Peer-to-peer collaborative consumption for fashion products in the sharing economy: Platform operations

With the advance of platform technologies, peer-to-peer collaborative consumption (P2P-CC) is getting very popular for fashion products in the sharing economy. With this arrangement, one important implication to consumers is that the fashion product’s value seems to be larger with P2P-CC than without. Motivated by the observed industrial practice on P2P-CC for fashion products, we construct stylized models and conduct an analytical study in this paper. We analytically prove that comparing between the operations with and without P2P-CC, the presence of P2P-CC always benefits the fashion brand (i.e. the firm) as well as the consumers who buy the product. For the relative benefits brought by P2P-CC between the firm and consumers, we prove that the firm’s expected profit is double compared to the consumers under the case without P2P-CC. However, this proportion is smaller under the case with P2P-CC. Regarding the platform, we find that it is beneficial for the platform to adopt the revenue sharing scheme, instead of the fixed service charging scheme, even though adopting either one does not change the qualitative conclusion on the benefits of P2P-CC. To check the robustness of results, we extend the model and conduct further analysis to highlight the impacts brought by the fashion brand’s advertisement decisions, the presence of different consumer segments, and the probable service delivery charge. We uncover that the main derived conclusion remains true in all these extensions. Managerial implications are then discussed.