Sunday, August 31, 2014

Success of Companies like Uber Validates that Collaborative Consumption is the True Social Commerce

The usage of the term Social Commerce has been changing over last 10 years. As per Wikipedia, this term was introduced by Yahoo! in 2005 to describe collaborative shopping where consumers aided each other by sharing their reviews, ratings and advice, creating pick lists for the benefit of others and answering each others’ questions.

The term has evolved and has been referred in the past few years to include applications such as Group buying (by companies such as Groupon, which itself has evolved into a provider of “local” deals) and is now accepted as Commerce aided by collaborative e-commerce tools that enable shoppers to get recommendations and advice about goods and services from individuals they trust, such as people within their social network, known product mavens or even strangers who made verified purchase.

As the sharing of product information and trust has increased, people have become more comfortable not only getting advice from strangers but also buying products and services, or in some cases, sharing usage of products and services.  By shared usage of products and services, consumers can share the cost thus allowing increase in value. This shared consumption and result commerce is called collaborative consumption and commerce and has allowed new ground breaking businesses which enable online and mobile sharing of products and services.

In fact, we claim that Collaborative Consumption and Commerce is the true social commerce - it represents a dramatic shift from the commonly known top down factory commercial distribution of product to a peer to peer exchange from one consumer to another.

Uber's Home Page

One of the leading examples of Collaborative Consumption and Commerce is Uber, the popular ride sharing mobile app that connects passengers with drivers who are willing to give you a ride at a fraction of a cost of renting a taxi. Uber now enables ride sharing in more than 120 cities across 38 countries and was recently valued at $18.2 billion  in their recent round of funding. The explosive adoption of Uber's services and company value validates the Collaborative Commerce business model. 

A ride is not the only thing you can share with others – the ubiquitous mobile and internet technology makes lending, swapping, renting and bartering viable for many kinds of products and services.  For example, instead of paying for a tutorial class with money, you can offer to trade your carpentry skills to someone who offers French language lessons near to your location. This encourages relationships to grow and create reliable ties among the parties involved.

Credibility is always a question whenever you choose to transact online especially with strangers. Many groups made it a point to make their processes secure and reliable to weed out the deadbeats. Sites like Taskrabbit employs the services of Acxiom, a database giant which can perform criminal background checks on their new and budding members. This along with the phone or video interview during the application process assures that the employer gets the trustworthy workers they deserve.

In fact, many consider, and we concur, peer selling sites eBay and craigslist to jumptstart Collaborative Consumption and Commerce by establishing trust in systems where you could buy goods from complete strangers using online platforms with built-in validation systems that relies on the community for establishing the trustworthiness - with goods flowing from early adopters willing to pay top dollars to mainstream adopters to value buyers, kids and others who are willing to buy last year version of a high end gizmo such as a smart phone, tablet or TV as long as they pay a fraction of the price. 

Here is a recent video on the subject by Professor Sundarajan* of New York University that I found informative: 

So we believe Social commerce have moved far beyond than simple testimonials, reviews and ratings posted by patrons to endorse a product or service, or a critique to warn others. Social Commerce is Collaborative Commerce conducted by living and growing peer communities of  individuals who are relying on the power of the technology, community and social networking to get the best value in products and services by collaborating and sharing with others. 

Yash Talreja

*Professor Sundarajan do not endorse or oppose products or services offered by the author, or by google adword or other advertisers that might be featured on this blog.  

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