How Intangible Rewards Encourage Consumers Engage in Collaborative Consumption

Introduction

This review is aimed to determine what literature is available for examining intangible social benefits that consumers gain from participating in collaborative consumption. Currently research mainly investigates the financial benefits consumers get when engaging in collaborative consumption. However, the social aspect of collaborative consumption is as important as the financial aspect if we want to understand what motivates consumers to take part in collaborative consumption. Therefore, this review will focus on the social aspects of collaborative consumption. There are currently gaps within literature on intangible social benefits in collaborative consumption.

Collaborative consumption, also as known as sharing economy to some was still a relatively new idea to most a few years ago. However, this trend is certainly rising fast thanks to technology innovation. It enables people to utilize inventory by sharing access temporarily on online platforms to others for a fee. Uber, Airbnb are both incredibly successful examples of collaborative consumption. In fact, they even have negative effect on incumbent firms in the industry. Zervas, Proserpio and Byers (2017) explores the relationship between Airbnb and hotels in the state of Texas by estimating monthly hotel room revenue as a function of Airbnb entry in the market. The authors use the data collected from Airbnb, monthly hotel room revenue from approximately 3,000 hotels in Texas dating back to 2003, with several other auxiliary data sets to compile controls, Zervas et al. (2017) quantify the extent to which Airbnb’s entry to the accommodation market has negatively affected hotel room revenue. PricewaterhouseCoopers estimates that by 2025 the global revenues that generate from collaborative consumption in just five areas which include travel, car sharing, finance, staffing, and music and video streaming will have increased from $15 billion in 2015 to $335 billion. Form that we can see collaborative consumption will continuously be a rapidly growing trend in the coming years.

Understanding the intangible social benefits consumers could gain from participating in collaborative consumption is important. There are many reasons why collaborative consumption is growing so fast. Marketers need to take notes on what else besides the obvious financial benefits drives consumers to engaging in collaborative consumption. In that way, marketers will know consumers’ wants and needs in order to craft a detailed marketing message to reach to the consumers. With the knowledge, it will enable marketers to create the effective marketing plan for firms and their products. It is also important for the incumbent firms to understand what will influence a consumer’s decision of purchase. It allows them to adopt to the changes in this fast-growing trend and adjust themselves to provide something collaborative consumption firms couldn’t provide to consumers in order not to lose their market share.

Discussion

In 2011, Time Magazine using the headline “Today’s smart choice: Don’t own. Share” to introduce reader the concept of collaborative consumption which includes renting, lending, and sharing of goods, claiming it is one of the “10 ideas that will change the world” (Albinsson & Perera, 2012). Hamari, Sjöklint and Ukkonen (2016) stated that “the sharing economy is an emerging economic-technological phenomenon that is fueled by developments in information and communications technology (ICT), growing consumer awareness, proliferation of collaborative web communities as well as social commerce or sharing”.

Zalega (2018) stated that the key advantages of collaborative consumption are as following: saving money, time and space, increasing the number of friends and acquaintances, strengthening social ties and relationships, reducing environmental degradation, minimizing waste and surpluses that are generated through overproduction and overconsumption, and using goods in a more efficient and deliberate manner. Cova (1997) conceptualizes social links within postmodern communities as “more important as the thing” which means that consumers value more the social aspect of a good or service instead of the good or service itself. Milanova and Maas (2017) noted that community membership is valuable for marketplace participants because communities create social links between members and influence their consumption choices. Albinsson and Yasanthi (2012) had similar findings which indicate a consumer-driven desire to enact social change while fostering personal and community well-being through participation in alternative marketplace. The authors further indicated that the nexus of value has expanded to include not only the goods and services but also the interactions between the individuals who participate in the giving and receiving. Aknin (2013) also noted that “hedonic value is also experienced with prosocial behaviors. Consumers experience emotional rewards from spending that promotes positive social connections. Therefore, the social community interaction in accessing collaborative consumption services may be an important factor for consumers in engaging in good-deed practices” (Hwang & Griffiths, 2017). The common finding among these researches is that consumers do look for more than the goods or the services themselves. Especially they value the emotional rewards from building interactions with other individuals and they see this is an important advantage of collaborative consumption.

