Sharing Economy — A Symbol of the Rise of Consumerism
Why we no longer live under a capitalist society
This is an article that I wrote a couple of years ago as part of my study in the University of Virginia. While it is slightly dated and technical, the topic of discussion is more relevant than ever — we now live under an age of consumerism, accumulation of capital is no longer the most important task for most companies, serving customers is.
Sharing economy has presented us an unprecedented form of social and economical exchange. Instead of having a clear cutline between suppliers and consumers, the sharing economy enable every individuals in the society to act as both simultaneously.
In fact, in the perspective of firms such as Uber, both the driver and the passenger should be considered as consumers because the business cannot function without the contribution from both sides.
Not only blurring the definition of actors within an economy, the emergence of sharing economy also distorts the relationship among factors of productions.
In fact, this means that factors of production, such as land, labor, and capital, are no longer in the hand of the privileged few, but the property-owning masses that have complete freedom of deploying those properties to any means they wises.
For above reasons, the emergence of the sharing economy not only calls for the redefinition of the field of consumer behavior, but also an reexamination of the capitalist social structure that we have accepted as a norm.
The purpose of this essay is to show that the emergence of sharing economy
symbolizes a transition from capitalism to consumerism — a new era of social structure in which the consumers, instead of the corporations, are at the center stage of social order.
This essay will also calls for the re-imagination of the field of consumer behavior that is more social interaction and consumer focused.
The ultimate goal of this essay is to promote a new wave of thinking and
stimulate discussions on consumer behavior analysis in the new era of consumerism.
The emergence of the sharing economy in recent years was driven by two primary factors– the creation and wide adaptation of the Internet, and the entrance of the millennial into the market economy.
We are going to first examine Internet’s role in providing a breeding
ground for more efficient and communal exchange relationship, then examine the psyche and attribute for the millennial generation to explain how the attribute of this specific generation led the transformation of our social structure and emergence of the sharing economy.
Internet, the breeding ground of sharing economy
Our examination of the Internet is going to focus on two primary areas — the social structure change provided by the Internet, and the sharing environment it facilitates.
Before the wide adaptation of the Internet, consumers were forced to purchase most of the products at retail locations.
Purchasing in retail is a classical symbolization of capitalistic social structure because products have to be passed down to several layers of distributers before reaching the hands of the consumer.
Most of the consumer surpluses are therefore extracted away from the consumers by the owners of factors of production along the distribution network.
The rise of Internet, however, offers an alternative method for consumers to retain most of their surpluses by either purchasing directly from the manufacture or through a distribution network that is significantly less
complex.
With those additional surpluses, customers now can choose to convert those surpluses into factors of production and become the owner of factors of productions themselves.
The emergence of this unique class of consumers forms the basis of the sharing economy.
Serving as an extremely convenient tool of communication, Internet has provided a medium for the capital owners to communicate with other consumers and exchange services with each other based on the each other’s capital ownership.
In this case, those customers both serve as suppliers and users within an economy, creating a new form of economic relationship that is outside of the traditional capitalist structure.
Starting with the trading of basic goods through the platform such as Ebay, customers has gradually started to trade more and more complex capitals with each other, facilitating the emergence of firms like Uber, which
facilitates trades of labor and automobile, and Airbnb, which facilitates trades of temporary ownership of property.
Another pleasant side effect of the rise of the Internet is the diffusion of the norm of sharing to the general public. By the time the Internet was popularized, the software engineer community has already established a norm of collaboration and code sharing through the open source movement (Poynder).
The rise of Internet brought the software engineering community to the center stage of economic development, and with it, also the norm of sharing and collaboration. The rise of social review websites such as Facebook and Yelp has demonstrated the fact that as people started to use Internet in their lives, they have also become increasingly more social and less private.
In the present day, much information that used to be considered taboo, such as one’s age and private lives, is all shared online for everyone to view.
This new norm of sharing and social interaction established a solid foundation for actions such as inviting a complete stranger to your own house or renting your car out for someone else’s ride, further facilitating the emergence of the new consumerism social order defined in the previous
paragraphs.
Millennial, the primary adaptor of sharing economy
Sitting in the center of the sharing economy is the millennial generation, a new generation of young American that has recently entered the workforce and becoming increasingly an important force in shaping the American society and economy.
According to research by Bloombergbriefs.com, over 50% of the work forces within the sharing economy are within the millennial generation (Leins).
Millennials are also 12% more likely than other generations to participating in the sharing economy (eMarketer).
We are going to argue here that the millennial generation is not only the primary participant of the sharing economy; they are also the creator of it.
