Join the disruptive marathon

Join the disruptive marathon

Technology and disruptive marketplaces will play a key role in building a more sustainable future. But sustainability still isn’t the main driver for users to change behaviour – convenience and competitive prices remain crucial, says Christian Horn Hanssen, Lead Investment Manager at Schibsted Ventures.

According to latest projections from the UN, the global population could grow to around 8.5 billion in 2030, and 9.7 billion in 2050. That means that the equivalent of almost three planets are potentially needed to provide the necessary natural resources to sustain our current lifestyles.

Furthermore, the UN’s Inter govern mental Panel on Climate Change (IPCC) issued a report in August 2021, stating that “human activity is changing the climate in unprecedented and sometimes irreversible ways”. It has never been clearer that we need to change on multiple levels to build a more sustainable future. This will require a huge effort from both businesses and consumers alike, but at the same time, it will also create enormous opportunities for those who manage to act and adapt.

Join the disruptive marathon
Join the disruptive marathon

This is how the UN explains what it’s all about: “Sustainable consumption and production are about doing more and better with less. It is about decoupling economic growth from degradation, increasing resource efficiency, and promoting sustainable lifestyles, which in turn could contribute to poverty alleviation and aid the transition towards low-carbon and green economies.”

Tech is a driving force

To achieve this, it’s worth exploring how technology and disruptive marketplaces can serve as driving forces. Over the past two decades we have seen the emergence of disruptive marketplaces and platforms. We have witnessed the television industry being disrupted by Youtube; the traditional hospitality industry being strongly challenged by Airbnb; and physical commerce being threatened by e-commerce, in particular by Amazon, which made it easy for non-technical people to operate their own online stores.

For a marketplace or platform to be disruptive, it must identify either new supply, new demand, or both – targeting individuals or businesses unable to profitably produce or consume goods and services in incumbent channels. The most powerful disruptive marketplaces are often those that simultaneously connect non-consumers with non-producers. Airbnb exemplifies this, case in point when it unlocked people’s homes (non-producers) ten years ago to a new set of users (non-consumers). The result is that we now see a new generation of niche, disruptive marketplaces continually emerging, ones that are focused on increasing resource efficiency and promoting sustainable lifestyles.

The fast growing American company Hipcamp is a great example of this. Hipcamp was founded in San Francisco in 2013. It is an online marketplace that offers outdoor stays and camping experiences via its website and mobile app. Private landowners, for the most part, list campsites, glamp sites, RV spaces as well as cabins, for users to discover and reserve based on listing type, location, landscape, activities offered and amenities. Hipcamp’s mission is to unlock access to private land, creating new places for people to experience the great outdoors and camp, much in the same way Airbnb did. Not only does its marketplace drastically increase the supply, but it also lowers the threshold for booking an outdoor stay for those who previously did not consider this to be a holiday option at all.

Glamping has gone from being niche to mainstream, driven by consumers who seek safe, local holiday experiences.

Hipcamp has, not surprisingly, experienced a surge in bookings during Covid-19. Glamping has gone from being niche to mainstream, driven by consumers who seek safe, local holiday experiences, which has slowly changed user habits. Even though few believe that Hipcamp will be a substitute to the traditional hospitality industry, many believe it will play a central role in offering a sustainable way to spend your holiday – unlocking new, local destinations that may lead to less long-distance travel.

New disruptive models are also challenging our ways when it comes to clothing. The textile industry is the world’s second-worst polluter, both in terms of production and waste. The EU estimates that a staggering 10 percent of global greenhouse gas emissions are caused by the production of clothing and footwear. One of the biggest problems is the vast overproduction and amount of unsold goods. New York based Rent the Runway (RTR) has set out to solve this problem. Founded in 2009, RTR allows customers (mostly Gen Z) to rent clothes and purchase second-hand merchandise from more than 750 designer brands.

Preventing supply from being burnt

In creating a niche, rental marketplace, RTR has built a platform in which brands’ unsold items can be worn by multiple customers over time, increasing longevity but also preventing some of the overproduction supply from being burned.

On top of all that, it is slowly changing user behaviours. RTR reports that 89 percent of its members say they buy fewer clothes than they did before joining RTR, and that 83 percent have consumed less “fast fashion” since joining. The fashion rental market is now projected to be valued at two billion USD by 2025, and rumour has it that RTR will be going public within 2021.

In 2019, Schibsted Ventures invested in Bookis, a fast-growing Norwegian marketplace for new and used books. Bookis has grown into the largest online bookstore in Norway, with almost 300,000 users and more than one million titles. Much of its success can be attributed to lowering the threshold for buying and selling used books by making it very easy for users to upload books for sale and integrating payments and logistics (a nimble C2C solution) through its platform. This has led to the creation of a whole new market: the “almost new, slightly used” (typically read once) book market.

By creating an effective way of buying used books (convenience) and enabling readers to also purchase newly published but slightly used books at a 40 percent discount, readers are incentivised to buy from Bookis rather than buy new. By offering royalties to authors for every second-hand transaction, it also gains their support. The ultimate effect being that it creates a new, disruptive marketplace with demand from what used to be non-producers – people with a library at home – with the supply of what used to be non-consumers – people who usually didn’t buy new, hardcover books but rather waited for the paperback edition or went to the public library (Read more about Bookis on pages 102–105).

Superior convenience is a must

I truly believe that disruptive marketplaces can be a driving force in building a more sustainable future, but as with ordinary marketplaces, there are some key elements that need to be in place to change user behaviour. New disruptive marketplaces must deliver superior convenience and be competitive on price. Studies have shown that even though people are more aware, sustainability alone is not a strong enough driver in itself for most users. For Bookis, it’s about the combination of convenience and price, not only the fact that it is a sustainable alternative.

It is also crucial to create a value proposition that satisfies both the demand and supply side of the marketplace. RTR creates a solution and an alternative business model for the overproduction of the clothing industry. In addition, it lowers the threshold for users to rent instead of buy new clothes by providing an attractive value proposition (price, convenience, new supply). The result is a win-win situation for both sides of the marketplace, and it has the potential to alter user and business behaviours over time.

I believe that the shift we are going through right now is a marathon, not a sprint. Changing user behaviour will take time and require multiple alterations. That’s why it is so important that we take part in driving these changes. Great opportunity awaits those who act and adapt today!

Christian Horn Hanssen

Christian Horn Hanssen
Senior Investment Manager Financial Services & Venture
Years in Schibsted: 13