Matti Jokela’s hardware store in the center of Malmö took an unexpected turn in business when media and Facebook users got wind of his latest venture, Tool Pool.
“With Tool Pool, you can borrow a complete toolbox with everything you need for odd jobs at home. We also lend power tools of all types. People flock to us to get tips and inspiration on how to improve their homes. And when they drop by, they’ll buy nails, screws, paint, or maybe something else,” says Jokela.
Households consisting of one or two individuals are common in today’s cities. It is also quite common not to own a car, a screwdriver, a level or a drill – tools that are good to have but are used only a few minutes per year. Sooner or later, something needs to be fixed in the apartment, but is it the hole in the wall or a drill that is needed? If you live in the center of town, it may be difficult to get to the large hardware stores on the outskirts of the city. And if you do venture there, how do you find what you need in the overwhelming supply?
“I know there are many people who don’t want to own a drill, but still need one now and then. I also realize that knowledge of how to drill, screw, spackle, paint, and fix things has decreased among many – but these people are experts at social media and the Internet instead,” says Jokela.
“Obviously, I have to make money but it is important to contribute environmentally as well. The correct and efficient use of quality tools is important from a resource from point of view, but I also try to keep an assortment of green products. Recycling and home renovation are subjects close to my heart. I enjoy finding sustainable solutions in everyday life and in small-scale renovations. Incorrect purchases and products that do not deliver what they promise are the worst from an environmental perspective.”
Own, rent or borrow?
The concept of Shared Economy and Collaborative Consumption is about the efficient use of material assets. Why buy a special tool when you can borrow or rent it? Why not rent out your apartment from time to time and earn some money while developing new social contacts?
We have always rented or lent tools, but it is the use of digital technology that allows the reduction of transaction costs. There are plenty of examples of sites that let individuals rent apartments, houses, cars and much more. Sometimes the rental transaction is between the two involved parties, or “peer to peer,” – a concept that is central to the Shared Economy. A third party may also act as an intermediary in the transaction.
An example is Airbnb, which is the largest platform for “peer to peer” rental in the world. The company brokers housing in over 30,000 cities. Another example is Couch Surfing, where users can either share their homes or find accommodation. Instead of staying in a hotel, you get to sleep a few nights in another member’s home, perhaps on the couch. Couch Surfing currently has 5 million registered users.
Another example is Streebank in London that has thousands of members. The website allows neighborhood residents to post queries about stuff they’d like to borrow from others and things they themselves would be willing to lend. This could include extra chairs for a party, or tools to wallpaper the bedroom, a ladder, a surfboard, a piece of clothing or services. Or maybe someone needs help to tune a ukulele, or find the best songs to play in the fall.
Zipcar in California has a similar Shared Economy concept. Zipcar is a car sharing service where members pay an annual membership fee and then have access to cars parked around the city. The car is locked up easily with a portable key card.
What is common to all the above named examples is the concept of the “post-modern consumer,” i.e. people who do not want to be passive and just utilize mass-produced goods and services. They want to participate by creating new markets and products. Research shows that environmental aspects are important for this type of consumer. Social media also enables them to quickly establish personal contacts with people all over the world. Postmodern consumption includes the sharing of experiences.
An interesting aspect is that individuals build their own trust capital by being active and responsible when they borrow and/or lend. By getting good recommendations on Facebook, it may be easier the next time you want to get a good apartment to borrow when visiting Paris, New York or Rome. Your and others’ reliability becomes a sort of private capital and in the system, it is common for both parties to rate each other.
Marketing in a new way
“Our way of marketing Tool Pool differs from the classic ad in the newspaper. I had early contact with the advertising agency The Fan Club, an agency that has won many prizes,” says Jokela. “Earlier, I charged for renting tools, but with Tool Pool – probably the world’s first commercial company to lend tools for free – what I liked was The Fan Club’s suggestion to use Facebook as a cost-effective and proven marketing strategy.”
The arrangement works as follows: The customer enters Tool Pool’s Facebook page and books a tool. The customer may borrow a maximum of four tools and return them the next day before closing time. There is no deposit. All that is needed is a social security number or some other form of ID. In addition to returning the tools in good condition, the only requirement is for the customer to share their experiences on Tool Pool’s Facebook page. If the tool is not returned on time, a fee of SEK 50 is charged per day. Consumables and accessories like saw blades and sanding paper are not included but goggles and other protective gear are free. The concept also includes free access to the “do-it-yourself courses.
“The arrangement makes it easy for me to administer the system and ‘the shares’ on Facebook spread the message among our target group. The social part is that people want to share their experiences and give advice to others. For me it is interesting that four out of five customers that enter our store to borrow a tool also buy something. Repeat visits provide a concrete experience and helps them to remember us, “continues Jokela.
This marketing strategy has been recognized by the Swedish advertising industry. Tool Pool has won prestigious industry awards like Guldägget and 100-Watt.
“I plan to spread the concept further and establish business partners, both in Sweden and abroad. Tool Pool is a way to both contribute to sustainable development and quickly get regular customers. I am convinced that the key success factor is the personal contact. To return an abused tool to an anonymous store employees might be a little uncomfortable and works sometimes. It would probably be worse if you had to look me in the eye the day after you borrowed the tools from me free of charge,” concludes Jokela.
The article was published in August 2014