New consumption models

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Consumers are changing the way they purchase and use products and services and altering the way they interact with companies.

Two approaches are central to this revolution: collaborative consumption maximises the use of assets through the re-use, sharing, swapping, bartering, trading or renting of goods between people (peer-to-peer); and ‘products-as-a-service’ business models create value through leasing goods to customers rather than selling them outright.

These models are challenging and posing a threat to existing business archetypes, by influencing not just what people consume, but how and when people access services.

Business value levers

Click on the chart to view a bigger version.

Source: Accenture, 2013

Size of the prize

One in five under-55s in the UK sharing more now that they were a year ago.

  • 60% of customers would consider leasing products and services over buying because of lower cost per use. [i]

  • Of these, 45% cite negligible maintenance costs as key driver, while 38% consider avoiding depreciation in value as main benefit of leasing. [ii]

Diagram source [iii]

 

Sustainability benefits

One principal source of environmental savings is from reducing the production of new products and by extending the useful life and utilisation of existing assets. There is a clear incentive for companies to design out waste, to maintain their assets through their lifecycle and to avoid obsolescence rather than building it in. Similarly, for consumers, the share economy encourages the extension of product life-cycles. Products and services are recognised as having intrinsic value as a market develops for their re-use, which reduces waste.

Examples

  • O2 rolled out mobile care services in 2012 that provide localised and personalised healthcare. This helped improve outpatient care, enabling patients to live healthier and more active lives by providing them access to health services remotely. [iv]

  • 88% of eBay’s US$14 billion revenue is from transactions (listing fees, share of value, delivery and payment processing) and 12% is from marketing and advertising. [v]

  • Zipcar, the neighbourhood car rental service acquired by Avis for US$ 500 million in January 2013 suggests that one Zipcar takes 20-25 cars off the road. [vi]

 

We need a different model of capitalism, one that enables new ways of consumption, and a new approach to value creation that actively maintains and restores natural and social capital.

- Ian Cheshire,
Group Chief Executive, Kingfisher

Example questions to ask to help your business consider this innovation area

Opportunity To what extent are our core products and services are suited for trade in the informal economy, or present options for a leasing / renting model with customers? What level of consumer demand exists for new consumption models in our market (or similar markets)?
Competitors To what extent could new entrants cannibalise our market through a collaborative consumption approach? How are our competitors innovating on new consumption models?
Business case What are the costs and benefits of a leasing model over the product lifecycle? How can we extract new revenue streams from facilitating collaborative consumption?
What investments are required to build new consumption models?
Source: Accenture 2013

References

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