COVID and The Future of the Sharing Economy

There’s hardly any aspect of our lives that COVID-19 has left unaffected. And barring a few sectors, most businesses have taken a big hit – some more than the others. One of the most impacted, of course, has been the sharing economy. In a world wary of anything shared, this sector lies in critical condition much in need of life support. And innovation.

So, what does ‘sharing economy’ mean to begin with? Essentially, it is an economic model that provides for sharing and purchasing goods, assets, and services between private individuals. This includes household-name companies like Uber, AirBnb, and WeWork – having the world locked inside has proven almost disastrous for these businesses.

The answer is clear. As Ramprasad Shastry – co-founder and CEO, DriveU, a Bengaluru-based start-up that provides drivers on demand writes – the pandemic and the sharing economy are like oil and water: they cannot mix. In a world where people are advised to stay home, meet as little people as possible, and comply with social distancing norms, it is difficult to even consider using shared services. When one is afraid to even step out of their house, how can we imagine sitting in a stranger’s car, or living in a home where other unknown people have stayed? Covid-19 has made the world more inward-looking in a sense – where using private resources and keeping distance from other people is the safest option.

Ridesharing giants like Uber and Lyft have particularly lost out. Uber had to lay off 20% of its employees, making 70% less trips overall since March, and seeing its share price fall by a whop-ping 30%. Unfortunately, as of 2019, both Uber and Lyft had still not turned a profit, so the pan-demic has hit these companies especially hard. Since there is no travel, the tourism and hospitality business – particularly within the sharing economy, is also struggling to stay afloat. Although AirBnb has not publicly released how the business is doing, it has filed for two separate loans of $1 billion each. Similarly, WeWork, a company that provides co-working spaces to people across sectors, has not only been unable to generate rent – it has also faced a lot of skepticism for its prospects – unsure about how it will ensure that people want to return to its shared-space model. Even Indian versions of these global companies like Ola and NestAway have been struggling to stay afloat, generate income, and pay their employees for the last few months.

Interestingly however, a study conducted by Statista showed that only 26% of the people inter-viewed claimed that they will be less likely to use sharing economy services once all lockdown measures are removed. So, what does the future hold?

Building people’s trust with shared systems post COVID will take a significant amount of time, particularly until a vaccine is developed and tested. So, while it is promising that people are willing to use these systems once more, it is unclear how long it will take for them to be able to with-out hesitation. Until then, it is advisable for these businesses to reinvent themselves, and diversify their services into areas more profitable. To begin with, ride share companies like Ola, Lyft and Uber should stop offering pooled / group rides to their customers. They could also use their drivers and vehicles for other purposes. For example, while Uber has seen a rapid decline in rides, UberEats has been able to help break the fall slightly – with people across the world using the service to order food at home. Such a model could be useful to these companies – expanding their services into areas like food, grocery and parcel delivery. Another interesting recommendation is for these ride share services to turn into ‘autonomous driving’ services – allowing people to rent and drive the cars themselves for a limited period of time. Airbnbs over the world, too, have been advised to turn into long-term accommodations – the overwhelming recommendation being to lease out to universities, and serve as student accommodations with a steady income. Such meas-ures help ensure less contact, less customer turnover (and therefore less risk of infection / more distancing between strangers), and also ensure a dependable flow of income.

In order to truly build customer trust, businesses part of the sharing economy will first and fore-most have to both create and enforce a standardised set of rules that ensure service is safe, and that the customers health is priority. Some businesses like Uber and Airbnb have already created certain rules – for example, drivers must disinfect their cars after every ride and sublets on Airbnb should have a minimum of a 24 hour gap between stays. The crucial part, however, is to ensure that these rules are strictly adhered to. This will require routine checks, customer audits and sur-veys, and stringent consequences for those who do not follow said rules. Companies will also have to have stronger verification processes to ensure that their employees / services are not car-riers themselves. Both employing people and allowing them to come to work, as well as allowing customers to use services will be long and cumbersome processes, but it is what needs to be done to ensure that those in the sharing economy are reliable and have a certain level of integrity.

While it is unclear how fast the sharing economy will revive itself, one can reasonably predict that its recovery will depend on a number of factors – including inter alia its adaptability, the business model, the amount of human contact it requires, and the risks its use pose. However, one thing is for certain – we will eventually return to shared services, since they ultimately have embedded themselves into our daily lives, and we cannot do without them for long.