The current pandemic has taken a toll on most areas of economic activity, including the sharing economy. Cancelled holidays, stay-at-home orders, mobility restrictions due to quarantines, and lockdowns resulted in a sharp drop in demand for sharing economy services.
The Sharing Economy Index 2021, recently published by the Consumer Choice Center, examines the impact said restrictions have had on the sharing economy as well as provides an extensive overview of the availability of ride-sharing, flat sharing, and other types of peer-to-peer exchange.
In this series of short blog posts, I will elaborate on what the sharing economy is, present the main findings of the Sharing Economy Index, and look at potential future regulations surrounding these services.
The sharing (collaborative) economy has transformed human interactions around the globe. As a relatively new economic model, the sharing economy is a platform based type of exchange that allows individuals and groups to share their services on a peer-to-peer basis.
One of the most distinctive features of the sharing economy is that it eliminates the need to own assets and allows people to use various items — cars, e-scooters, gyms — for a short time without buying them. For example, the flat-sharing platform Airbnb that has been around since 2008, allows you to rent a room or a whole place to yourself in exchange for a certain fee. Simple registration on their website or mobile app opens access to thousands of places around the world and is a great alternative to conventional hotels.
Another tech giant and San-Francisco native, Uber, offers services such as ride-hailing, food and package delivery and also requires just a simple registration process. Uber has been known to be a cheaper alternative to traditional taxi services and is currently available in 70 countries.
Technology has been the driving force behind these companies. However, platforms only act as intermediaries and facilitators: they instantly connect the supply with demand. All forms of collaborative consumption require the internet to connect providers with potential customers. Platforms offer a safe and easy-to-use platform to link people in need of certain services, assets to those who can provide them.
The trust among users is built through the rating systems. Most platforms encourage review exchange to achieve the best user experience and guarantee safety. For example, for Airbnb, some hosts go the extra mile to make sure their guests enjoy their stay by offering free cleaning services or early check-in. Uber recently released Uber Lite to accommodate those people in developing countries who don’t own the latest smartphones and have an unstable internet connection. Mexico is one of those countries. To adjust to the needs of Mexican people even better, Uber also fought hard to enable cash payments in Mexico city, expanding their service to around 10 million people in the metropolitan area.
Sharing economy provides services that are more affordable and accessible than their traditional counterparts. The main reason for this is the fewer entry barriers. In order to start driving Uber or rent out your flat through Airbnb, you use idle assets already in your possession. In many countries, platform businesses face fewer market entry barriers compared to traditional businesses, too. Often, it only takes a quick sign-up to join a sharing economy platform.
A variety of services — from home-sharing to co-working spaces — has made our lives much easier. Even though the recent pandemic has been quite challenging, we’re optimistic that the sharing economy will continue to expand and provide even bigger benefits for people around the world. In the next blog post, we’ll go into details on what effects COVID-19 has had on the sharing economy platforms and how they responded.