Online marketplaces, platforms and networks are the key business models of the sharing economy. They tap into the resources of others in order to work. In their book What’s Mine Is Yours, Botsman and Rogers defined three different systems:

  • Product service systems (PSS): consumers pay to use certain products, which means they don’t need to buy these themselves. Services which improve the lifespan of goods, such as repair and maintenance, are also part of this model. Making maximum use of a product eliminates the need for (re)users to purchase, maintain, repair or insure expensive appliances themselves.
  • Second-hand markets: social networks that help find a new owner for used goods. They can be given away, sold or simply exchanged for other goods. Reuse and reinvention, conceiving new product applications, this is where the sharing economy and the circular economy intersect.
  • Shared lifestyle: a system for people to share immaterial things, such as time, space, talent and money. This phenomenon tends to appear locally, in the sharing of workspace, parking lots or odd jobs, for example. There are global matches being made for the shared lifestyle, too, of which couch surfing (Couchsurfing.com) is a prime example.

The common thread: presenting consumers with an option to step off that tired linear path that is the customer journey. Suddenly, sharing, exchanging and reusing become real alternatives to buying goods and services.

Many sectors find these new sharing economy business models disruptive: the music industry (iTunes, Spotify), the taxi business (Uber), hospitality industry (Airbnb) and the automotive business (carsharing). As a rule, the established industry has been taken off guard by these new market entrants, and then scrambled to find an adequate response. Meanwhile, consumers are happy to take advantage of all the turmoil and the money it saves them.

Similarly, stores, travel organizations, banks and insurance companies all need to step up and take the opportunities the sharing economy has to offer. This means they need to embrace and adopt new business models. By integrating sharing and exchanging into the value chain, they could tune into the new behavior of customers.

As early as 1980, futurologist Alvin Toffler coined the term prosumer referring to the blurring of the lines separating producers from consumers. Consumers now produce their own energy with solar panels on their roof or home-grown vegetables in their kitchen garden or allotment. Thanks to 3D printing, consumers and small businesses can now create products of their very own, at home and through open software.

Prosumers can join forces in cooperatives and/or opt to work with existing businesses. Prosumers will prove to be important partners for online marketplaces, platforms and networks. They are perfect partners for those brave businesses, retailers and brands who dare to open up their business models to prosumer input.

Zero marginal cost society

For centuries, business have set themselves the task of increasing the efficiency of their goods and services. Every inch of marginal cost reduction could be the tipping point in the race with your competition. Economist Jeremy Rifkin believes we are now at the dawn of an age where goods and services will be produced at virtually zero marginal cost, provided we disregard the fixed cost of production. Airbnb for instance, have little to no effort or cost when a new apartment is added to their online portfolio. Auction websites, marketplaces and platforms have a similarly easy ride: adding new goods or services, or even new manufacturers, can all be done for (next to) nothing.

Zero marginal cost society is going to be both inevitable and dramatic for everyone involved in retail, thinks Rifkin. Producing goods and services with ever-decreasing revenue, to the point of no marginal yield, is surely a dead-end street. Turning over any profit becomes nearly impossible. In the long run, looking ahead 50 years or so, capitalism could vanish as the dominant economic system. We are not there yet, though a collaborative economy does seem to be an irreversible given.

This is blog 15, based on my book ‘The end of online shopping. The future of retail in an always connected world’, published by Business Contact (Dutch/Flemish editions), Nubiz (English edition) Post & Telecom Publishers, Beijing (Chinese edition, from Q1 2018). The book will also be translated into Danish, German, Italian and Portuguese in 2018.