ri IC

It all started
with a
lawnmower...
AS A CONCEPT, COLLABORATIVE CONSUMPTION HAS BEEN AROUNO SINCE THE
m , WHEN NEIGHBOURS WOULO SHARE EQUIPMENT LIKE A LAWNMOWER.
THE AOVANCEMENT OF THE INTERNET HAS SEEN THIS BUSINESS MOOEL
GROW, ANO THE SERVICE INOUSTRY IS ONE OF THE NEW FRONTIERS.
BY ANTHONY O'BRIEN
18 Charter | February 2013

he average power drill is used

as little as six minutes of its
entire lifetime, according
to author Rachel Botsman,
who started championing the buzzword
'collaborative consumption' (or CollCon)
in 2009 to describe businesses dabbling
in old-fashioned economic models such
as bartering and renting.
In its most basic form, collaborative
consumption (also known as 'peerto-peer marketplaces', 'the sharing
economy', or 'access economy') describes
primarily online transactions that involve
the sharing, swapping, bartering, trading,
leasing or renting of a product its owners
aren't using to its fullest capacity Think
of it this way: if you own a power drill, you
probably use it for significantly less than
1 per cent of its shelf life. So, rather than
allow the tool to gather dust, post it on an
internet platform and share it with others
in your community It's win/win. The
renter doesn't need to fork out to buy a
power drill and the drill's owner takes a
fee for the lending, which he or she can
continue to earn until the drill fails.
Lisa Fox, co-founder of Open Shed,
agrees that 'a CollCon' best describes
a "business that involves sharing
anything you don't use frequently that
you'd be happy to let other people
use". For example, openshed.com.au
allows consumers to borrow, rather
than buy, anything from tools, camping
equipment, bikes, golf clubs, kayaks
and surfboards from their owners, for
a 6 per cent fee. Other people share
their spare workspaces, via Inspire9.
The poster child of CollCon is arguably
AirBNB (airbnb.com.au), which enables
homeowners to rent out spare rooms
in their house to strangers - or the
entire home - when they're on holidays.
According to Botsman, AirBNB is
generating an average of US$1600
(AU$1526) a month for homeowners in
New York, which is good coin for a spare
room if you can get it.
Fox is at pains to point out that the

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internet has been critical to the grovrth of

collaborative consumption transactions,
"as it makes it easier for people within
communities to connect more efficiently."
Apart from the sharing of spare
tents, tools and rooms online - there's
also a growing CollCon service sector,
led by the likes of sidekicker.com.au in
Australia. Sidekicker, launched recently
by former senior business analyst with
Deloitte, Thomas Amos CA, along with
Jacqui Bull and creative agency Loud
& Clear, connects businesses and
professionals with a network of staff
('sidekicks') for events, office assistance
and more, from $25 an hour Sidekicker,
which is operating in Melbourne at this
stage, falls under the CollCon banner
as its website matches sidekicks with
businesses - there's no recruitment
agency involved in the transaction
and, as a consequence, it's possible to
hire a temporary PA for $25 an hour
rather than $35 to $40 through some
recruitment agencies. It's worth noting
sidekicks pay a service fee to Sidekicker
for each job connection.

Growth ot CollCon
Prior to 2009, no single Australian
business identified itself as a CollCon
firm. But by December 2012, there
were about 30 businesses operating in
the peer-to-peer marketplace. Botsman
attributes CollCon's growth to a number
of factors, including a renewed belief
in the importance of community, the
escalation of social networking and
real-time technologies, unease about the
impact of global warming, as well as the
GFC, which she believes has impacted
consumer behaviour. For example, the
Australian household savings rate is
currently an average of 9.3 per cent - it
was just 3.7 per cent in 2007/08 when
the GFC started to bite. Amos says that
social networking and the internet have
made us more comfortable communicating with strangers. He reasons:
"We are becoming more aware of the

environmental issues associated with

consumption, however the recession
didn't have such a big impact here in
Australia, although when things are
tough, we tend to reach out to our
communities."

