The rise of the ‘peer-to-business-to-peer’ marketplace

The concept of the peer-to-peer marketplace is well known since the rise of the internet and has become an important feature in any definition on the collaborative economy. However, lately in the Netherlands, we have had several discussions on how new models such as the model of ParkFlyRent, fit in the collaborative economy. This is a carsharing marketplace operating from Schiphol Airport. It offers travellers leaving the country free parking while they are abroad as well as a clean car when they get back. The other side of this marketplace is a car rental service to incoming travellers, while sharing the revenues with the car-owner. This marketplace resembles other peer-to-peer carsharing schemes such as Turo (formerly RelayRides or Snappcar except for the fact that the car owner and car renter do not meet one another, neither online nor offline.

ParkFlyRent is giving a sneak preview on what a large part of the future collaborative economy might look like. There are similar developments in the accommodation sector. One example in Amsterdam is Iambnb.nl, which tells customers: “the only way you’ll notice your house has been rented out is through your bank account.” Or a similar proposition from the Spanish hotel chain Room Mate Hotels who started ‘BeMade,’ a fine example of how existing providers can jump in on the peer-to-peer opportunity.

Traditionally, contact between peers has been one of the hallmarks of the collaborative economy experience. But even traditional marketplaces are moving slowly from a truly peer-to-peer marketplace towards the peer-to-business-to-peer variant. We have seen technological developments already taking a bite out of the personal contact. Think of electronic lockers with keys to Airbnb apartments, or boxes installed in peoples cars to enable unlocking, tracking and booking. The question is, what will the majority of people ultimately opt for?

Convenience is key

We are moving towards a world where marketplaces become the dominant place for economic transactions. This means that people will get what they need from other individuals through online (and offline) marketplaces. One of the main market opportunities that arises here is convenience of which time is an important element. For instance the two hours that you have to wait at home to receive your guests on Airbnb. These are the constraints that limit the growth of the peer-to-peer model.

Interestingly, startups face this ‘time’ issue, and demonstrate the possible solutions. The way ParkFlyRent operates demonstrates an opportunity that extends to many other markets. It is this model that beholds an opportunity for hotel chains to expand in the example above. Within the consumer goods sector Move-loot is an online secondhand store that buys, sells and manages the logistics, effectively taking out the hassle of goods trading. In Amsterdam some cafes attract new customers by providing key services for local Airbnb hosts. Around the largest peer-to-peer markets, we see the contours of a new economy emerge. Still shifting away from large centralized institutions, but nevertheless filled with new middlemen resembling those we have known since the earliest market based societies.

Opportunity

The opportunity in reducing time based ‘hassles’ is strongest in places where there is a double mismatch in supply and demand like the example of ParkFlyRent demonstrates. Think of an airport where thousands of people need long-term parking, and thousands of others need a long-term vehicle rental. In the 20th century ownership based business models, those were seen as separate economic opportunities. Airports earn money by renting out parking spots, car rental companies invest in car fleets to rent out. In the 21st century access based model, it makes perfect sense to turn those two markets into one, without compromising on people’s access to mobility. In fact, access to mobility will only increase as fixed costs such as owning and maintaining a car fleet, as well as parking spaces, will go down dramatically.

Implications for trust management

In this model, the marketplace becomes the most important trade partner for both the supply and demand side. It is therefore very interesting to see how transparent these businesses will operate, and to what extent they will still bring the supply and demand side together online. Do you have a say in deciding to whom your car is rented out?

Trade off

Removing friction for convenience holds a great promise but might just take away an important human element. Turo did a partnership with General Motors to install the Onstar system. This tool made each transaction easier as there was no handover. However, they realised the friction was in fact good and led to greater accountability. So they ditched it went back to key handover and saw claims and issues drop between users. Similar developments can be expected in other markets. Peerby could remove friction of goods handovers by partnering with a parcel locker company. This would increase the number of goods circulated and thus its positive environmental impact, the downside is decreased social capital. More of the same examples and their impact on people’s behaviour should be identified.

