Companies belonging to the “sharing economy,” such as Uber and WeWork, are feeling the crunch of the coronavirus pandemic.
Social distancing measures that have been put in place nationwide and around the world have left many people at home, reducing the need to participate in ride-sharing and travel stays.
On Wednesday, Axios reported financial disaster has come to several companies that work around a collaborative model, including ride-sharing services, coworking spaces, or online consumer sites, such as eBay and Poshmark.
According to The Information, a media site focused on tech news, Uber executives are discussing laying off up to 20% of its workforce. Uber’s Chief Technology Officer Thuan Pham also recently resigned.
TechCrunch reported Lyft, another popular ride-sharing service, will lay off 982 employees and furlough an additional 288 because of the decline in business. The company will also place a salary reduction of 30% for its executive leadership, 20% for vice presidents, and 10% for all other employees.
Home-sharing company Airbnb introduced new cleaning protocols to increase sanitation during the pandemic. Airbnb also put out a 24-hour waiting period following the cleaning procedure before guest stays, citing guidelines provided by the Centers for Disease Control and Prevention. The company has not disclosed how its business has been economically affected by the coronavirus, but it took out two separate $1 billion loans this month, according to the Axios report.
Recommerce website, or online marketplaces where sellers can auction or sell their secondhand items to online consumers, have sought to aid dilapidated consumer confidence with new marketing strategies. Poshmark, a fashion resale company, recently launched a video feature on its website to give consumers a more realistic shopping experience. Forbes reports the feature was set to be introduced in the second half of 2020, but was fast-tracked because of the pandemic.
The sharing economy model has taken off in recent years as tech-driven models have attracted a diverse consumer base. In 2019, Airbnb and Uber collected more than half of the $23 billion raised in venture funding since 2007, according to the Henderson Institute, Boston Consulting Group’s strategy think tank.
