The sharing economy emerged about a decade ago in response to the 2008 financial crisis. As a result of the crisis, many people lost their jobs and faced economic hardships; thus, people looked for new ways to make money as well as to gain access to resources more inexpensively. Fast-forward to 2020: the world is facing another crisis, which is expected to have an even worse impact on the global economy.
However, this time, the coronavirus pandemic forces people to remain apart physically as many countries have enforced strict social distancing measures meant to prevent the spread of the virus. Yet the backbone of the sharing economy is interacting and exchanging resources among peers. Several reports have come in about the sharing economy giants being hit hard as a consequence.
How may COVID-19 affect the sharing economy?
For example, the stocks of ride-sharing companies like Uber and Lyft experienced serious plummeting. Before the virus hit, Lyft shares were being sold for approximately 59 USD per unit. As of 25th of August 2020, the price was around 29 USD per share .
And it is not just the giants. Other local and community sharing platforms are also impacted, keeping people from tool libraries or sharing clothes. The next months remain uncertain for such platforms, kept afloat for the time being by user donations and small business loans from governments.
However, some sharing businesses see market growth during these times due to their value propositions and pivots in their business models. For example, in Beijing, China, bike-sharing has seen an increase in use, by as much as 187% compared to before the pandemic, as people prefer to ride bikes – an individual form of transport that takes places in open spaces – instead of public transportation .
In addition, sharing platforms have pivoted aspects of their business model or value propositions, specifically to offer services to essential workers. For example, Uber offered 10 million free rides and food deliveries to first responders and people in need .
In China, Airbnb is offering discounts to people renting long-term, as short-term rentals are currently prohibited. This rapid and sharp shifts in business models may give us an idea of how sharing economy platforms might transform as a result of the pandemic.
Drivers of ride-hailing services like Uber especially struggle and food delivery services are taken for granted. Perhaps work in the gig economy will finally be acknowledged and safeguarded after the crisis? As the negative social and economic impact of unregulated gig workers becomes even more noticeable during these times, there are already raising voices asking for proper labor regulations and the right to unionize .
Similarly, accommodation sharing websites have been blamed for removing the housing stock from the long-term rental market. An interesting rebound effect is being reported from London where the real estate website Rightmove has seen a 45 per cent increase in long-term rentals available on their platform. The newly listed apartments are mostly furnished and centrally located previous Airbnb listings .
If fundamentally flawed systems, such as short-term rentals and unregulated taxi services, are offered an opportunity to start anew, will they take it? And, how will this change manifest itself in the fabrics of our cities?
How can the Sharing Economy help our cities become more resilient?
Although public sentiment seems uncertain, data shows that many businesses in the sharing economy are back on track and that people are actually regaining the confidence to use an app to call a car and stay in a stranger’s home for a long weekend getaway. While it seems that sharing platforms are making a recovery, we need to ask ourselves how this economic system can be reshaped in order to truly help our cities become resilient?
First of all, with so much unknown about what the future holds and how the “new normal” will define our personal interactions and willingness to share, any future sharing economy must respond to our new as well as our ongoing challenges, especially in the light of long-term challenges such as climate change and social and economic inequality. Sustainability has been on the political agenda for some time and will remain so as our economic system needs to be rebuilt.
Therefore, sharing platforms need to be humble and acknowledge the vulnerable spots in their own systems, They need to be agile in redesigning systems in our society. The examples of sharing platforms already pivoting their business models – such as platforms complementing the public transport system – and helping citizens demonstrates that these platforms do support our cities to be more resilient.
Second, it is worth considering that community-based organisations may be more attuned to the needs of a community and could more quickly respond to calls of action compared to commercial platforms with traditional management structures and profit motivations.
A sharing economy that helps us to build resilient cities is one that capitalizes on community spirit and good will, thus building networks of citizens and inclusive societies. We are already seeing swells of grassroots and community initatives -such as community gardens and local swapping platforms – which can be organised for a common good.
Last but not least, a sharing economy that fosters resilience in our cities should also tackle socio-economic inequalities. It is hard to make an argument against the importance sharing economy workers – such as delivery personnel, in these challenging times. Solely regarding them as independent contractors can be detrimental in the long run, not just to firms and welfare, but more often than not to the workers themselves.
If fair chances and proper recognition are to be offered and acute urban social inequality is to be avoided, then platforms, workers and governance bodies have to come together and agree on an intermediate classification of workers in the sharing economy – between employees and independent contractors, in order to guarantee some social or health benefits and more robust rights.
Born out of a past crisis, the sharing economy can help us overcome our current crisis and build resilient urban communities. But, in order to evolve and avoid reverting to the status quo, we will need to constantly question the system and request agility and sustainable actions from sharing platforms, while at the same time keeping them accountable towards local communities and their workers.