When Consumers Want To Share Products

Product strategists should check out this article in today’s New York Times about online borrowing.  Think of it as a Web-empowered peer-to-peer product rental program. The article describes how Web sites like SnapGoods allow private owners of products to rent them out for temporary periods of time to consumers who want to use – but do not (or cannot) own – those same products. It’s a product rental marketplace, smaller than but resembling a product sales marketplace (like eBay).

This peer-to-peer product rental approach to sharing complements another sharing technique that has been around for a while: timesharing. Vacationers who own 1/8 of a condominium in the Bahamas get to use it part of the time, as do their fellow timeshare partners. More recently, the Web enabled Zipcar to grow to over 275,000 users by 2009. Zipcar users make reservations to use vehicles in their neighborhoods on an hourly basis.

Much like the resurrection of layaway buying, product sharing is a response to economic difficulty: Consumer debt combined with less availability of credit is reshaping elasticity curves. Buying and renting out is one rational response to this new ethos; renting items and not buying them is the complementary response. This is yet another example of, as James McQuivey has written, how technology has shifted the product landscape toward consumers’ needs and away from industries’ needs. Today’s ethos of frugality and minimalism makes product rental seem to fit the zeitgeist.

This movement is also reminiscent of mobile phone sharing in the developing world, particularly in Africa. On the other hand, recently Africa seems to be catching up in individual ownership. This says something about mobile phones as a product. Some products are more plausibly sharable than others: While renting an Xbox for a weekend of gaming sounds fun, renting a toothbrush never sounds appealing. Mobile phones are ideally individual, not public, devices, linked to specific users, their settings, and locations. So sharing products probably has limits that vary by specific product categories.

What might the peer-to-peer product rental market mean for consumer product strategists?

  • Cannibalization is the threat. The product strategist’s nightmare here is cannibalization: If product sharing becomes widespread for any given product, fewer units of that product will be sold. SnapGoods and similar sharing solutions represent a potential business challenge, in that sense.
     
  • Competition is one response . . . Product strategists and retailers can take on cannibalization directly by helping consumers see the value of individual ownership – and by offering financial assistance to help them make purchases. The aforementioned product layaway offerings from retailers like Sears can help some consumers realize the dream of individual ownership in lieu of product sharing. Expansion of other forms of credit might be both unfeasible and also undesirable for consumers who have made strides on debt reduction but who may still hold too much personal debt for some product purchases.
     
  • . . . but cooptation might be the most sophisticated reply. Product strategists could build in product sharing directly to their offerings. Just as car companies offer leases to their customers who don’t want to buy, what would have happened if Ford had created Zipcar-style car sharing first? Seeding Ford vehicles to almost 300,000 drivers would have taught these mostly younger drivers the value of Ford products, perhaps leading to future purchases of Ford vehicles.

I’m interested in learning what product strategists think about this emerging rental marketplace. Could it affect your product strategy in some way?

Comments

Touch Marketing...

JP,
We are SUPER happy that you are bringing up the impact of sharing and redistribution models on makers and sellers of goods.  We believe that SnapGoods' focus on access does not undercut product marketing efforts but in fact can support and complement it with a new kind of experiential customer acquisition and engagement.  We call this Touch Marketing.

For certain kinds of products the ability to touch, feel and experience a good is the only way for some consumers to fall in love with and convert to purchasing the good.  Reading reviews and others' opinions does not always suffice.  We are a bridge that connects good products with these consumers in a community-oriented, safe way.

Within our growing community of users we've already seen really interesting instances where consumers who had not committed to purchase a product converted to sale after a rental.  They just needed to touch the stuff.  We are currently working with a growing network of product sellers and marketers for this very reason.  Our platform lowers the barrier of access to experiencing a good product which engages people's interests and provides an opportunity for them to evangelize.  

This new kind of approach (per your own comments) is a fantastic addition to traditional marketing methods.  Touch Marketing and P2P (and B2B) sharing, lending, and renting together constitute what we call the Access Economy.  It will not replace traditional consumption, but rather provide alternate routes to drive intelligent more sustainable commerce.  We've actually submitted a panel proposal to SXSW on this very topic and you can see the description here.

Thanks for a great post and elevating the dialog!

The Frictionless and Freelance Economy

Ron, thank you for commenting! It think SnapGoods is a good example of how technology creates a more frictionless economy, lowering the cost to consumers of searching out people who own products they'd like to rent. It's also analogous to the Freelance economy, which makes every person an economic agent (freelance workers, juggling three jobs, selling services on Crowdflower, and now renting goods all fit into this). I do like your term "Access Economy."

One of my Facebook friends asked me if this will become mainstream. I replied: I supsect that it could, much like Craigslist and eBay have grown in usage. But it would really depend on the product. Leaf blower? Yes, by all means rent it for the weekend. Clothing? Less likely.

All in all, I suspect that you guys will benefit from a poor or flat economy more than a high-growth economy -- people simply have more incentive to frugalize their lives.

Thanks again for participating in comments!

best,
j. p.

SXSW Panel Picker Link

Somehow forget to append link to panel referenced above:
http://panelpicker.sxsw.com/ideas/view/7855

Renting Textbooks

Another Facebook friend, who works in university administration, tells me that textbook rental is becoming very important to university students -- for example Chegg.com.

best,
j. p.