WASHINGTON (AFP) – “Sharing economy” firms like Uber and Airbnb were seeing surging growth and predictions they would reshape several economic sectors. Then the pandemic hit.
These companies are now bleeding more cash than ever, shedding workers and scaling back expectations for profitability amid heightened uncertainty about consumer trends and the economic outlook.
The sharing platforms had “tremendous momentum” in industries like transport and tourism and even apparel-sharing prior to the pandemic, said consumer markets analyst Steve Barr of PwC, which had previously predicted the sharing economy to generate USD335 billion in revenue by 2025.
“I think there’s going to be a very significant shift in consumer behaviour,” Barr said. One factor could be a move away from urbanisation in dense cities – a major force driving the sharing economy.
That could dampen the sharing economy “lifestyle” that had been building for people who opted to shun ownership, Barr noted.
Uber said in its quarterly update that it lost nearly USD3 billion and its rides business was down some 80 per cent in April, prompting cuts to 14 per cent of staff.
The rideshare giant said it has seen some “green shoots” in the recent weeks and is seeing strong revenue growth for its food delivery operation UberEats.
However, an IBM survey released this month found more than half of those who used ridesharing apps planned to reduce or stop using these services completely.
“Riders are to continue to have a strong aversion to getting in a vehicle with a stranger for fear of infection which will not be allayed until there is a vaccine,” said analyst Richard Windsor on his Radio Free Mobile blog.
Arun Sundararajan, a New York University professor who researches the sharing economy, said he nonetheless sees some room for optimism for ride-hailing firms.
“I think we’ll see a shift to greater personal space control,” Sundararajan said. “A lot of people will move away from mass transit in densely populated areas.”
This could bring more business to ride-hailing services like Lyft and Uber or to “micromobility” platforms for bicycles and scooters, which the two companies also offer.
The researcher said, however, that it may take more time to see a rebound for “pool” rides with multiple passengers, and that the health crisis might slow the trend in which people give up their personal vehicles for shared rides.