In her article for the Harvard Business Review, Rachel Botsman (@rachelbotsman) discusses a paradigm shift in the way people consume. In this era of Airbnb and Postmates making our day-to-day lives more convenient, consumers are being judged -- not just by how much they spend, but from the reputation trail they leave behind.

Botsman shares an epiphany she had following her stay at the Disney Swan Hotel in Florida. She did something she rarely does anymore: used too many towels and left them carelessly on the floor. As she walked out the door, she realized how she would never have done this had she been staying on Airbnb. The peer-to-peer business model is shaping how people behave because leaving a towel on the floor might tarnish a nearly perfect Airbnb record.

A new era of trust is among us

What we can take away from this shift is that people are placing their trust in each other, instead of big institutions. When asked in a gallup poll in 2015 what institutions people trusted in, all major four institutions, including banks and government, were at an all time low, except for the military and small businesses.

Here are some key reasons trust is shifting away from big institutions

• Institutional trust isn’t built for the digital age: peer trust is built on a bottom up, more personal and flowing dynamic
• Encourages a new kind of trust that gives consumers peace of mind as they participate
• This trust will grease the wheels of a multi-billion dollar industry

Both startups and big brands are boarding the collaborative bandwagon. Recently, I wrote about how Amazon is launching its variation of Etsy, with Handmade. What I find interesting, besides big names adopting peer-to-peer models, is the opportunities it opens up for entrepreneurs and small business owners. With more choices, creators and entrepreneurs will attract more customers, therefore keep building upon their reputations.

As with any new marketplace, changes and improvements will be needed regarding security and regulatory issues to help businesses succeed in the long-term. It takes time to build something worthwhile. As we’ve already seen, many companies are investing in this new business model, which has a proven record of success. We’re always looking at the shifts in this exciting economy and can’t wait to see where it takes us next!

Read source article here