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The sharing economy: One more casualty of coronavirus?

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Dr Oksana Gerwe is a Lecturer in International Marketing & International Business at Brunel University London

The unprecedented pandemic of the coronavirus has turned the world upside down for all of us, affecting individuals, societies, countries and economies across the globe. Both the human and the economic toll of Covid19 continues to rise. The sharing economy is one of the sectors that have been profoundly disrupted by the measures taken in order to slow down and overcome the pandemic. Closed boarders, cancelled flights, enforced lockdowns and extended quarantines have put on hold many sharing services that in the last several years we have come to take for granted. Staying at an Airbnb property at a travel destination, taking a ride on BlaBlaCar, renting a car through Turo, getting help with an errand on TaskRabbit or borrowing a bike through Peerby are all but impossible in a world of self-isolation, social distancing and strict personal hygiene protocols. Will the sharing economy, just recently the darling of all unicorn watchers, survive the coronavirus pandemic?

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Uber apps are still working but you cannot go anywhere as a driver or a passenger because that would imply breaking social distancing rules.

Sharing Economy Strengths become its Weaknesses

 Even though we still do not have a universally accepted definition of what the sharing economy really is, according to current research, companies in the sharing economy are characterized by four unique features:

  1. They are digital platforms that facilitate offline transactions between suppliers and consumers.
  2. They are based on peer-to-peer transactions, where both the suppliers and the consumers are, mostly, ordinary individuals or micro-entrepreneurs, not large business or companies.
  3. They emphasize temporary access instead of ownership.
  4. They enable access to underused physical or human assets (an empty room, a parked car or empty seat, a BBQ, someone’s skills, talents or time).

Each of these features contributed to the spectacular success of the sharing economy in the last decade. Digital platforms like Airbnb, Uber, Lyft and many others were able to scale up at a mind-blowing speed by professionally aggregating underused assets owned by individuals and capitalizing on the social trend that values access more than private ownership. Sharing became a culturally cool and an economically smart thing to do both for suppliers and the consumers of the sharing economy.

The coronavirus pandemic turned each of the sharing economy strengths into a weakness. First, even though the digital backbone of the sharing economy remains untouched and the online sites can operate just as smoothly under lockdown conditions, the new restrictions make it impossible to provide or consume the services these platforms were designed to facilitate. The Airbnb platform remains functioning, but you cannot rent (out) a property in locations, closed down because of the pandemic. Uber apps are still working but you cannot go anywhere as a driver or a passenger because that would imply breaking social distancing rules. In the absence of transactions, sharing platforms have seen their businesses implode. Equally, the suppliers to these platforms have overnight lost all the demand for their offerings, resulting in canceled bookings, massive economic losses and unclear future prospects.

Second, in light of the increased demands to personal hygiene and safety, peer-to-peer business model suddenly seems suspect and unreliable. When proximity, touch and cleanliness may mean the difference between getting and not getting the virus or passing and not passing it on to someone else, people are no longer comfortable with the possibility of riding in a car that already drove many other passengers, staying at a property that hosted multiple guests in recent days or inviting a stranger to your home to help you with an errand. The alleged carefree, relaxed attitude to health and safety standards adopted by the sharing economy as part of its easygoing ethos during the boom times now starts to look like carelessness.

Third, under the pandemic conditions, we are now forced to use only what we already own. Forget access to other people’s assets when you have to stay indoors for weeks on end. Those who have property, cars, BBQs, garden furniture, bikes, scooters, etc., are able to wait out the lockdown in a more comfortable, sustainable fashion. With access alternatives eliminated, ownership suddenly starts to look more appealing not only in terms of the control that you have over its cleanliness, condition and availability but also from the point of view of one’s economic safety and security, as the assets that you own will help you weather the economic storm resulting from the coronavirus pandemic. No wonder social media is overflowing with stories and Tiktoks of people getting out their old guitars, sports equipment, kitchen appliances, tools and grills that after a lifetime of underuse are now in great demand by their owners. The lucky owners of balconies and patios have never used them more than during the recent weeks when we cannot leave our homes.  The old saying “My house is my fortress” has never rang so true as under the present circumstances of the medical, economic and social uncertainty.

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The Airbnb platform remains functioning, but you cannot rent (out) a property in locations closed down because of the pandemic.

The Future of the Sharing Economy

What will happen to the sharing economy in the aftermath of the coronavirus pandemic? What are its implications for the sharing economy suppliers, consumers and platform owners? On the one hand, the Covid19 outbreak is likely to expose all the weak points of the sharing businesses, taking some of them to the breaking point. In the upcoming days we may see some sharing platforms ran out of cash and exit the market, creating massive losses for platform owners and investors. The economic consequences of the pandemic will be just as catastrophic for the individual suppliers of sharing platforms. As a result, customers will end up with fewer alternatives to access goods and service through sharing in the long run.

On the other hand, the pandemic has activated the reset button that can bring balance to some of the excesses that developed in the sharing economy during the last years of boom and can benefit the sector in the long term. The surviving platforms will have to pay much closer attention to business fundamentals of their operations, prioritising profitability potential and cashflow instead of mere growth and reliance on injections of capital by investors. Using the lessons from the pandemic, platforms and individual suppliers of sharing services are likely to improve their health and safety standards, making the sector more sustainable for all. Lastly, the coronavirus outbreak can serve as a catalyst for policymakers to bring a much-needed order to the sharing playing field. This is a unique opportunity for regulators and authorities to implement better practices, rules and norms, such as protecting sharing economy suppliers from the precarity of their incomes in downturn markets, balancing the tensions between economic gains and sustainability pressures from over-tourism at some travel destinations, restoring supply of long-term rentals that had earlier converted to sharing accommodations, leaving local residents short of places to live. The demand for sharing in the post-pandemic economy is likely to return. Let’s hope the lessons of coronavirus outbreak make the sharing industry more sustainable, resilient and safe for all the parties involved. 

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