Exploring collaborative consumption business models - case peer-to-peer digital platforms

Abstract

The global economic downturn is one of the reasons that make us reevaluate our relationship with possessions and consumption. Thanks to the rise of technology and the mainstream use of social networks, collaborative consumption has become a buzz word during the past few years. The literature on the field, however, is scarce and mainly comprises of industry reports and articles. This research aims to fill in this gap by exploring the business models of five leading peer-to-peer digital platforms, using a framework developed from a theoretical review. Another objective of the research is to identify lessons managers from peer-to-peer startups can learn in order to launch and run a successful peer-to-peer platform.

The framework used in the study's empirical analysis is developed from a literature review on e-business models and two-sided markets. Osterwalder (2002)'s e-business ontology was chosen as the backbone of the analysis due to the comprehensiveness of the model in analyzing different elements of an e-business model, including product innovation, infrastructure management, customer relationship and financial aspects. Two-sided markets and platform management literature uncovers fundamental features of a two-sided market such as indirect network effects, multihoming, as well as pricing and critical mass challenges for two-sided platforms. Because of the idiosyncratic features of two-sided markets, peer-to-peer platform managers have to take into consideration these issues when developing strategies and activities for all the elements of the platform's business model.

The study utilizes a qualitative approach with the multiple case study method. Five leading peer-to-peer platforms from various industries are chosen as case studies and their business models are explored in-depth through the application of the developed framework. One of the most important findings is that peer-to-peer platforms' value proposition can be divided into two groups: the experience group, which makes use of idle resources such as time, space or labor, and the passion group, which connects people with the same interest and passion. The empirical analysis also reveals that critical mass, growth and trust and safety are central issues of the case peer-to-peer platforms and their entire activities circle around solving these issues, using innovative processes and continuous application of technology.