As the global Covid-19 pandemic keeps more than a billion Indians inside their homes, it has turned into a stressor for one of the most innovative segments of the tech world: the sharing economy.
Over the last decade, consumers have begun to prefer a different type of consumption, which does not involve personal ownership, but temporary access to goods and services.
India’s sharing economy has fast evolved beyond categories like travel aggregation and ride hailing, to furniture rentals, co-working and food delivery. While the sharing economy was viewed as lucrative pre-Covid; today the same businesses are experiencing a challenge they have never faced before.
Uber and Ola have been rudely shaken, since their rideshare model, which revolves around shared mobility, is being viewed with apprehension in the times of social distancing.
Airbnb is severely affected with a collapse in recreational travel.
Even online delivery firms, Zomato and Swiggy, are bracing themselves for unforeseen challenges, even after life comes to ‘normal’ post-lockdown.
These companies are suffering weak consumer demand, supply-chain disruptions and shortage of manpower, leading to poor growth rates.
Ride sharing apps
Speaking of ride sharing, both Uber and Ola control 90% of India’s cab market, which is slated to reach USD 14.3 billion by 2022. With the mobility industry being severely affected, it will not be easy for these companies to grow at an annual rate of 13.5%, which was predicted prior to the pandemic.
Ola and Uber had suspended their operations in most metropolitan cities, due to government restrictions during the lockdown. Softbank-backed Ola, however, was offering limited services to support essential services in some cities.
While there are no official numbers available, analysts say their business is down by 80-90%.
After partial relaxation of the lockdown after May 3, Ola and Uber are allowed to ply in Green and Orange Zones. Intercity travel and cab sharing is still out of bounds for cab aggregators and private vehicles will only be permitted for essential activities.
Online food delivery
The online food delivery market was set to grow 9.5% between 2020 and 2024, according to Statista, resulting in a market volume of USD 13.2 billion. However, the numbers may be revised as consumers remain cautious and refrain from ordering food online. Besides, restaurants and pubs in most large cities have been ordered to shut by the government.
Although they are allowed to operate as delivery and takeaway joints, yet orders for Zomato and Swiggy have been hit. The numbers have dropped by 70% during the lockdown to under 1 million a day, from a steady state of 2.5 million deliveries a day, prior to the lockdown.
For online delivery firms, a major constraint has been the curbs imposed on the movement of their workers and harassment from police. While several cities have stepped up efforts to ease their movement, large food aggregators have been working at a delivery staff strength of between 20% to 30%.
These companies are also innovating to stay relevant post-Covid.
Innovating to stay relevant
Zomato is offering food@work, a contactless dining experience in the office as well. This includes upgrading an existing office cafeteria, something Zomato calls the ‘digitised cafeteria’. You place the order while you are at your desk, which means you skip the queues and don’t need to wait for your cafeteria to prepare this food.
Zomato says that right now, they have 70 organizations on board across India, including Accenture and co-working space WeWork. They have more than 1,000 food partners, who prepare or deliver Zomato food@work orders.
Swiggy offers a service called Swiggy Genie, your personal concierge or butler. This is a go-to solution for having essentials delivered home during the Covid lockdown. They will collect groceries from a store you choose to buy from and deliver them to you. These are only limited to the stores that are on-board Swiggy Genie.
Urban Co. (formerly Urban Clap), has also seen its business come to a halt. Once the lockdown is lifted, the company expects certain categories such as cleaning and sanitization, as well as beauty and haircuts to grow. Massage, on the other hand, could be negatively impacted so the company will put tangible relief plans for these partners in place.
Travel and hospitality
With complete lockdown in the country and temporary suspension of all modes of transport, the travel and hospitality sector has been heavily impacted. While hotels are already suffering, even home-sharing platforms like Airbnb may face bigger challenges when businesses resume.
According to industry experts, Airbnb might face a trust deficit post recovery, owing to the fact that the company does not have direct control over the inventory listed on its platform. They have no clue about what the owner has done or those who have stayed in the room. That makes it hard for Airbnb to win consumer trust.
Oyo has also seen its revenues plunge by at least 50-60%, and is set to cut every controllable cost. Earlier, Oyo was in the news for having cut 5,000 jobs. Like other hospitality and travel firms, Oyo is likely to see a decline in its business even further with people trying to avoid non-essential travel.
Also, the company’s model is different from hotels – since it is in the budget space, its clientele is very different, and the income of this demographic because of job losses, might affect Oyo’s future prospects.
Co-working spaces in India wear an empty look today – once the hub of community, these spaces now face threat from the very idea they were modeled on. Even before the lockdown began, India’s IT industry had made a decision to begin work from home – this proved to be a costly affair for co-working spaces.
Startups, freelancers and small enterprises are requesting rental waivers, as well as cancellation of lease agreements.
According to CBRE, co-working operators leased 10.8 million sq ft. office space during 2019, up 26 percent from the previous year. But with Covid-19 turning around the situation, these operators expect a short term blow, with workplaces trying to maintain social distancing and focusing on health and hygiene.
But the situation is likely to improve in the long run, since companies would lay more emphasis on cost optimisation and prefer flexible workspaces.
GoFloaters, which provides an on-demand office network, has been receiving more queries from companies who want to cut down on their office rents, or follow a hybrid-remote model. Also, with companies looking to practice social distancing, they will have to send some of their employees to co-working spaces.
Some co-working spaces, like ABL Workspaces, have already begun operations. They are adopting stringent health and hygiene steps, including undertaking deep cleaning and sanitisation of their workplace.
Sharp decline in manpower
Reduced manpower is another issue plaguing the shared economy. Ever since the lockdown began, thousands of migrant workers returned to their homes, under the fear of growing uncertainty and police brutalities.
Licious, a popular meat delivery company, lost almost half of its 500 delivery staff immediately after the lockdown was announced. The remaining workers were moved into a hotel to control the situation. With growing demand, the company had to get hold of workers through referrals, which brought its total headcount to 800. That’s not all – the company also started working with third-party providers like Yulu and Shadowfax.
Even BigBasket had to bank on partnerships with restaurant associations, retail associations, garment factories and even Uber, to get more people. The demand was five to six fold, but the number of delivery executives were not enough, and that led to disappointment amongst customers.
The shared economy will innovate and survive. The world will continue to use its services but with more caution, after thoroughly scrutinising the recommended health and hygiene practices. And that will be the new normal in the post-Covid world!
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