In order to prove this point we are going to first define several characteristics of the millennial generation and then show how their personalities and preferences have contributed to the creating of the sharing economy and eventually the transformation to consumerism.
Millennials are vastly different from consumers of other generations. Instead of participating in exchanges with firms in a purely economic sense, they also seek communal and social interactions with the firms.
They expect the firms to not only provide them with products they need, but also interact with them through social media and other related channels. Instead of being shaped by brands like generations before them, they expect to shape the brand to their own liking (Solomon).
When purchasing, millennial seeks social experiences including but are not
limited to meeting new people, bonding with his/her follow friends, or simply being able to share their experiences on social medias to show off to their peers (Solomon).
They not only refuse to surrender their surpluses to the firms, they also expect the firms to surrender part of their producer surplus to satisfy their personal need of control and social interaction.
Even when serving labor suppliers, they want works with less time restriction, more adventurous, and more social, attributes that can only be provided by firms in a sharing economy.
In a way, the millennial generation is not only the biggest stakeholders of the sharing economy; their influence on the society is what created the sharing economy in the first place.
The more relaxed supplier and worker structure provided by the sharing economy not only place much emphasis on creating value for both side of the economic relationship in terms of higher income for suppliers and lower price for users, but also both provide unprecedented opportunity for both parties to communicate and socialize with each other, an attribute that is considered
extremely desirable by the millennials.
Even though firms are the providers of the services within the economy, they have no power in controlling the interaction between suppliers and users. Economically, firm within a sharing economy usually can only charge a small percentage commission fee in return for its service. Without labor, land, or capital, firms are being exploited in this new economic system of consumerism, while consumers, now both acting as suppliers and users, serve as exploiters.
As a company, how should you act in light of this?
The rise of consumerism and transformation of the relationship of production demand firms to rethink marketing initiatives and redefine the way in which they approach analyzing consumer behavior and utilizing result from these analysis in the sharing economy.
This transformation must take place in both macro and micro level.
In the micro level, firms need to shift the focus of consumer behavior analysis from an individual to social-interaction among individuals.
In a macro level, firms need to redefine the goal consumer behavior analysis from extracting more values from the consumers to providing more values to them.
As illustrated earlier in this essay, customers in the sharing economy simply do not act solely on their own individual decisions anymore.
From collecting peer’s suggestions when selecting the service, to interact with suppliers during the service, and eventually to sharing their post-purchase experiences through social media after the service, all consumer behaviors within a sharing economy is social.
At the same time, social interaction is at the core of the competitive
advantage of a firm within the sharing economy since firm lack necessary capital to compete on other grounds (How Millennials).
Therefore, even though the traditional clustering analysis and
customer profiling might still provide valuable insights, firms must figure out ways to record and quantify social interactions along the way of a consumer’s journey.
By capturing those interactions, firms will be able to draw numerous amounts of insights regarding consumers’ (both suppliers and users) perception about the brand, and construct a community that optimized to satisfying their need of social interaction.
In a macro level, firms need to shift from a profit-centered analytics goal to a consumer- centered one.
Currently, goals of almost all consumer analytics initiatives within a firm are geared toward increasing profit and revenue.
While this proposition is valuable for a firm’s survival under the traditional capitalistic system, overly obsession on increasing profit and revenue can actually harm a firm’s competitive position in the sharing economy.
This is because in a sharing economy, firms control no factor of productions and usually merely serve platforms of communication between suppliers and users.
If a firm attempts to price discriminate, consumers will simply leave the firm and turn to the firm’s competitor for similar services.
On the other hand, if a firm’s analytics goal is to provide its consumers with the best community and service experience possible, both on the supplier and consumer side, it will create enormous amount of brand loyalty and creating a higher revenue and profit for the firm as a result.
At the same time, it is crucial for a firm to realize that they not only need to service the end-users of their platform, but also the suppliers. Uber has provided a great example by not only providing conveniences to its end-users by optimizing route and providing more social-based services such as share-a-ride, but also providing a comprehensive driver dashboard to help the
drivers to create most value.
This essay argues that the emergence of sharing economy is a symbol of the
transformation from a capitalist social structure to a consumerism structure where consumers, rather than firms, control the factors of production.
As a result of this transformation, this essay also calls for the redefinition of consumer analytics to be more social and consumer-benefit focused.
However, as mentioned in the introduction, the goal of this essay is to merely provide a direction of discussion for consumer analytics under the age of consumerism.
The recommendations provided in this essay are not meant to be comprehensive nor exhaustive, but merely serving as an invitation for further discussion upon this matter.
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