Are collaborative customers redefining the buyer-seller network?

Social technologies are creating a ‘collaborative economy’ – changing the way customers shop and redefining the buyer-seller relationship.

That’s according to a new report from Jeremiah Owyang at the Altimeter Group, who explains that customers are not just using social technologies to share their activities, opinions, and media, but are now also sharing goods and services.

“An entire economy is emerging around the exchange of goods and services between individuals instead of from business to consumer,” he says. “This is redefining market relationships between traditional sellers and buyers, expanding models of transaction and consumption, and impacting business models and ecosystems.”

This is being driven by three market forces, says the analyst: Societal drivers such as the drive for sustainability and desire for community; economic drivers such as the increase of financial flexibility and access over ownership; and technology drivers such as social networking and mobile devices and platforms.

“With new platforms and increasing consumer adoption, individuals will more easily find ways to monetize their goods or services and buy directly from one another at lower costs and, sometimes, more convenience. Crowds will also assert buying power over companies,” said the report.

So how will this affect the customer experience? According to Owyang, the customer experience will extend past the first purchase, as customers share their goods. Customers will also trust each other more than brands and put advocates centre stage, who will be measured by their online social reach and reputation.

But whilst the emergence of this new buyer-seller relationship is placing pressure on existing business models, there are already some innovative companies taking advantage of the collaborative economy. Owyang gives the example of Toyota, which rents cars from dealership lots, and Patagonia, which partnered with eBay to encourage customers to buy and sell its used products.

As with any new market, though, they are fraught with challenges as they disrupt the status quo. For instance, government officials oppose sharing that disrupts existing regulations and Owyang points to the recent legal woes of Airbnb, and a host of car-sharing services who have struggled with regulatory barriers and legal battles.

Additional challenges include a lack of trust between peer-to-peer ‘buyers’ and ‘sellers’ and a lack of industry-wide reputation systems and data standards.

Owyang advises that to survive in the collaborative economy, businesses must evolve their business models to become either a company-as-a-service, motivating a marketplace, or providing a platform, as outlined in Altimeter’s framework above.

“The forward-looking company employs one model; the most advanced companies employ all three, with the corporation at the center,” he concludes.