What is the net impact of collaborative consumption on a market?
This is the question that was posed at the last Colloborative Chats session at the AirBnB HQ. On one hand, collaborative consumption companies enable microbusiness. Who could forget about the guy who made $20k+ on AirBnB? Much like the AirBnB whales, there are tens of thousands of eBay prosellers making a living hawking used goods. They constitut about 10 to 15% of users but 80% of the transactions and gross merchandise value.
On the other hand, collaborative consumption’s ethos is about efficiency: finding excess supply and using the internet to discover previously inaccessible latent demand. Said another way, collaborative consumption is more effective resource allocation.
Holding all things equal, greater efficiency in a market implies a smaller market. The average AirBnB night costs far less than a hotel night. The average GetAround car rental is less expensive than a ZipCar rental.
In order for collaborative consumption to have a net positive impact on a market, it would need to grow the number of transactions at a rate proportional to the decrease in transaction value. If an AirBnB New York night is $79 compared to $149 for a hotel, we would need to see twice as many transactions in the ecosystem to maintain the same ecosystem “GDP.”
At this point, we can make a definitive statement about the relative costs of collaborative consumption offerings compared to alternatives. To compete in these markets, collaborative consumption choices tend to be cheaper (because quality cannot always be guaranteed). As to the impact on the market size, I’ll have to wait and see. It makes for a fun debate.