By Angela Ding
03/27/2020
When you type into Google the phrase “sharing economy”, that is the definition that pops up through the Oxford Dictionary. The concept of a shared economy has shocked various industries and forced many existing companies to adapt. The idea of sharing property for profit is attractive to people because it gives them the opportunity to make money with something they already own and be able to use the services as well. One of the most successful examples of a company that operates under a shared economy is Uber. Uber is a ridesharing company that is used in many places in the world. Through an app, riders can request for a car that is best suited to their needs. This company has disrupted the demand for taxis throughout the world and has inspired many new companies to be created. Another company that has adapted the concept of a shared economy is Airbnb. Airbnb allows homeowners to rent out their homes to others and is an alternative to hotels.
COVID-19, the coronavirus disease, started as something that seemed easy to ignore for countries outside of China. Even within China, there was a lot of unclarity in regard to what exactly was going on in the city of Wuhan. Now, as of March 23, world-wide lockdowns are the norm. Millions of people are forced or urged to self-quarantine and maintain social distance from others. The panic comes from how easily the virus is spread and how similar the symptoms are compared to the common flu. Due to this panic and orders to socially distance from each other, companies that adopt the shared economy concept are greatly affected.
I first noticed this when I opened up my Uber app. I saw very few cars driving around my city. I live in San Diego, California, which is usually populated by a lot of tourists who depend on Ubers. In the picture to the right, there are four cars that are in service around me.
To see how it affected bigger cities, I asked a close friend who lives in New York City to look on her app. This is her screenshot of how many cars are in service around her through Uber:
There are more cars around her, but she noticed that the number of cars significantly decreased. These two findings should not be surprising. With California being the first state on lockdown and many more states following suit afterwards, the fear of leaving the house is becoming more and more widespread. Non-essential businesses have closed, meaning there is no need for drunk adults to order an Uber home from the bar or club. Countries have closed down their borders, not allowing people to leave or enter the country, causing low demands for an Airbnb from vacationers.
According to an article from Yahoo Finance, Uber saw a 60% decline in customers in major cities. However, according to the same article, Uber’s stock is up 7%. Why is this a case if there is little demand for Uber drivers? UberEats.
UberEats is a delivery service that operates under Uber. The drivers for UberEats are the same for Uber; they are all independent drivers around the world. UberEats users can browse on the app from the comforts of their own home and order food. Then, the restaurant will prepare the food and the drivers will pick it up and deliver it to the customer’s location. At a time like this, where restaurants and bars are required to close their formal dining and only allow takeout and where people are scared to leave their house, UberEats offers the perfect solution for bridging these two gaps. While Uber is being used less and less, UberEats has been a major success during this time. Other food delivery services that are a part of the sharing economy such as GrubHub or InstaCart are all seeing an increase in popularity. Amazon and Whole Foods’ partnership has been extremely popular in my area as people can get their groceries delivered to them at home. It is so popular here that it is difficult to find a delivery slot time within a day of ordering, so customers have to order for a delivery in the next few days.
It can be very easy for these companies to take advantage of their customers. As leaving the house becomes less of an option for many, these companies such as UberEats or GrubHub can jack up the delivery prices and make a lot of money based on demand. Instead, they understand the economic hardship that a lot of families are going through and eliminated delivery fees in most cities. They are also in support of local restaurants that do not belong to big chains. Even the Uber app itself is promoting $0 delivery fees from local restaurants.
What’s the big picture? Clearly, Uber could have failed during this time. They did not fail and are still projected to do well. Earlier, I mentioned Airbnb as an example of a company that has adopted the shared economy model. Here are some news headlines about the company:
Their headlines are not as positive as Uber’s headlines. The important lesson that Uber has emphasized to the world is that it is important to be versatile as a company. The concept of marketing myopia is similar to this scenario in that when there is a shock to the economy or industry, a company’s survival will depend on how well they can adjust to change. Uber’s ability to turn to a different segment of their business has allowed them to maintain revenue when one aspect of their company is failing. While it is not feasible for all companies to follow Uber’s steps, it is something important to consider when starting or maintaining a company.
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