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Assignment #2

The Consumption--Sustainability Conundrum:

Is there an Answer?: A Critical Analysis of

“Collaborative Consumption: Shifting the Consumer Mindset”

Gabrielle Bishop (565-548-724)

GLST 390

“I dont want the DVD, I want the movie. I don’t want the answering machine, I want the

message it carries. I don’t want the CD, I want the music it plays.

In other words, I don’t want stuff - I want the needs or experiences it fulfills.”

- Rachel Botsman on collaborative consumption

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Introduction: What is “collaborative consumption” (CC)?

Do the names: AirBNB, Netflix, eBay or Wikipedia ring a bell? How about YouTube,

SwapTree, or Kiva? All of these brands are part of a revolution in consumption, driven by social,

environmental and economic forces: it’s called “collaborative consumption”. Collaborative

consumption is a form of consumption that adapts to the needs, wants and preferences of the

consumer, while simultaneously reducing the number of new products and raw materials

consumed. In essence, rather than paying large sum to own a product or service that will go

unused (or become idle) the vast majority of the time, consumers instead pay a small amount to

have shared ownership of said product or service.

In the case of Netflix, subscribers pay a small monthly fee (of around $8) to have access

to a shared database of thousands of different films and TV series, as opposed to paying $20 to

$30 per new DVD. In the case of AirBNB (Air Bed and Breakfast), a huge success in

collaborative consumption, homeowners can rent out parts of their apartment, cottage, house or

other property to interested travellers. On average, hosts generate roughly $430 USD per month

in supplementary income, thanks to renting out a portion of their primary or secondary residence

to AirBNB travelers (Grémillon 18). For 93% of AirBNB travelers, the unique allure of “living

like a local” during their trip drives them to participate in AirBNB’s services (ibid). Both Netflix

and AirBNB provide low-cost, environmentally and socially-sustainable alternatives to

traditional modes of consumption. The best part? Consumers don’t have to forfeit their

preferences or make large changes to their lifestyle in order to participate in it. In fact,

collaborative consumption by its very definition is driven by consumer preferences and

participation.

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According to venture capitalist Mark Suster, several factors have contributed to the rise

of collaborative consumption. These include: un/under-employment, debt, globalization, scarce

resources, transparency, and demographics. Faced with the new challenges posed by all of these

factors, many consumers have opted to shy away from the 20th century’s trend of

“hyperconsumption” (or, consuming for the sake of consuming) and have instead begun to move

towards more collaborative forms of consumption.

In her viral TEDx talk on the same subject, Rachel Botsman, perhaps the best-known

advocate for collaborative consumption, identified “four key drivers” that are responsible for the

rise of this new socio-economic phenomenon, which are:

1. A renewed belief in the importance of community;

AirBNB growth infographic. Digital image. Blog.AirBNB.com. AirBNB Inc., 24 Feb. 2011. Web.

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2. A torrent of peer-to-peer social networks and real-time technologies;

3. Pressing unresolved environmental concerns; and

4. A global recession that has fundamentally shocked consumer behaviors.

Suster also credits “disruptive

technologies” (such as Skype, WhatsApp,

Netflix, Craigslist, Facebook, etc) with

making collaborative consumption

significantly competitive when stacked

against forms of hyperconsumption. The

term “disruptive technologies”, originally

coined by Clayton M. Christensen, suggests

that in order for firms to stay competitive,

they must anticipate consumers’ current and

unstated needs and adopt relevant new

technology and business models. Firms that

focus too much on the consumers’ current

needs, and thus fail to innovate risk falling

behind. Conversely, disruptive technologies, which offer significantly lower prices, lower

margins, and higher performance, will win consumer loyalty via collaborative consumption.

Ultimately, Botsman argues that collaborative consumption, while gaining more ground

in recent years, is by no means a “new” idea. She argues that humans are innately predisposed to

be collaborative consumers. From an anthropological perspective, one only need look at pre-

modern societies and how early economic exchange was facilitated. In pastoral and hunter-

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gatherer cultures, humans largely hunt in packs. In many places around the globe, bartering for

goods and services has still yet to go out of style. Technology’s role in promoting collaborative

consumption is undeniable, however, as seen in the following quote from Botsman’s TEDx talk:

“Collaborative consumption has been around for years… think of libraries and

launderettes. But technology makes sharing fun.” Further still, she quotes the New York Times

saying, “Sharing is to ownership what the iPod is to the 8-track, what solar power is to the

coalmine”.

With the resurgence of collaborative consumption comes many questions: is this model

of consumption truly sustainable? What sort of risks are involved with it? And, in an ever-

globalizing world, is this model applicable across both developed (rich) and developing (poor)

nations alike? These questions will be explored in the following pages.

