When was the last time you spent too much money on something that you only used for a little while? Maybe it was a DVD that you bought and after watching it left it to gather dust, a handbag that you used once and grew tired of, or an iPod that was upstaged by a new model in a matter of weeks? Across all types of consumer products, people are realizing that long-term ownership of many of them doesn’t make sense anymore. For some, this is because they tire quickly of things, for others it can be as simple as a reaction to the clutter caused by a constant flow of purchased items.
In response to this consumer trend, new companies are springing up around new models of ownership that are built around the complete ownership cycle. Whether a subscription service like Netflix or GameFly, a temporary ownership service like TechForward or Bag Borrow or Steal, or a fractional ownership service like NetJets or Zipcar, these companies understand that subsidizing a users’ ownership costs by retaining value in the product is just as important as getting them the product in the first place. Consumers are responding by adopting these services in droves.
Let’s take a look at some Ownership 1.0 behaviors and their Ownership 2.0 counterparts:
Ownership 1.0 – Buying Commodities: Buy DVDs, Toys, Electronics and use them. Pile them in the closet when you realize you don’t really use them. Eventually throw them away during spring cleaning once they are throughly worthless.
Ownership 2.0 – Subscription Services: Subscribe to services that let you get the latest & greatest DVD’s, Toys & Electronics for as long as you want to own them while giving you an easy way to trade them in for new ones when you want. Keeps them out of the closet and quickly back into the hands of someone who will use them, and in doing so, lowers the overall cost of ownership dramatically.
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Ownership 1.0 – Selling Junk: Go into your closet and take out piles of things and try to sell them at a flea market, pawn shop, eBay, or trade-in service. Such services have existed in one form or another for a long time, and they all follow the same logic: use item for as long as you want, procrastinate about reselling them until they have little value, and then sell them for very little nothing.
Ownership 2.0 – Temporary Ownership: Buy or finance an item and get a fixed resale price – or residual value – at the same time. This allows you to sell an item back when you are ready to get a new one. Car leasing is a great example of this because it allows you to know what you are going to pay to own a car for 2 or 3 years. Of course, you have to agree to take care of it well over that time, but as long as you do, you get a portion of your money back, and you can move into something new. These models are moving down-market from things like cars and houses, to things like electronics, handbags and textbooks.
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Ownership 1.0 – Buying Expensive Items: Save up for years to buy an antique car, boat, vacation home, etc. Proceed to use it five days per year. Perform maintenance 2 weeks a year, or pay someone to do so. Eventually get frustrated at the expense-to-fun ratio and sell it. Repeat with a different item.
Ownership 2.0 – Fractional Ownership: Own a part of antique car, boat, vacation home, etc. and use it for up to as many days of the year as your ownership percentage allows. The cost of a single item can be spread out over a group of people who use the item infrequently, again dramatically lowering the cost of ownership without decreasing the utility very much, and sometimes increasing the utility because the item in managed and kept up by the service.
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Generally, the differences between Ownership 1.0 and 2.0 can be described as follows:
Ownership 1.0: Retailer sells the customer an item. Customer uses item. Customer loses interest in item, stores it. Customer eventually disposes of item or resells it.
Ownership 2.0: Retailer focuses on the needs of the customer’s ownership style for a specific type of item and offers an ownership option that goes beyond simple purchasing, but actively manages ownership and resale.
Would love to hear your comments!
