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A circular economy changes the way we own products

To buy or not to buy no longer needs to be the question. The sharing economy has given rise to a number of hybrid models for product ownership, and renting, shared ownership and subscriptions are a few of them. Exactly which ones are best suited to a circular economy depends on many factors. And, together with Ihopa and Husqvarna, RISE intends to find out.

Historically, ownership has been 'binary' – either you have owned something or you have not. Now, however, the sharing economy is gaining ground and ownership is becoming something non-binary. So says Johannes Dahlberg, one of the founders of Ihopa, a company that, among other things, runs Ihopa.com, a marketplace and service for shared ownership:

– "We see great opportunities for creating something between ownership and non-ownership. However, there's much we need to learn and understand about how consumers behave and which ownership alternatives work best for different products and contexts."

A project to create understanding

This understanding is intended to be sought in a joint project with RISE and Husqvarna Group. The project, CONCISE, will study consumer behaviours, models of how people make purchasing choices and what makes an offer attractive, among other things.

– "Normally, we use existing data when creating quantitative models to analyse these types of issues," says Agnieszka Hunka, a senior researcher at RISE. "In the case of circular products, such data are not available in the same quantities, and this also makes everything more of a challenge for us as researchers. The phenomenon is so new that companies haven't yet worked systematically with circular business models to any great extent."

Shared ownership isn't a new phenomenon

Circular products are nothing new to Agnieszka. In an earlier project, she investigated consumer behaviour in the buying of reused products.

– "We looked at the mobile phone market and our findings were surprising," says Agnieszka. "It turns out that a remanufactured mobile phone primarily competes with brand-new products, and it could in fact dominate that market."

So, which different purchasing and ownership models will be studied within the confines of CONCISE?

– "We're going to look at four different purchasing scenarios: buying something alone, buying something together with others, subscribing to access to something, and paying per use. They all have their advantages and disadvantages, and they vary in suitability to different types of ownership or purchase," says Agnieszka.

Shared ownership – nothing new really

The purchasing scenario that Ihopa mainly works with is shared ownership. In part through the service at Ihopa.com that facilitates traditional shared ownership, and in part through the Prylpoolen concept where the group is still key, but the thresholds have been lowered and resulted in a subscription model. Johannes says that shared ownership and 'group consumption' are not really new:

– "Shared ownership isn't a new phenomenon. Consider, for example, an extended family sharing a holiday home, or a group of friends who've got together and bought something that they all share. Many people hardly realise that in practice they are sharing something when it happens spontaneously. With Ihopa, we want to bring top-of-mind awareness to this alternative, so that people take the opportunity when the conditions are right, such as when they need a machine that several of their neighbours might also need."

According to Johannes, younger people are more likely to take up shared ownership, and women seem to look on it more favourably than men. The interest is great, such as in a solution to sell shares in something you already own, like a boat that is seldom used.

– "The hardest part is finding the first person who wants to enter shared ownership," says Johannes. "After that, it's much easier. It could be a leadership issue, but really shared ownership doesn't need a designated leader."

Use increases for shared products

One of the benefits of shared ownership is that the products are used to a much greater extent than is otherwise the case.

– "Consider, say, Swedish leisure boats. Sadly, these are used very little on average, so the risk that it would be in use when you want it is relatively small," says Johannes. "In Prylpoolen, we've often seen ten or more subscribers sharing a product like a drill, and it's extremely rare for more than one person to want to use it at the same time. We're looking forward to gaining greater understanding of how consumers think and behave when choosing between these different alternatives.  I also hope that more studies will follow, as there are so many different questions about group consumption that need to be answered if manufacturers and other interested parties are to be willing to invest heavily in new circular business models with the group as a basis. This is just the beginning!"

Published: 2020-09-22

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Agnieszka Hunka

Senior Researcher

+46 10 228 40 65

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