With the cost of owning goods rising faster than disposable income, consumerism is being turned on its head to focus on access to a resource, rather than its ownership. Collaborative consumption is a social, more efficient economic model, which replaces individual ownership with sharing, enabled by technology. Spearheaded by Rachel Botsman, TED speaker and co-author of What’s Mine is Yours, the trend was named one of Time Magazine’s ‘10 ideas that will change the world’.

 For example, today you can holiday in a stranger’s home via Airbnb, and find a ride in someone else’s car via BlaBlaCar. You will save significant amounts on “traditional” accommodation (eg hotels) or transport options (eg train). Of course, if you have a flat standing empty, you can also register as a host on Airbnb to make extra cash. And if you regularly drive long distances, you can list your ride on BlaBlaCar and offset your heavy fuel costs by taking “paying” passengers.

 It’s the exact matching of supply and demand, thanks to the Internet, that is key to the enabling this two-sided marketplace to function. Traditional consumption requires a centralised inventory available for purchase, capable of meeting demand peaks, which is highly inefficient as supply must always be greater than demand. Individual ownership and use also make for under-utilised assets: apartments lie empty, car seats are unoccupied, your neighbours’ power drill gathers dust while you head out to buy your own.

 Collaborative consumption, however, is based on asset distribution. The inventory is centralised for rental instead of ownership or distributed across the consumer base for access via a consumer-to-consumer rental model. Existing assets are simply re-assigned to meet demand peaks: supply and demand match organically, via connected platforms.

 Underlying this phenomenon is one essential prerequisite – peer-to-peer trust and reputation. Consumer trust in big brands is now found online between peers. Across the web, people are creating public profiles linked to social networks enriched with ratings based on past activity. These online ratings record the trusted reputation you have earned and make it publicly available across the globe, to anyone at any time.

 At BlaBlaCar we encourage our members to fill out their profiles with preferences, from how much they like to talk (‘Bla’ to ‘BlaBlaBla’) to whether they drive to music. After each ride shared, members add reviews to each other’s profiles, boosting their trustworthiness. Building peer-to-peer trust has enabled us to grow to more than 3m members to date, with over 600,000 people transported per month in peer-to-peer transactions. The net result is a huge efficiency gain: drivers share their costs with passengers, massively alleviating the financial burden of transport for both parties, whilst the per capita carbon emission of a road journey is divided too.

 Ms Botsman says the consumer peer-to-peer rental market alone is worth $26bn. As a bottom-up rethink of the transportation system, BlaBlaCar is just one part of it. If the social and financial benefits of BlaBlaCar are anything to go by, a focus on the new efficiency paradigm enabled by the Internet could be a powerful economic growth model. 

This post is part of a series managed by the Economist Intelligence Unit for HSBC Commercial Banking. Visit HSBC Global Connections for more insight on international business.

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