Hyperlocal Media and Collaborative Consumption Services

The “shared economy” currently being ushered in by startups like Airbnb, Getaround and Toolspinner is creating new marketplaces where locals can rent their homes, cars, and tools to neighbors. Coined “collaborative consumption,” this new trend enables the efficient sharing of resources and goods that are used on occasion as an alternative to outright ownership and the garage clutter this creates.

What Is Collaborative Consumption?
The first phase of the collaborative consumption business model started with B2C (Business to Consumer) companies like Netflix and Zipcar that consolidated inventories of DVDs and cars, respectively, to rent out at lower rates than Blockbuster and Hertz. The second and current phase introduces the new communal sharing or P2P (peer to peer) business model that leverages inventory owned by consumers (rooms for rent, cars, tools, expertise, time) to create match-based marketplaces. P2P transactions can be executed virtually, as on eBay, where goods are transferred via mail — but the bigger implication of P2P for hyperlocal is in the rise of local social graphs where neighbors trade with and refer each other.

Consumers now have more options to rent over purchase, and this dampens retail demand. There’s literally no need to purchase a chainsaw that’s used twice per year. Obviously, brands and retailers lose when their products are rented out or sold in the secondhand market because they make no money on the transaction. Yet, as the sharing trend gains momentum, many local retailers will need to recoup lower sales volume by opening inventory to rental, just like Hertz on Demand and BMW’s Drive Now were created to counter the Zipcar concept. Adapting to radically new business models like rental will be traumatic for brands and retailers alike, and will present an opportunity for retail consultants versed in social media and social change who can connect consumers directly to these new rental businesses.

The Role of Hyperlocal Media in Collaborative Consumption
The big hurdle facing collaboration consumption startups is developing local traction. Most people have never heard of Zaarly or Taskrabbit, and most startups don’t have on-the-ground resources to educate consumers and brand themselves in more than one market at a time. Hyperlocal media can take on the role of educating consumers; it can publish directories for consumers of the literally hundreds of services that are chasing niches ranging from dog-sitting to bike rental. Even better, media or tech companies might create aggregate sharing services center for their community in the same way daily deals aggregators filter deals sourced from hundreds of sites. And yes, there already is de facto local aggregation platform — Craigslist — but its clunky user interface is inefficient and its user base has no credibility rating system.

Media companies should encourage collaborative consumption because it brings consumers, their neighbors and businesses into value-laden conversations as they negotiate the errands of daily life. There is media value to this participation. However, there are two good reasons why traditional media companies may not immediately embrace collaborative consumption: 1.) The model won’t make them money unless they run their own shared services platform; 2.) It also threatens local advertising revenue from retailers faced with lower sales and pressure to reallocate marketing budgets to social marketing.

So the opportunity is wide open, then, for enterprising startups and hyperlocal networks to figure out how to aggregate these services and serve them up where traditional media brands won’t.

Patrick Kitano is founding Principal of Brand into Media, a strategy group for social brand management solutions, and administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of Media Transparent, and contributor to Social Media Today, Daily Deal Media, and The Customer Collective. He is reachable via Twitter @pkitano and email pkitano@gmail.com.

Image courtesy of Flickr user hansol.

  1. February 16, 2012

    Patrick, thanks for the mention of ToolSpinner. Interesting points in your article.

    I’m very interested to see the impact of P2P rental systems on manufacturers and retailers alike. I see this trend as a huge boom to retailers and an opportunity to upsell consumers on higher quality goods rather than mass produced throw away junk equipment. For tools, quality manufacturers like Dewalt will benefit. GM’s recent partnership with RelayRides is a perfect example of what partnerships could look like in other industries.

    Tool rental shops, hotels, and car rental agencies will be hurt the most as opposed to manufactures, and builders.

    1. February 17, 2012

      Your perception that manufacturers will benefit is something I overlooked. It makes sense that consumers will purchase high quality goods if and when the personal “rental” market becomes a reality. For example, you just made me realize that I should purchase a high end bicycle in San Francisco because I live next to Golden Gate Park and the rental income will produce an ROI. And I agree, the middlemen businesses are all fodder to this movement.

    2. Emilie, Fun2Rent
      February 26, 2012

      I agree that P2P companies can actually benefit manufacturers/retailers. I work for Fun2Rent.com, a P2P rental company operating in the recreation and powersports niche, and we are actively developing relationships with local powersports dealerships. We argue that powersports dealers can use Fun2Rent as a sales tool by promoting the fact that potential buyers can recoup the cost of their purchase by renting out their vehicle.

  2. February 16, 2012

    In an ideal world, collaborative consumption companies would come together to create a plugin for hyperlocal sites, giving a window where users could access all of the collaborative consumption services available within their region.  Perhaps the collaborative consumption market will see a future of mergers and acquisitions to consolidate into a few larger platforms, making the provision of widgets and plugins a little more practical?

    1. February 17, 2012

      Yes, the collaborative consumption marketplace may consolidate just like the daily deals market did last year. The key problem facing these startups is their ability to scale nationally when they trudge from city to city on a virtual dog & pony show of education and branding. So we’re doing something like your aggregated services widgets idea. We’ve built a hyperlocal media network devoted to community service (not advertising) that we’re positioning to support collaborative consumption services by giving them access to our readers by city. We welcome inquiries from local startups.

  3. Stephanh
    February 17, 2012

    The sharing economy, and the behavior it produces, is one of the only ways we will not blow ourselves off this planet in the fight for resources. One of the pioneering Sharing Economy sites, Bright Neighbor, has a plan for how we can slow that down, and eventually Facebook will assimilate the best sharing functionality and build it in to try and wipe out all the smaller upstarts.


Leave a Reply

Your email address will not be published. Required fields are marked *

Case Study: Golf Center’s ‘Grizzly’ Check-Ins Build Loyalty