Collaborative Consumption: Live Fashion, Don't Own It - Developing New Business Models for the Fashion Industry

Abstract

The rise of collaborative consumption or the sharing economy has brought forward new business models in many industries, such as in hotels (e.g. Airbnb), transportation (e.g. Uber), and more recently, in the fashion retail industry (e.g. Rent the Runway). While the exchange of fashion items commonly used to take place between private individuals, an increasing number of retailers have innovated their business models to provide a platform that facilitates renting or sharing of clothing items between consumers and/or the retailer. Little academic research exists however on how retailers can design their business models to create, deliver and capture value from this new form of collaborative consumption. Based on a sample of twenty-six fashion retailers (Europe, US) that engage in fashion-sharing, this paper analyses their different underlying business models and identifies three sharing business model archetypes (Fashion Rental Model, Swapping Model, and Second-hand Retailing Model). Interviews with CEOs of these companies provide further insight into the main motivations and challenges in adopting sharing-business model. In so doing, we offer retailing managers a practical framework to guide business model innovation for collaborative consumption, as well as advance academic research by bridging the literatures on business model innovation and collaborative consumption.