Rise of the Peer-To-Peer Green Economy

November 21, 2010

One could argue that the green revolution really took root online with the launch of eBay. Or perhaps Craigslist. Connecting individual sellers with millions of potential buyers brought the neighborhood garage sale (or local classifieds) to the masses, and with it, the ability to extend the product lifecycle of used, yet still useful, products. As Amy Skoczlas Cole from eBay said, “The greenest product is the one that already exists.”

Such peer-to-peer ‘connective’ consumption has long existed offline. Online models like eBay connect individuals at massive scale, while overcoming transaction barriers through the use of seller reviews as well as secure payment mechanisms like PayPal.

Such models challenge the notion of permanent ownership, and with it the environmental impact that it brings. Instead, ownership is viewed as a temporary or altogether unnecessary condition required for realizing product benefits. Products such as cars, beds, clothes, lawnmowers and drills often lay idle and available for use if only those that are in need connect with those that have. Collectively, many have dubbed such transactions ‘collaborative’ consumption because they require the involvement of a community network to make them liquid.

Today, there are at least three peer-to-peer (P2P) models emerging that can facilitate greener transactions:

Rent. Today, there are many businesses that rent, instead of sell, products to consumers including Netflix, Zipcar and RentTheRunway to name a few. Shared products have a lower environmental footprint, of course, requiring fewer products overall to be produced to meet demand.

Recently, P2P models have emerged that allow consumers to rent products that they own including a spare bed (CouchSurfing), car (Spride, Getaround), even a wedding dress (Zilok). Such models leverage social networks to provide reviews and referrals for products and participants, as well as mobile apps that take advantage of location-based capabilities.

Exchange. Increasingly, consumers can facilitate the exchange of goods through trading, bartering or gifting. Such transactions reduce demand for new products by extending the lifecycle of existing ones. Such models provide a more flexible and open ended way to facilitate exchanges than with money. For example, FreeCycle users to make products available free-of-charge to those that are want to take them. In contrast, ThredUp facilitates the exchange of children’s clothes between peers but expects participants first to give clothes to a member in the community before accepting clothing in return. Similarly, Swap enables members to exchange books, CDs, movies and video games. What you can get depends on whether others want what you have to give.

Use Virtual Currency. Consumers can facilitate transactions through the use of virtual currencies that provide many of the benefits of a legal tender – the ability to accumulate, bank and borrow – without actually having to be legal tender. Such currencies work well in networked communities that rely on shared services to deliver a product or service. The Superfluid, for example, is a collaborative social network in which members conduct peer-to-peer transactions by exchanging “favors” for virtual currency. Here, a marketplace has been established where by individuals offer their services (say, web development) in exchange for Quids and then, in turn, spend Quids on services that they need (copy writing).

Certainly, there is the potential to leverage such networks in the green space. Perhaps Quids could be exchanged for environmental services such as conducting a home energy audit or preparing a social corporate responsibility report for a small business.

For consumers, such peer-to-peer transactions are a natural evolution of social networks. Such transactions will continue to grow as mechanisms for transacting become more seamless and consumers become accustomed to more unconventional methods of exchange.

Marketers will be challenged to participate in a meaningful way in such peer-to-peer transactions. Some like eBay and Zilok make it easy by allowing both individuals and businesses to facilitate exchanges. Alternatively, advertising on the largest exchange sites is certainly an option. This is particularly opportunistic for brands naturally aligned with such models including shipping companies, for example. Additionally, businesses should take advantage of such exchanges to launch new offerings such as pay-by-the-day insurance for those that seek to rent a peer’s car, for example. New models that reduce consumption are not necessarily bad for business – they are simply unleashing new opportunities for companies that can play a role in their facilitation.


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