The sharing economy becomes more relevant in the present context as the covid-19 pandemic triggers the factor to the full bloom. The idea behind the sharing economy differs from traditional business models. It is built around the sharing of resources. It involves mutual development, processing, delivery, trade, and usage by various individuals and organizations of goods and services. New business models supported by new technologies have been the backbone of the rise of the sharing economy worldwide. There is a drastic change in the perception of people regarding shared goods. The sharing of resources is becoming more common and popular and it is going to further increase in the future.
The concept of sharing of resources confronts the conventional view of ownership in private hands. It rather promotes collective production and utilization of products and facilities. The emergence of online sites that facilitates the purchasing and selling of used items has developed a favorable notion among people regarding the used goods. In the sharing economy access to resources is more crucial than having its ownership (Stack and Writer, 2011). The impact of the covid-19 pandemic is also visible on the sharing economy forcing them to make required adjustments. The below assessment will cover the discussion around the growing popularity of the sharing economy model as compared to the traditional business model in the covid-19 pandemic. It will cover the impact of the covid-19 pandemic on the sharing economy model and the required adjustments made by them to adapt to such conditions.
With the deteriorating economic structure of the countries and people of it, the sharing economy becomes a primary object for everyone. Uber with ride-sharing, Airbnb with its sharing model is in the lead position recently (Hadi, 2020). New startups are not objectifying one aspect rather facilitating from food delivery to toilet rental. This is not any particular countries' concern; rather it becomes an international issue. There is an emergence of new opportunities for the sharing economy as people want to rent out to earn. The growth of the sharing economy has been spurred by the use of information technology. Companies leveraging the sharing economy model of business have reconstructed the traditional model of business which was flourishing for years and marked a clear distinction between the firms and its customers.in the traditional business model, firms require a middleman who connects the organization with the consumer. Theses middleman helps in the sales of the products offered by the organization (Hamari, Sjöklint and Ukkonen, 2016). But the ongoing covid-19 pandemic has severely impacted the traditional model of businesses. The pandemic has resulted in the contraction of profit by the businesses and it has become hard for them to maintain the traditional model where there is more cost is involved in setting up infrastructure.
As a result, there is a growing trend of sharing economy models that advocate for the sharing of resources. Businesses do not have to spend more on building the infrastructure and the cost involved in middleman can also be saved as there is direct contact between the producer and consumer. The sharing economy model has seen tremendous growth and has cut short the profit of big organizations. The peer to peer model has diluted the differentiation among the customers and the producers. The sharing economy model has generated opportunities out of things that are in the past are no perceived as a usable resource by the people. It helps people to commercialize their spare and used resources providing them a source of income. The activity of renting out used assets is going to become more prevalent in the covid-19 pandemic as the earning levels of people are contracted making them look for additional sources of income which will ultimately help in the rise and growth of the sharing economy. As compared to the traditional model of businesses where there is less flexibility offered, the sharing economy model offers people more flexibility in their earning which is needed during the pandemic (Böcker and Meelen, 2017). People are getting more attracted to the sharing model due to shared benefits and less cost involved in it where people can book a cab with a click of a button and pay for it online. The popularity and growth of Uber and Airbnb have made it crystal clear that people like convenience and accessibility. The sharing economy model has taken full benefit of the change in the preferences of consumers where they prefer purchasing products from individuals instead of multinational brands.
It is necessary to note that there is not a uniform impact of the pandemic on all the sharing economy. Some businesses operating in the sharing economy has seen expansion while others have shown contraction.Covid-19 puts pressure on many industries and organizations to shut down and the sharing economy is left as the only option. Due to the situation, Airbnb and Uber started to have a huge loss of revenue. But despite the little contraction, the sharing model is better performing than the conservative business model (Codagnone and Martens, 2016). The contraction and layoffs in the sharing businesses are much lower as compared to others. Startups considering the situational crisis thrive to cherish the opportunities to make a profit by obtaining a sharing economy in its infrastructure (Chen et al, 2020). Amazon flex obtains package for delivery service with a moderate budget. The organizations are trying to address market requirements with close details which signify the products which are in high demand are being delivered by them.
Many people, who are isolated or quarantined through a pandemic, are potential customers for them. Considering the situation organizations like Uber and Airbnb even compared to obtain the same model sharing economy to initiate the profit margin in this situation. The ongoing pandemic has caused the businesses operating in the sharing economy model to make necessary changes and adjustments to make the customer feel secure and comfortable. In this regard, they are required to come out with new innovative solutions so that the customer base is not hampered due to the pandemic. Companies have begun to provide a self-driving solution rather than the carpool option due to safety concerns involving the pandemic. Businesses are altering their product composition to attract new customers. The pandemic has resulted in the introduction of new technologies that can help businesses and customers to observe distancing amid the current scenario. The increased sanitization and hygiene expenses related to the covid-19 pandemic have forced the businesses to develop a comprehensive strategy to make necessary changes in its operation to maintain profitability. It has caused businesses to adopt a sustainable model to bring down their operational cost.
The covid-19 pandemic has lowered the job opportunities in the traditional business sector which requires physical interaction as a result people are moving towards the more flexible options available like the sharing economy model which has put a debate around the facilities available to the workers in the form of health coverage, proper compensation, healthy and safe working environment (Katz, 2015). Adoption of such forward-looking strategies by the businesses will help in their active growth and development. Due to the pandemic customers are observing social distancing and maintaining adequate hygiene. It has been seen that the businesses operating in the sharing model have less control over the quality of services being offered to the customers which include maintaining adequate hygiene which may customers hesitant regarding using the services. Guidelines and policies of the businesses are adjusted to make the customers feel sufficiently comfortable to avail of the services. The pandemic has exposed the vulnerability of the workers who are working on different businesses operating in the sharing economy model where they lack basic protection and are exposed to virus (Hawlitschek, Teubner and Weinhardt, 2016) Companies like Uber have responded to such problems by setting up sick leave fund to help worker fight the uncertainties. The pandemic has revealed the unfair and unjust nature of the sharing economy where tech-based proficiency enjoys prominence over the workers.
The discussion proves the fact that considering the situational crisis organizations need to switch to the sharing economy where expenditures can be reduced and thus profit can be initiated. Also, there is greater acceptance among customers regarding the use of shared resources which has fueled the growth and development of the sharing economy model. There has been increased customer traffic which is seen during the pandemic time because of changes in consumer behavior where they prefer convenience and accessibility. The assessment shows that the sharing economy models of businesses are also impacted by the ongoing covid-19 pandemic apart from the traditional business requiring them to make the necessary adjustment in their operation which helps further expansion of the business model.
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