The Rise of Collaborative Consumption on the Example of Couchsurfing
Research Paper (undergraduate) 2011 21 Pages
TABLE OF CONTENTS
1. THEORETICAL PART
1.1. Entering a new era of markets
1.2. Collaborative consumption
1.2.4. Suzi's daily routine
1.2.5. Forms of collaborativeconsumption
1.2.6. Whydoes itwork?
1.2.7. Implications of collaborative consumption on conventional businesses
2. COUCHSURFING.ORG AS A SUCCESSFUL EXAMPLE OF A LIFESTYLE PEER-TO- PEER NETWORK
2.1. Qualitative Research
2.1.1. Research questions
2.1.2. Research methodology
2.1.3. Couchsurfing.org - Company profile
2.1.4. Criticalsuccess factors
2.1.5. Qualitative Research: Motivations behind Couchsurfing
2.2. Quantitative Research
2.2.2. MembershipandFrequencyof Use
The objective of this paper is to analyze the emergence and the characteristics of collaborative consumption. Moreover, this paper examines the causes and underlying motivations for using Couchsurfing as one particular form of collaborative consumption by focusing on consumers. Lastly, we will provide potential implications of this trend for commercial organizations.
1. Theoretical part
1.1. Entering a new era of markets
In recent years economic life has changed more radically than in the past century altogether. Consumers and firms are getting away from the typical capitalistic principle of "buyers" and "sellers". The new economies are rather defined by "users" and "suppliers". Ownership, which was the underlying principle of decades of capitalism is not desirable anymore as it is "(..) considered outdated and out of place (..)" (Rifkin 2000, p. 5). Nowadays, firms are outsourcing and leasing cars, electronics and even people. It is just not important to own things anymore, but simply to have access to resources. Product life-cycles are becoming shorter and shorter and especially electronic goods are almost outdated shortly after their release. Therefore, companies need to be flexible and react quickly. The principle of ownership can just not fulfil the requirements of an ever-changing and fast-paced economy (Rifkin 2000).
While consumers are still more reluctant towards this trend, they are picking up on it. Car-sharing or bike-sharing, for example, is becoming more and more popular in order to (simply) save money and thus replace traditional ways of just buying goods. Furthermore, people are increasingly aware of their (negotiation) power. Groupon, for instance , is only able to offer all these "blockbuster discounts" because there is a huge mass of people behind (it) to "negotiate" big bargains. The rise of the internet and modern communication is an important building block of developing this kind of network economy. Without modern communication it is just impossible to coordinate a network economy and to identify suppliers, users and their needs (Rifkin 2000).
This general trend of (either) sharing goods or getting access to it is called "collaborative consumption".
1.2. Collaborative consumption
Sharing has a long history. Even today, primitive tribes in Africa hunt big game together and eat it in company of their families. The Amish people in America build houses together in order to keep the society alive. Sharing has always been part of our lives and is important (simply) to survive. The privilege of having access to sharing is a result of being a member of a certain community or culture. This traditional form of sharing used to be based on intrinsic factors, such as tradition, family relations or ethnicity. According to Rifkin, today's motivation to share certain kinds of products is based on economical benefits one could gain when sharing, instead of simply consuming a product by owning it (Rifkin 2000).
1.2.2. What is collaborative consumption?
Collaborative consumption is defined as a collective term for different forms of sharing. These forms comprise bartering, lending, peer-to-peer trading, tool exchanges, Couchsurfing, bike sharing and many more. All these forms of sharing have one common ground: The emphasis lies on the access to a good or service and not simply on ownership. New technologies such as the Internet and several web-based platforms did their part in accelerating this trend of consumption (Botsman, Rogers 2010).
1.2.3. Benefits of collaboration or why are people doing it?
Why do people share? This question has grasped attention by philosophers or anthropologists, but not very much by consumer behaviour researchers. For our purpose it is, however, necessary to give a short overview of the "why" aspect of sharing. Price has described sharing as "(..) the most basic form of economic distribution (..)" (Belk 2009). Tomasello (2009) describes that people cooperate, because they are evolutionary inclined and born to do so. Similar studies have concluded that sharing simply improves the efficient use of resources through reciprocal effects from which individuals benefit. Other researchers explain sharing as an aspiration for experiencing feelings of unity, social belonging and an aggregate extended sense of self \ Stack found out that sharing is basically a combination of both, a "tactic of survival and an expression of community" (Belk 2009).
To be more specific, the benefits of sharing are quite apparent for peer-to-peer by market (e.g. RelayRides) or profit-oriented (e.g. Zipcar) collaborative consumption concepts. On the one hand, users are able to have access to goods only for a specific time or only to fulfil a certain task. Hence, they just pay for what they get and are able to save money. On the other hand, suppliers are able to reduce idle running and lend the goods for the time they don't need it. Some users of p2p car-sharing, for example, are redeeming enough money to offset their payments for their car (Sacks 2011).
When looking at non-profit based sharing concepts (e.g. Couchsurfing or Neighborrow) the motivations are less obvious. Particularly, the benefit of the provider or "supplier" is not that apparent at first glance. The benefits can range from "doing something good" to "making new friends" or "being part of the community" (Botsman, Rogers 2010). Here, the findings of Belk come into account when talking about an "extended self" and social motivations. The user-advantage, however, is more obvious: Getting access to a couch (Couchsurfing) or a drill (Neighborrow) without paying a usage fee and building or maintaining a social network. Couchsurfing, for example, does offer more than "cheap accommodation". They organize regular meetings and social events. The goal is to facilitate exchange between cultures and it promotes an altruistic way of living (Couchsurfing 2011). In fact, people who just want a free-ride are not very welcomed by most of the members.
