Before the advent of the Internet and even during the first boom, major powerhouse companies could rely on economies of scale and branding to find consumers. But in this day and age of the Long Tail and Lean Startup, no company is safe. Instead, organizations must rely on innovation to keep their customers engaged or face serious competition by young, high potential, and agile startups.
And not only are the business models shifting, we are facing the change of an entire segment of the economy. It’s all about sharing for the peer-to-peer generation.
Startups such as Lyft, AirBnB, and RelayRides (to name just a very few) are shifting and commercializing for the peer-to-peer economy movement, providing people with the ability to share the cost of big ticket trappings such as housing, cars, and even high-priced luxury vacations. The world’s focus is moving from ownership to one that centers around collaboration and access to a resource. This is driven by the values of a generation that do not gravitate toward the dream house but the dream city – focusing less on material wealth and more on substantive experience.
In order to innovate and forge new market-definers, products, and services in a sharing economy, businesses must be keenly aware and prepared for the democratization of trust. Consumers no longer need to turn to a brand to trust in quality of the goods and services they purchase. Instead, they can turn to local commerce and peers before establishing a commercial relationship. The capability to trust online reviews for businesses has provided for new business models to emerge – think AirBnB, Uber, Lyft, and Yelp, all companies that are cumulatively valued at over $8.5B and expected to generate over $400M in revenue in 2013, with double digit growth. And, of course, public mainstays like eBay and Amazon helped blaze the trail.
The peer economy coupled with the growing urbanization trend highlights the fact that many consumers now need city-centered products and services. These are two concepts that feed on each other: Consumer purchases must fit into a physically compact space and cater to an experientialism value that is far more categorically diverse than ever. On top of it all, it must be absolutely on-demand.
Like all economic ages – from industrial to digital – the peer economy and generation is one that holds incredible potential for collaboration, as well as upheaval and disruption.