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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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Works Cited
AirBNB growth infographic. Digital image. Blog.AirBNB.com. AirBNB Inc., 24 Feb. 2011.
Web.
Anderson, Lauren. "The Global Collaborative Consumption Community." Lecture. OuiShare
Fest. Cabert Sauvage, Paris, France. 2 May 2013. YouTube. 8 May 2013. Web.
Barros, Pablo. "Collaborative Consumption and the Sharing Economy in Developing Markets."
Sustainable Brands. Sustainable Life Media: Cultivating a Flourishing Future, 15 Apr.
2013. Web.
Battista, Paola. "French like Collaborative Consumption." West: Welfare, Society, Territory.
West Online Newspaper, 14 Nov. 2013. Web.
Botsman, Rachel, and Roo Rogers. "Collaborative Consumption: Shifting the Consumer
Mindset." Mother Earth News. Ogden Publications, Inc, 19 Nov. 2010. Web.
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.
Botsman, Rachel. "The Case for Collaborative Consumption." Lecture. TEDxSydney. Bay 17
Theatre, Sydney, Australia. 22 May 2010. TED: Ideas Worth Spreading. TED © TED
Conferences, LLC, Dec. 2010. Web. 3 Dec. 2013.
Buczynski, Beth. Sharing Is Good: How to save Money, Time and Resources through
Collaborative Consumption. Gabriola Island, Canada: New Society, 2013. EBL: E-Book
Libary. Web.
Crain, Rance. "Collaborative Consumption Sounds Great on Paper Than Reality." Advertising
Age. Crain Communications, 11 Oct. 2010. Web.
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Davis, Paul M. Trust and the sharing economy. Digital image. DeskMag. N.p., 12 July 2012.
Web.
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Practices, Prospects for the Future." Lecture. Collaborative or Participative Consumption:
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2011. Web.
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Protero, Andrea, Susan Dobscha, Jim Freund, William E. Kilbourne, Michael G. Luchs, Lucie K.
Ozanne, and John Thøgersen. "Sustainable Consumption: Opportunities for Consumer
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EBSCOhost. Web.
Sagoff, Mark. "Do We Consume Too Much?" The Atlantic June 1997: 1-31. The Atlanic Online.
The Atlantic, June 1997. Web.
Suster, Mark. "The Sharing Economy." Lecture. LeWeb'13 London. Central Hall Westminster,
London. 6 June 2013. Both Sides of the Table: Entrepeneur Turned Venture Capitalist. 9
June 2013. Web.
Walsh, Bryan. "Today's Smart Choice: Don't Own. Share." TIME: Lists. TIME, 17 Mar. 2011.
Web.
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