Nonetheless, collaborative consumption concepts provide both, "a solution and a social network" (Baek). Lisa Gansky even predicts that the economic benefits of saving money are becoming the norm and that the benefits of collaborative consumption are lying in the simplification of life and in the liberation from consumer society which makes people happier (Gansky 2010).
1.2.4. Suzi's daily routine
In order to describe the diverse forms of collaborative consumption in daily life, an example based on a fictional character named Suzi is provided in the following. Suzi works as a post-doc at the Northeastern University in Boston. One day in her life comprising many ways of sharing could look like this:
At 8 o'clock in the morning, Suzi picks up a bike from Boston's local bike-sharing service Hubway and cycles to the nearest Starbucks café. At 9:00 AM, she makes a lending to a couple that needs money for a wedding through the online money lending service Zopa. Since Suzi planned on visiting her best friend in NYC over the weekend, she receives a text message at 10:00 AM from Lea, an eRideShare user: "Hey Suzi, this is Lea, we are leaving from Central Station at 4, going to NYC". At 4:00 PM, Suzi arrives at the central station to meet Lea and a couple who will drive in the same car to New York City. Lea is a so-called Zipster and rented her car from Zipcar. Together they drive to New York, where Suzi plans to stay throughout the weekend. Arrived in NYC, Suzi meets Jon, whom she got to know through the online portal Couchsurfing.
1.2.5. Forms of collaborative consumption
There are several forms of collaborative consumption. Botsman and Rogers (2010) have divided them into three categories:
a. Product service systems ("PSS")
Products offered by companies are being sold as services and not just as goods anymore. Thus, instead of selling durable goods such as bikes, companies offer them to be used by multiple persons at different times. In case individuals who are willing to share their own products, this can be done directly from person to person (peer-to-peer) without involving a third party. The idea behind PSS is that one does not need to own a product, but rather to be able to use the good of someone else in order to receive the benefits from using it. An example for this form of collaborative consumption is bike sharing, which is offered e.g. by the "Deutsche Bahn" in every major city in Germany. Examples for peer-to-peer sharing are car-sharing platforms such as Whipcar or RelayRides. Anyone can offer others to use their cars for a certain usage fee.
b. Redistribution systems
Redistribution systems facilitate sharing of already used, durable goods, such as tools or other objects that either are currently not required or not needed anymore by its (mostly private) owners. Goods can be redistributed without money, e.g. through swapping or borrowing, or in terms of money by selling something, e.g. through eBay or craigslist. Furthermore, there are systems that enable to share things for free. In the case of kashless.org however, this did not work out, as the non-profit organization ran out of money and therefore had to shut down their website.
c. Collaborative lifestyles
Collaborative lifestyles describe the general tendency of people towards sharing things that are less tangible. According to Botsman and Rogers these can be things like time, money or space. An example for peer-to-peer money lending is the British company Zopa. Zopa is a commercial platform on which people can borrow money on a relatively low rate from other individuals instead of from banks. The creditworthiness of each potential borrower will be ranked with A*, A, B or C or Young market. Thus, potential lenders can choose which potential borrowers they want to lend money to (Zopa 2011).
Yet another example for a collaborative lifestyle is the non-profit organization Couchsurfing, which will be explained in more detail in the second part ofthis paper.
1.2.6. Why does it work?
Still, there is the question why all these mentioned examples even work. In this part, we will examine four basic principles that enable the emerging trend of Collaborative Consumption.
1. Critical mass
In order to make a collaborative service such as Couchsurfing work, it is necessary that "enough" people are registered on the platform in order to reach a "critical mass" (Ball 2004). In other words, there must be enough supply in order to meet demand. For example, when only a couple of hosts were registered it would be almost impossible to find a couch at the desired location, at the desired time. Hence, people would not even bother to check Couchsurfing out, since they know that the bets to find an appropriate accommodation are very low. Therefore, only when a "critical mass" of people is participating one can benefit from the service.
2. Idling capacity
Idling capacity can be described as the availability of products owned by individuals to the use for others. For example, a household drilling machine that has is being used 13 minutes in its entire lifetime lies unutilized in the shelves for years. Thus, it is available for a neighbor who can use it during idle time instead of buying his own (Botsman, Rogers 2010).
3. Belief in the commons
This principle describes that people believe that products can be used by anyone. Someone might not be willing to share his favorite pair of shoes, because this is something personal. However, things that are not obviously deteriorated can be shared among people easily. Another important aspect in this context is the network affect: The more people are inside a sharing community, the greater the benefit will be for the whole community (Botsman, Rogers 2010).
4. Trust between strangers
For the most part in Collaborative Consumption, people who share the access to goods or services do not know each other. Therefore, it is almost a prerequisite for the service to work that people trust strangers. When using Couchsurfing one must be able to trust in a host or a guest to be harmless, reliable and without any bad intensions. In many cases there are mechanisms in place that allow consumers to build trust.
1 Possessions reflect the identity of the possessor, and in turn these possessions contribute to that identity. By extending the “self” one is expanding the domain of one's possessions and common property (Belk 1988, 2009)