CollCon: the next step in the

age ot outsourcing
Respected business analyst and leasing
advocate, Phil Ruthven, chairman of
IBISWorld, says CollCon is not a new
term, but applauds Botsman for her
ingenuity. "Collaborative consumption
has been around since before she was
born," says Ruthven, who argues the
sharing economy is a derivative of the
outsourcing trend in the workplace
and at home, that started five decades
ago. "What's more, the generation of
under-30s has been outsourcing for half
their lives." Amos, now 26, is a case in
point. The genesis for Sidekicker dates
back to 2010, when the young Chartered
Accountant was working and studying
full time and playing a lot of competitive
golf. "My mum was doing a lot for me and
I decided I needed fo pay someone to
help me out. I saw US-based Task Rabbit
(taskrabbit.com) and realised there could
be a business in it."
Ruthven believes that the earliest
seeds of collaborative consumption can
be traced to the shift to commercial
leasing in America in the 1960s. "At
that time, business owners realised that
owning hard assets was not a smart
move when they were only getting the
equivalent of a 6 per cent internal rate
of return, plus some capital gain," says
Ruthven. "The Americans realised you
should be getting closer to 25 per cent if
you were any good, so why park capital
in something returning little more than 6
per cent? It was abject bloody nonsense,
so they started leasing factories,
warehouses, shops and offices, as well
as computer equipment."
Not long after, consumers also
cottoned on to concepts such as leasing
February2013

Charter 19

and outsourcing. "In the past you might

have had neighbours who shared a
lawnmower," says Ruthven. "Then they
thought, "Bugger this', we'll get Jim's
Mowing to do it'."

Opportunity knocks
for CollCons
Ruthven maintains business start-ups,
whether they're in the CollCon space
or not, would be well served to look at
the opportunities involved in serving
the household and business sectors.
Ruthven explains: "Currently GDP is
running at $1.5 trillion, yet this figure
doesn't include the $600 billion
for household activities that many
Australians still perform, such as mowing
lawns, gardening, cleaning and so on."
To put this in perspective, IBISWorld
says this figure is about two and half
times the size of the mining industry.
That said, there are already plenty of
household chores being outsourced.
In 2012, IBISWorld calculated that
the outsourcing of household chores
has overtaken all retail sales (excluding
motor vehicle-related work). In fact,
more than $33,000 per household
was spent last year on the chores we
previously executed ourselves up to the
mid-1960s, when outsourcing started to
grip. This equates to $292 billion, while
IBISWorld estimates that the business
sector outsourced around $800 billion
on information technology, transport,
company canteens and the like in the
past 12 months.
Sidekicker's
Amos
is following
Ruthven's advice, saying: "We thought the
casual labour market was old, expensive
and stagnant and there was an opportunity
to connect time poor professionals and
business owners with young, talented
people, the sidekicks." Since launching in
mid-2012, Sidekicker has already grabbed
some market share in Melbourne's
competitive hospitality sector, by muscling
in on the temporary recruitment market
Amos says: "Our clients get quality staft on
demand, at a fair price."

It's not all blue sky

Like any business modei, establishing
a CollCon business has its share of
challenges. For instance, there might
be a shortage of sidekicks, cars or
hammers, that wiii immediately force
20 Charter

February 2013

i n the past you

might have had neighhours
who shared a lawnmower.
Then they thought,
"Bupoer this, we'll get Jim's
Mowing to do it."
- Phil Ruthven . "
consumers back to a recruitment agency,
car rental outlet or hardware store. On
the flip side, there could also be a flood
of products and services for bartering,
sharing or leasing, which makes the
concept iess interesting for product
and service owners. Open Shed's Fox
says a shortage of power tools or tents
is a problem she would like to have.
"My ultimate goal is the behaviours
promoted by coiiaborative consumption
go 'mainstream', and then it really would
be for the market to determine the best
price for items."
In addition, owners could end up with
a blunt saw or busted lawnmower after
sharing an item with an unscrupulous
renter Fox says: "Before a rental occurs,
owners and renters can get an idea about
someone through reading their profile,
accessing feedback on their previous
rentals or sending messages privately to
get to know individuai members better."
In other words, owners are always in
control, according to Fox, "so if you don't
feel comfortable sharing your stuff with
someone for any reason, you don't have
to." In addition. Open Shed owners are

encouraged to specify a bond to cover

the non-return or damage of property,
while all money transfers are handled
through PayPal, with an authorisation in
place to cover the bond until the item is
returned. "If there is an issue the owner
may access ail or a portion of the bond,"
says Fox. Open Shed aiso plans to
offer a product damage guarantee and
insurance cover
Amos worries about the revenue
models of some global CollCons. So
before entering the access economy,
he advises aspiring business owners:
"iook at voiumes and what your clip is on
each transaction. A business that is just
connecting people who share stuff needs
to have a revenue stream, especially
where there is no financial transaction, for
example, my broom for your rake."
"However, if you are using a CollCon
model in Australia, if the numbers stack
up - and there's enough transactional
volume and the market for your idea is
big enough to ensure sufficient turnover
- then you're in with a show of being
a success in the peer-to-peer market
place."

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