Aftermath of Coronavirus: Is This The End Of The Sharing Economy?

Over the past couple of years, we’ve started to rent and share assets rather than purchase and own them. It started by sharing our homes with strangers and carpooling our cab rides with people heading the same way. What started as a foreign concept has become all too common for us, from cars and cabs to homes and furniture.

However, the sharing economy has been around long before it became a buzzword. The idea of collaborative consumption like sharing your apartment with a roommate or renting a car is an old practice. The rise of the internet has made it easier to expand this way of living among strangers as well. We now have platforms organizing this economy, exerting control over the user, and creating a level of trust.

But does social distancing fit into this trend? According to Statista, only 26% of the people said that they will be much less likely to use sharing economy service.

The sharing economy will be making a comeback but the crisis can accelerate an ongoing change in the sharing economy.

Standardization Of Norms

Sharing marketplaces will need to enforce a set of rules and procedures to standardize the basic aspect of the service offered. These rules will help set a foundation for the dos and don’ts that will make consumers feel safe enough to use these services.

Some businesses already have such rules in place. For instance, Uber has a set of standards for its drivers which are publicized to inform their users and keep their drivers accountable. Drivers need to have a clean driving record and their vehicles must meet formal standards.

Usually, most sharing marketplaces exert a low level of control over the service quality. Airbnb, for example, doesn’t enforce basic hospitality or hygiene standards on homeowners. In order to reduce the chances of low-quality service, businesses should ensure basic amenities and provide detailed guidelines on the cleaning process. However, in the wake of this crisis, the latter is being implemented by Airbnb.

Synchronized Rating System

Sharing platforms rely on a user-based rating system for quality control, ensuring a level of trust between the user and service provider who they have not previously met.

If a user’s average rating falls below a certain threshold, his or her account is deactivated. Sounds perfect right?

Since there are a lot of sharing platforms for every kind of service, service providers that get banned from one could rely on others to sell their service. To ensure such defaulters aren’t evading the system, businesses can centralize ratings across platforms on a single site.

For instance, if a driver has a bad rating on Uber, this rating should be showcased on a central site for other platforms like Ola to review them.

Stronger Verification Process

Trust is the key element of the sharing economy. After all, you are sharing your assets with a complete stranger; there needs to be a level of confidence for consumers to feel safe enough to avail their service. So how do you go about creating trust between strangers?

As we live in an online world, platforms need to keep their consumers safe by identifying service providers and confirming that they are fit to service their consumers.

To address this, platforms added identity verification so that users can feel safe. But, platforms don’t verify the ownership of the asset. For instance, the car driven by an Uber driver could be leased or owned by a company rather than the individual driving it. Or, the holiday home may be set up by an advertiser disguised as the owner.

While writing this article, I was doing some research on the kind of verification Uber and Ola drivers need to go through. An acquaintance, George, drove for Ola as a part-time gig during college. However, the Ola account was not registered to him.

He was instead hired by another individual who had set up the Ola account. George had provided 100+ rides and none of the riders noticed that the profile on the app didn’t match the driver. Come to think of it, when we take a cab, we always verify our cars but most of us rarely verify the driver.

In order to eliminate these bad actors, platforms need to set up an airtight verification process. While this would mean that onboarding a service provider will be a long and cumbersome process, the end-users will have an epic experience with the platform.

How Does The Sharing Economy Look Post-Covid?

The recovery of the sharing economy will vary according to the business model, the amount of human contact it needs, and the risks involved. Sharing services like ridesharing, co-working, and home-sharing have experienced a significant reduction in revenue, a direct impact of the stay-at-home order. These businesses would have to implement new standards to revive customer confidence.

On-demand services like Zomato and Swiggy have thrived during this period with a surge in demand for these services during the lockdown period. This crisis will alter the behaviour of the consumers even in the long run as they see how convenient these services are.

However, many businesses in this space have smartly adapted their strategy. Companies like Rapido and Zypp have utilized their fleet to deliver groceries. As the crisis affects consumer behaviour, businesses in this space must keep an eye on these changes, restructure their strategy and think quickly to make their services useful, safe, and usable for consumers.

As we emerge from this crisis, the services that survive would be stronger and resilient than ever. Sharing services would implement new standards for participants and build better platforms for end-users. We may not rush into shared services but eventually, we will, as these services have become a part of our lifestyle.