How has Covid impacted various sectors
Due to the COVID-19 pandemic, activities in the sharing economy (SE) were in jeopardy. Even though SE is regarded as a disruptive phenomenon, particularly in the lodging and transportation industries, the pandemic raised concerns about its long-term sustainability. Before the outbreak, SE was estimated at a faster rate. SE was expected to be worth $335 Bn by 2025, according to estimates.
Because many sectors, such as healthcare, tourism, and restaurants, were closely linked to the SE, the importance of sharing grew in the pandemic era. Activities such as lodging, eating out, hosting in-person conferences, and cruising, as well as the role of travel agencies and tour operators in organizing such activities, ground to a standstill.
However, because various nations were put under lockdown as a result of the COVID-19, the use of online shopping and food delivery services soared. The need for freelance work soared as workplaces closed. As a result of the closing of movie theatres, video streaming services have become the primary source of entertainment. Preventive measures have impacted all sectors of SE, increasing the need for some services while slashing demand for others.
Sharing Economy Model
By the second half of the 2000s, consumer behavior had shifted dramatically, and an increasing number of individuals were beginning to see that their current purchasing patterns would not be sustainable in the future. Companies arose in this atmosphere to provide a new type of answer to the evolving customer needs. A sharing economy is a form of the new economic model that focuses on the peer-to-peer exchange of goods and services to increase the efficiency of underutilized resources. The phrase “sharing economy” began to be used to refer exclusively to enterprises of this sort. Couchsurfing, Airbnb, Uber, and its peers, which are developing as a result of significant shifts in consumer habits, have overturned whole industries with their so-called “creative disruption” in the span of only a few years.
There is an opportunity for the sharing economy to thrive in the post-pandemic period. The sharing economy has revolutionized the way people travel, dress, and stay as a result of technological evolution. It has posed a challenge to traditional marketing strategies, but it has also given the business model a new direction and a brighter future, with many organizations taking use of technology advancements. According to industry estimates, sharing will increase from $13.75 billion to $19.25 billion over the next five years, with half of the contribution coming from people under the age of 30.
People were more interested in taking advantage of free and reduced services before the pandemic. However, they are now more cautious about the implementation of safety and preventative measures. In post-pandemic circumstances, we’re witnessing the positive side of the sharing economy and how it’s affecting service providers and platforms.
Traditional businesses must examine which of their service sectors are vulnerable to the advent of a sharing economy player; then, once these areas have been identified, businesses must determine how they will be able to stay up with the trend.
Companies following sharing economy model to reinvent themselves
The pandemic had imposed several forms of restrictions on the way people interact with each other. As a result, a lot of sharing companies had to reinvent their business models to suit the current scenario in order to sustain themselves. This has been the need of the time as most of these companies were on the verge of scaling their businesses and a crisis like this would have sabotaged their growth. Spending huge amounts of money and giving great discounts to keep hold of the market would be unlikely for these growing startups as they take a hard look at unit economics in these challenging times. We look at how different companies across various industries have reinvented themselves to overcome the economic drop due to the pandemic.
· Mobility — Shared commuting was growing popular before the pandemic. However, the market was bound to witness a decline due to the safe commute preferences of consumers. Cab services like Uber and Ola focussed on selling their self-driving car services, instead of shared rides. Some have even expanded their operations to the delivery of essentials, packaging, and moving services.
· Co-Working — Co-working spaces had just started to gain the attention of firms when suddenly people were forced to work from home. In response, startups in the space took the support of AI to access controls like contactless cards and facial recognition. Smartworks even increased the area per employee to 120–140 square feet from 70–80 sq feet per employee, keeping in mind the social distancing norms.
· Accommodation — Accommodation companies, like Airbnb, were at great risk of facing the brunt of the pandemic. Airbnb in particular shifted its focus by introducing short-term rentals and opening up its spaces for frontline warriors. The platform largely encouraged domestic travels over global travel, owing to the travel restrictions due to Covid. Co-living rents were cut down and annual hikes were deferred. Globe — a platform that offers hourly rentals, on the other hand, had performed substantially well as it identified the new market among those who need to work-from-home or need a change of atmosphere.
· Others — While some sharing companies have suffered due to the pandemic, there has been minimal impact on companies, such as those engaged in furniture and appliance rentals. Furlenco, Rentomojo, etc. have not suffered much as these affordable products never go out of demand. Unlike other sharing economy companies, their products are used by customers over longer time durations.
Future Outlook — Will the sharing economy lead to a boom?
Due to its several advantages to consumers as well as businesses, sharing economy companies are on a rise. The trend is visible not only in B2C companies where the concept has already garnered reliability, but it is also on the rise in the B2B sector. Some companies that have served individual customers in the past, now look forward to grabbing onto the institutional customers as the demand from the former declines.
Technology has played an essential role in preparing innovative business models which have helped growing startups to reduce their expenses without compromising on the scale during such turbulent times, thus leading to the reinvention of the sharing economy companies. With the conscious efforts among customers as well as businesses to achieve sustainability, we see the continued rise of sharing economy companies.
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