Yes, Collaborative Consumption is Sustainable

Before exploring the notion of collaborative consumption’s sustainability, it is first

integral to examine its basic characteristics. According to Botsman, collaborative consumption

can be sorted into three main categories, consisting of:

→ Redistribution markets, which take a used, pre-owned item that is no longer needed, and

instead move it somewhere where it is needed. This philosophy of “reduce, reuse, recycle, repair

and redistribute” stretches a product’s lifecycle, thereby reducing waste. Examples of these could

range from Amazon.com to the neigbourhood thrift shop;

→ Collaborative lifestyles, which consist of the sharing in resources of money, skills and time.

Landshare, an example of a collaborative lifestyle platform in the UK, matches those with excess

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land with those who want to grow

food. In Nanaimo, the “gleaning”

initiative run by the non-profit

Foodshare group incorporates a

similar model, where the landowner

takes a portion of the gleaned

produce, and Foodshare takes the

rest, re-distributing it to those in

need; and

→ Product service systems, where consumers pay for the benefit of a product (which would

otherwise have a high-idling capacity), without having to own the product outright. Proving that

collaborative consumption truly spans across a variety of market segments, one need only look at

a few examples of product service systems. Ranging from participating in a small, local library,

to subscribing to a website like Bag, Borrow, or Steal (where users can pay a monthly fee to rent

the designer bag of their choice, rather than buying it outright), this type of collaborative

consumption truly spans across a variety of market segments.

All three examples lessen waste in some way, shape or form, mainly by reducing the

number of products that need to be produced to satisfy consumer demands. In the case of

collaborative lifestyles, additional resources may even be created, whether that be a few baskets

of apples gleaned from a person’s backyard and given to someone in need, or another bed

available for a traveler in a city like Paris.

In this way, lessened environmental waste is directly-tied to tangible economic growth.

For example, 1,100 new jobs and €185 million were generated in Paris as a direct result of

Botsman, Rachel, and Roy Roo. The three types of collaborative consumption

systems, according to Botsman. Digital image. Harvard Business Review.

Harvard Business Publishing, Oct. 2010. Web.

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AirBNB’s activities. This realisation is critical, in a world where 40% of consumers are “willing”

to buy green products, but where only 4% actually do (Pathero 32).

Collaborative consumption is socially and economically sustainable because it

fundamentally adapts to the needs of the consumer in order to be successful, instead of the other

way around. In other words, the consumer is not obligated to sacrifice their individual lifestyle or

personal freedom. Because less products are needed to satisfy the same amount of people, less

waste is created. In this way, collaborative consumption is also environmentally-sustainable.

Collaborative Consumption is not Sustainable

Perhaps the largest concern surrounding collaborative consumption’s sustainability is

regarding safety and privacy issues. In her book “Sharing is Good: ”, Beth Buczynski sums the

risks up in three main categories: misrepresentation, accidents, and theft or vandalism

(Buczynski 73):

Problem Example Solution

Misrepresentation Buyer receives clothing item in

poor condition or wrong size

from eBay vendor.

Buyer leaves negative feedback on

the seller’s profile, damaging their

reputation and negatively impacting

future sales.

Accident

Client spills paint in peer-to-peer

rental car, potentially damaging

it.

Client takes immediate action:

drives car to auto shop for thorough

cleaning, calls rental service and

requests extended return date.

Theft or vandalism San Francisco woman returns to

her apartment after renting to

someone through AirBNB, sees

that it has been vandalized, and

that many of her personal

belongings were stolen.

AirBNB acts swiftly and creates

new insurance policy which

guarantees up to $1 million in

coverage.

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While the concerns surrounding

misrepresentation, accident, and theft

or vandalism are certainly valid, the

reality is that sustainable quality-

control measures (ranging from

online insurance policies to buyer and

seller feedback centres) have already

been designed and implemented. And

while they are certainly not without

flaws, their inception provides a good

buffer for the social and economic

sustainability of collaborative

consumption. In any case, some even

argue that modern consumers have less

trust for monopolies and more trust in

centralized systems (Hickman).

Furthermore, humans simply “yearn to

be trusted”: research shows that people

get a spike of oxycontin when they’re

entrusted with another’s goods”

(Walsh). Davis, Paul M. Trust and the sharing economy. Digital image. DeskMag. N.p.,

12 July 2012. Web.

Reputation capital on the corporate scale: EmeraldInsight.com

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An interesting concept that has arisen as a result of the discourse surrounding

collaborative consumption’s sustainability issues is that of “reputation capital”. Put simply,

reputation capital is the trail that digital consumers leave behind regarding their online

transactions. In the old system, Botsman argues, reputation didn’t matter. Today, this is not the

case. Even those who are not conscious participants in collaborative consumption are forced to

be aware of their reputation capital, such as restaurants (Yelp, Urbanspoon), tourist attractions

(TripAdvisor), higher education instructors (RateMyProf), and even general employers

(Glassdoor). Botsman thinks that soon, the value of reputation capital will surpass the traditional

credit rating. Said capital will be searchable to anyone with access to an online search engine.

