The emergence of ‘collaborative consumption’ threatens to disrupt the vertical relationship between producers and sellers of goods and their customers. If this ‘disintermediation’ of products takes hold, companies will need a strategy to avoid being cut out of the chain entirely by increasingly connected consumers.
How can traditional companies adapt to a new era in which consumers are keen to have access to goods and services but do not necessarily want to own them? This is the central theme of a new report entitled " Corporations must join the Collaborative Economy", published in early June by the Altimeter Group, which provides research and advisory services for companies challenged by business disruptions. Jeremiah Owyang, Altimeter partner and main author of the report, presented the findings at the Le Web conference in London on 5-6 June. He believes the solution for companies lies in including customers in more stages of the business chain, and in the longer term moving towards a genuine service model.
Re-writing the role of the customer
Following the approach of websites which open their APIs up to developers, the Altimeter report suggests that companies should give their customers the chance to participate in the design of their products and services right from the initial stage. An example here is New York-based Quirky.com, a social product development company which works through co-creation, transforming its customers into inventors. The Quirky motto is that “ordinary people have extraordinary ideas,” and that invention should be accessible to everyone. The report gives examples of how firms can adapt to the changing relationship between sellers and consumers of goods by taking the initiative to bring customers together via new platforms which enable them to co-purchase and exchange their brands’ products. Two years ago Patagonia launched a partnership with Ebay whose thrust is encourage customers to buy second-hand Patagonia products and sell those they no longer need through Ebay. The result has been that the outdoor clothing and gear specialist has found a new clientele of young people who would not have been aware of the brand if it had not been for this initiative.
The company as a service provider
Last but not least, Jeremiah Owyang argues that instead of selling products to consumers, companies ought to be focusing on the real needs of their customers. The objective must be to establish a long-term relationship with the existing customer and to acquire new customers, which means building a strategy around the service concept, he insists. Winning the pricing war is no longer the main driver. Instead the essential challenge is to retain customer loyalty by offering them genuine services. The Altimeter report also points to innovative practices introduced by a number of companies in order to espouse the collaborative values of their customers, especially by sponsoring events or social initiatives. One example is the move by global financial services provider Barclays to sponsor the town bicycle hire scheme set up by the local authority Transport for London.