Collaborative Consumption – Imagine
Wednesday, 12th February 2014 at 8:03 am
New business models are harnessing the digital age to create a sharing economy based on participation and connection, explains Parkhound founder Robert Crocitti.
When John Lennon penned the immortal lyric, ‘Imagine no possessions, I wonder if you can’ in 1971, not many people would have conceived that within 50 years that dream may be a possibility. As consumers continue to embrace combining, sharing and pooling of resources and goods, collaborative consumption has become the latest poster child of the digital economy.
Collaborative consumption is a business model that encourages the shared use of products rather than individual ownership. A good example is a drill. In a lifetime we may use a drill for 3 hours but to create, package and distribute that drill there is a lot of waste. Imagine instead if there was one drill for every 1,000 homes. Imagine those homes shared that drill for the odd occasion that they needed it. It would reduce waste drastically.
The Movement in Australia
Collaborative consumption as a business model has gained significant recognition off the back of a variety of successful start-ups in the United States. It does however have academic roots closer to home. Sydney based Rachel Botsman has championed the benefits of collaborative consumptions for the past five years and has appeared at TEDx Sydney and the ABC Television's Big Ideas program over this time. Botsman has even written a booking describing the model as a revolution in the way we consume.
Collaborative consumption is the model that Airbnb, and more locally GoGet have implemented for accommodation and cars. Airbnb is focused on helping people rent out their apartments and spare rooms online. It now offers short and long-term accommodation in 34,000 cities, 192 countries and has just hit 10 million deals. The service targets property owners looking to make some additional income from their property. Sydney based GoGet was founded in 2003 and allows people to rent out a car. It now has over 1,000 cars available across Australia.
The Australian start-up I co-founded, Parkhound, is aiming to alleviate the country’s parking problems through the combined power of its 20 million inhabitants. The business is symbolic of the role collaborative consumption models can play in the new digital economy. Parkhound offers an online marketplace that connects drivers looking for parking with local property owners who have spare parking spaces. It is based on the premise that there is enough parking for everyone already in Australia if people come together and share.
The crux of the collaborative consumption model is that through its emphasis on pooling resources. It generates a classic win – win situation in both time and monetary terms. In Parkhound’s case, local residents make money from leasing a parking space such as a garage or driveway and motorists get a cost-effective parking experience. Now connected by technology, drivers previously would have had to hand out pamphlets, do letter drops and even door knock houses in the pursuit of a suitable parking space.
A New Way of Engaging
Much of the rise behind collaborative consumption is related to the maturing of the Internet economy. As businesses moved online they generally replicated their physical store on their website. Over time, new opportunities have emerged based on the real time, global and instant communication capabilities of the World Wide Web. Entrepreneurs soon realised that not every business needs to be based on being the buyer or the seller – there was an opportunity to be the facilitator of consumer sharing and pooling.
There can be little doubt the collaborative consumption model is a product of the digital age. Pooling resources relies on the hyperconnectivity that shapes modern living. Smartphones, unlimited internet connectivity and other devices bring people from afar to our fingertips. Using mobile capabilities such as location based services and push notifications brings the collaborative consumption proposition to life.
Parkhound, for example, has developed an iPhone booking app which allows motorists to book a parking space as they are walk to their car. Technology enables the provision of a recommended sale price based on the location of the property.
Onwards and Upwards
The collaborative consumption model is proving scalable – becoming more robust, dynamic and viable with additional participants. The more parking spaces there are, the more drivers that can find a parking space they need at the price they want. The more drivers there are, the more sellers that will want to join the marketplace to earn money for themselves.
Yet management of a growing pool of participants presents its challenges. The dual-sided marketplace effect needs to be managed effectively and is a common issue for collaborative consumption models. What is critical is ensuring both stakeholders succeed – buyers can find parking and sellers can earn income.
Growth has to be carefully monitored across both sides of the business model. Thus far, Parkhound has seen demand that consistently outstrips supply. As parking space listings grow, the business is forced to focus on attracting buyers. Yet as the number of buyers expands, the business must again look through the lens of parking space listings.
The effect of collaborative consumption models in society is positive – reducing waste and promoting sustainable resource use and connecting people and encouraging social interaction. In the spirit of the model, over time, there are also opportunities for collaborative consumption businesses to collaborate – there appears to be a natural synergy between companies like GoGet and Parkhound in the Australian market.
In the interim, these models represent a way forward where Australians can share and work together to solve problems – social, geographic or otherwise.
About the author: Robert Crocitti is the co-founder of Parkhound (www.parkhound.com.au). Parkhound was born from an unlikely source – Aussie rules football. Crocitti along with co-founder Michael Nuciforo and a group of friends decided to drive to a football game last year when inspiration struck. After circling around the ground for 15 minutes on the hunt for parking the group noticed something. There were dozens of empty garages and driveways right near the football ground. The idea stuck. There are unused parking spaces all around that can be used to solve Australia’s parking shortage.