However, communications professional Rance Crain fears what the implications of

reputation capital would be:

Can you imagine what would happen to the poor guy who gets rousted by the

Collaborative Consumption police? Maybe he snored too loudly on the empty couch he

shared. Or maybe he put too much soap in the communal washing machines or dug the

trenches too deep in the communal vegetable garden.

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Indeed, there is ample room for corruption in reputation capital. One need only look to the

companies who create multiple accounts to leave positive feedback on their own business’s page

or to do the opposite to their competitors. However, many remain optimistic and think that in

time, the system will be perfected.

Sagoff and Botsman: Overlaps in Consumption Theory

Botsman’s call for collaborative consumption seems to be the perfect solution to concerns

raised by Mark Sagoff in his article “Do We Consume Too Much?”, which, although written in

1997, still has strikingly relevant observations for current consumption habits.

Three main points seem to overlap between Botsman and Sagoff’s views:

Firstly, those in the developed world are chronic over-consumers. Indeed, debates

surrounding global resource depletion seem to overshadow a point that perhaps makes Western

consumers

uncomfortable: creating

a more sustainable

planet is not necessarily

about stretching our

habits to the limit, but

rather about making

small adjustments to

patterns of consumption

en masse.

Secondly, Both Botsman and Sagoff seem to agree in that there is no “one-size-fits-all”

approach to creating sustainable modes of consumption. This is because each culture, influenced

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by geographic features, history and other variables, each has its own preferred modes of

consuming. However, collaborative consumption offers a fairly flexible alternative, since (as

mentioned before) it is a system that is largely driven by consumers and their own preferences,

thereby making it culturally versatile. While the average young Canadian might think of Netflix

as their most-used form of collaborative consumption, another young person in the developing

world might instead think of bartering (ie: trading one small service for another).

Finally, the two appear to agree in that global society must shift its focus from economic

growth to a more sustainable framework. This does not mean forsaking profits for the sake of

preserving the ozone layer. Rather, the two argue that the system can be tweaked to not only

generate profits, but to also act as a sustainable alternative to patterns of hyperconsumption.

Can Collaborative Consumption Thrive in the Developed World?

Collaborative consumption can absolutely thrive in the developed world. In fact, it is

already thriving, thanks to accessible online platforms that act as virtual marketplaces for

collaborative consumption, many of which have already been detailed in length (Netflix,

Amazon, AirBNB, etc). As well, the market associated with second hand goods alone is

astronomical, at around $500 billion USD a year (Anderson). There are countless opportunities

that are easily available to developed-world consumers of all market segments and

demographics. Rich or poor, young or old, local food enthusiast or luxury bag collector: the

venues for collaborative consumption in the developed world are truly innumerable.

As for the developing world and emerging markets, collaborative consumption has

become less of a choice and more of a necessity.

In the past decade, Brazil has seen an additional 30 million people added to the middle

class (Barros). As a result of this growing middle class, collaborative consumption initiatives

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have begun to spring up. Particularly successful is the bicycle sharing program, which has been

introduced to four different Brazilian cities (Rio de Janeiro, Sao Paulo, Porto Alegre, and

Recife). Babags, an online luxury bag rental site, has also grown in popularity. Brazilians are

very wired - OLX, the country’s most popular online marketplace sees 60,000+ transactions a

day. Thus Brazil, a large emerging market, boasts many opportunities for collaborative

consumption, especially those initiatives involving online transactions.

Looking back a bit further, the 1983 launch of Grameen Bank (“Bank of Villages”) in

Bangladesh is widely viewed as the first modern example of the sharing economy. Based off of

the concept of “solidarity lending”, villagers would share responsibility of a single loan at

Grameen Bank.

There was no

insurance, no

legal documents;

most loans were

under $1,000

USD. The result?

It worked: many

Bangladeshis

were lifted from poverty as a result of Grameen Bank’s activities, and in 2006 its founder,

Muhammad Yunus, was awarded the Nobel Peace Prize.

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In countries where the legal system and government bureaucracy is largely subject to

corruption and is just generally less-developed, collaborative consumption provides a more

efficient economic alternative.

Conclusion: the Future of Collaborative Consumption

One of the greatests discussions of the 21st century will be if and how global

consumption patterns can continue at the rate they have been throughout the 20th century. What

some critics fail to realize is one key fact: the rate of resource consumption per-capita varies

intensely between the developed and developing world. Furthermore, resources are not

disappearing as fast as many assume they are. In fact, one sees an excess of resources in many

cases (ex: wheat production). What is needed is a change in patterns of consumption. This is

Grameen Bank Model: Grameen-info.org

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where collaborative consumption comes in: a system that the culture and consumer in question

can mold to fit their own individual preferences, collaborative consumption offers a sustainable

alternative to the past century of Western hyperconsumption. While there are still indeed bugs

within its system, most of which relate to the concept of “reputation capital”, the rate at which

this system has gained popularity is astonishing. Because of its versatility and sustainability both

on micro and macro-levels, collaborative consumption does not appear to be going anywhere

soon. Indeed, collaborative consumption is the future of consumer-driven economics.

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