Barnes and Mattsson (2016) noted that most studies show financial benefit as a key motivation for consumers to engage in these platforms however this is usually only for the monetized platforms, rather than those that are non-monetized. Fraanje and Spaargaren (2019) underpinned the conventional Peerby practice is the ‘social promise’ of collaborative consumption as a stimulant to social interactions among people. The authors agreed that it gives rise to a new form of ‘neighbourliness’, mixing online and offline elements. Botsman and Rogers (2010) emphasized the need to connect to like-minded people and argue that this need enables collaborative consumption. They further stated that the sense of community drives participation in non-monetary sharing marketplaces. Benoit, Baker, Bolton, Gruber and Kandampully (2017) also pointed out that the intangible social benefits may act as a motivator for peer providers with underutilized assets in the sense that peer providers may value the opportunity to get to know travellers from around the world and/or support them in getting to know the local country or city of residence. Habibi, Kim and Laroche (2016) agreed that in some contexts (e.g., couchsurfing and toy libraries) social utility has been found to be an important driver of collaborative consumption use. The authors used Couchsurfing users as an example, who expressed sharing-based motives for collaborative consumption use, such as a strong presence of bonding and social relations between users like the draw of “free accommodation” would allow users to experience benefits such as traveling the world with minimal economic investments while still experiencing other intangible social benefits (e.g., “meeting new people”). Barnes and Mattsson (2016) used Airbnb as an example. The authors pointed out that Airbnb intended to build a global community of people sharing home space (from air mattresses to caves, tree houses and castles) so as to make people feel like they ‘belong anywhere’ which is the new slogan of the brand. They also noted that both the accommodation space and its associated cultural impact may be as much the reason for visiting as the city or country destination. Barnes and Mattsson (2016) further stated that by increasing the number of hosts renting rooms in both central and peripheral urban areas, Airbnb will be able to ‘unlock new neighbourhoods and boost small businesses there’ (such as restaurants and corner shops). In this way, personal connections will be created through links between guests and hosts have led to the rapid growth of a global community.

Collaborative consumption represents an opportunity to build sustainable economic, social and human development in an environmentally-friendly way. The key issue is linking people who need a resource with others that have these resources. This relationship is based on a sense of community, sharing and participation among users, where trust is the link making possible to establish connections, develop an alternative form of consumption and, over the long term, maintain the relationships that are created (Montes, Sanchez, Villar, & Herrera, 2018). Barnes and Mattsson (2017) developed a theoretical model that based on a comprehensive set of potential consumer motives by conducting a survey among 745 participants. Researchers identified a total of twelve distinct consumer motives as significant, the five most important drivers and prerequisites of platform usage intentions are as the following financial benefits, trust in other users, modern lifestyle, effort expectancy, and ecological sustainability. On the other side, motives such as product variety and availability, process risk concerns, independence through ownership, and trust in other users have thus far garnered much less attention as drivers, impediments, and requirements for peer-to-peer sharing. Mittendorf (2018) hypothesize that trust influences the obtainers’ intentions to perform certain actions on the online platform.

Wiertz and de Ruyter (2007) propose that “firms that own and operate such online platforms do not control the actual sharing at all. Instead, the development is led by social dynamics, such as enjoyment and self-marketing of a community” (Hamari, Sjöklint & Ukkonen, 2016). Bae and Koo (2018) stated that digital platforms provide collaborative consumption with such transactional networks, used to coordinate and facilitate sharing activities among strangers by accelerating connections. It could explain why collaborative consumption is able to take off among the millennial generation, because as prior research stated that “Millennials are motivated to influence incumbent industries and organizations, favor social connections, pursue open and frequent communication with friends and business partners and are comfortable with communication technologies”. A study conducted by The Nielsen Company (2014) on the millennial generation found the following characteristics that differentiate them from other generations: millennials are (a) diverse, expressive, and optimistic; (b) driving a social movement back to the cities; (c) struggling, but expressing an entrepreneurial spirit; (d) deal shoppers who desire authenticity; and (e) connected and seeking a personal touch. The common finding among these study is that the Millennial generation favors and seeks social connections. Collaborative consumption allows consumers to build personal connections when they are engaging in this kind of consumption as it is a peer-to-peer access based activity.

Conclusion

In conclusion, the aim was to review literature on the social aspects when consumers are engaging in collaborative consumption with a focus on intangible social benefits. The literature reviewed consumers value the social aspect as important as the financial aspect if not more. Consumers build trust, relationships and a sense of belonging with others when they are participating in collaborative consumption. It also shows that they value these benefits and they motivate consumers to partaking in collaborative consumption. This means marketers and firms have to pay attention to these findings and try to provide as much social benefits to consumers as they can. Because consumers look for more than just having a good quality products or services and financial benefits. For example, firms can create online forum as a platform for their consumers to find like-minded people with similar interests. Currently there are gaps within the literature for examining the intangible social benefits of collaborative consumption. Future research should look into investigating how different segments of consumers value the intangible social benefits differently in both collaborative consumption and the traditional model of consumption.

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