Adapting to the Sharing Economy

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How do consumers access, buy, and use their favorite products and services? The answer to that seemingly simple question is changing.

Instead of buying and owning products, increasing numbers of consumers are paying to lease and share them.

As professor Kurt Matzler and doctoral students Viktoria Veider and Wolfgang Kathan of the University of Innsbruck explain, in companies can benefit from this trend through creative new approaches to defining and distributing their offerings.

The so-called "sharing economy" is growing rapidly. PricewaterhouseCoopers has estimated that by 2025, it could represent $335 billion in revenue worldwide.

Well-known examples of successful startups built on "collaborative consumption" systems include Airbnb, an online accommodations marketplace, and Zipcar, a car-sharing brand.

Growth in sharing systems has been fueled by the Internet, with its rise of social media systems that facilitate connections between peers eager to share their possessions. The central conceit of collaborative consumption is simple: Obtain value from goods that are not entirely exploited by their owners.

The speed of growth with which sharing systems have spread suggests that the sharing economy might represent a serious threat to established industries, due to fewer purchases in conventional markets.

Companies therefore should understand and manage this new system in order to adapt current and future business models to provide new sources of revenues within this growing area of the economy.

There is an environmental argument for the sharing economy: The more we share, the fewer of Earth's resources will be consumed, creating a more efficient and sustainable mode of consumption.

However, evidence suggests that the proliferation of sharing does not entirely stem from ecological awareness or ideological motivations. In fact, research suggests that the major consumer motivation is self-oriented.

Specifically, consumers prefer the lower costs that the leading companies in the sharing economy tend to provide. That's good news for companies looking for new opportunities within the sharing economy. It means that managers can promote products and services in the realm of collaborative consumption in much the same way that...

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