts are prime examples that have been extremely successful through luxury sharing. Private aviation is no stranger to this idea either. Since the underlying assets are so expensive, private aviation has been using collaborative consumption for years. Beginning with fractional ownership programs in the 1980’s, jet cards in the 2000’s and the most recent trend of individual seat sales, collaborative consumption has facilitated rapid growth in this industry. Companies such as BlackJet, Victor and Surf Air are three companies that are at the forefront of this pseudo commercial form of private travel responsible for bringing private aviation to a new demographic and fostering innovation.
As collaborative consumption continues to skyrocket, many are stuck asking the question: why rent when you can buy? The answer is simple. Renting requires less responsibility and provides far more flexibility than owning. Why buy one house when you can rent six different houses each year? By taking advantage of this sharing economy, customers can keep their assets liquid and have a more diversified group of experiences. Companies that understand this are well poised to be incredibly successful.
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JS