Market

One could argue that peer-to-business-to-peer marketplaces operate on the fine line between classic peer-to-peer marketplaces and product service systems delivered by companies. Offering the convenience of a product service system while grasping the economic and environmental benefits of making a better use of existing underutilized assets. This is a rapidly emerging opportunity, which might be of value for a significant part of the market and thereby attract more people to the collaborative economy. But then again, it has to be discovered how far services within this economy can get without the personal contact.

By Pieter van de Glind (co-founder shareNL), with valuable input from Jessica Slijpen and Rachel Botsman

 

 

5 thoughts on “The rise of the ‘peer-to-business-to-peer’ marketplace

  1. Great blog again Pieter, it forces us to look (and think) forward in the collaborative economy. In my opinion the only way to bring the collaborative economy to the mass is to make the threshold to participate as low as possible. Looking to the sharing economy there are 3 sides of te story:

    1. social
    2. (saving) money
    3. sustainability

    I believe that there always has to be a balance in these 3 values; everybody makes its own balance based on personal preferences and situation. We can desperately try to focus on social, but then the sharing economy will be used by some happy few. It reminds me to an interview I had with the Swedish supercar builder Christian von Koenigsegg. We talked about sustainablility and then he said: when you will focus on being a sustainable ‘green’ business, then your target group will be 1,5% of the population. When I design a ‘greener’ engine, it has to be greener, faster, smaller ánd cheaper. No concessions. That is the only way to bring sustainablility to the big audience. It is interesting to hear that from a man that build cars which start at 1.500.000euro each, but he made a good point.

    The sharing economy was first famous about the social and sustainable aspect, then the money came in (and the discussions about ‘what is sharing’). You can be sad about that, but looking to the biggest success (in numbers) are the platforms where we ‘share’ goods of great monetary value for people: cars, labour and accommodation. With these platforms the threshold can be high, since the value in return is high too. When we really want to make the step to a more efficient use of our resources, then we also have to look to how to lower thresholds, like additional services, smart locks, lockers, etc. In some situations you don’t want to be social, just effective.

    I truly believe that the social aspect and added value of the sharing economy will stay for the people who want that (like me), but we don’t have to be mourning about when other aspects of this economy are more important for others. Important is that we have to secure transparency by making models and definitions, so that the audience knows what they are dealing with and which interest is on the line. (like the discussions we had about Uber not being sharing economy at all).

    Besides that I truly believe that the big examples we hear to much will pave the way for new grassroots initiatives. For us it is important not to judge too fast, since a huge shift as we are in right now needs some time and different steps to develop.

  2. The world is changing, and our perception of how commerce and trade is conducted is following suit. Technology has not only enabled a redefinition and re-democratization of the marketplace, but also opened up possibilities which enables the conversion of idle capital into revenue sources.

    Alani Kuye
    pHlatbed

  3. I strongly believe Collaborative Consumption validates the direction that technology has enabled the world to go in. Your write up validates this as well..well said.
    Today people talk about Social Responsibility with the “Hero Complex” approach. Meaning the notion of Social Responsibility is viewed as something noble that big corporations or wealthy individuals undertake as an act of benevolence. This is simply wrong on many counts! Social responsibility is a shared approach to managing our world.

    No one person or group can be socially responsible without collaboration, which means social responsibility cannot exist without collaborative consumption. The idea that a handful of people champion this cause astounds me, it’s a cause every human being should champion as we are the custodians of our planet and the lives that inhabit it.

    The rise of the peer to peer marketplace is nothing new. Throughout history, people have engaged in peer to peer trade as an alternative to conventional marketplaces whenever power begins to corrupt or infringe on their ability to survive. It’s a subconscious response to an ever increasing concentration of commercial power in the hands of a few. Whether we realize it or not, it’s a natural response that technology has enabled….or should we say re-enabled!

    For example, people talk about the oldest profession in the world being prostitution, again no. It’s actually farming. You till the land and exchanged crops for timber, livestock, poultry, seeds…which eventually led to communities, protection / soldiering….and everything else. Until the custodians and leaders of those enclaves became lords and fiefdoms were established. Long before the advent of the monetary system.

    There is a social aspect but it’s beyond an “aspect”. Collaborative consumption, social responsibility, the new economy, the sharing economy all cannot exist without each other. The world is shrinking, we can’t solve today’s problems with yesterdays solutions. This is why the old guard is having a difficult time adapting to change.

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