PremiumThe coronavirus pandemic has forced everyone to adopt drastic social distancing and isolation measures. Will these measures lead to the creation of an isolation economy and spell the decline of the sharing economy? Mint takes a look at what lies ahead
1. How does a sharing economy function?
A sharing economy is the idea that we do not need to own everything we use and that it is more efficient to share and use such assets when needed. It is all around us, whether car sharing through Ola or space sharing through Airbnb. The benefit for the user is not having to invest upfront in ownership of assets that might be used sporadically. They also have the flexibility to experiment with new products. Simultaneously, service providers derive their value from high-capacity utilization of the assets. The rapid adoption of the sharing economy in recent years has been fuelled by huge venture capital investments in this space.
2. What is changing due to the virus spread?
Even before the virus outbreak, we had been increasingly getting isolated. Joint families became nuclear families and these are now becoming single families. Job opportunities have encouraged people to move to newer locations. Technology has enabled us to work from any location, without being bound to an office seat. E-commerce and delivery systems ensure we do not need to leave our homes. Movies can reach our personal screens faster than we can get to a theatre. Social media, Zoom calls and virtual house parties allow us to connect with friends and family, from wherever we are.
3. How has idea of an isolation economy gained currency?
The rapid global spread of the coronavirus has forced everyone to adopt isolation measures. In a post on Forbes.com, Bridges Insight founder Kumar Mehta terms this the emergence of the isolation economy. The handshake has given way to the namaste as a greeting. Hanging out has been replaced by Hangouts. Why can some of these not become permanent?
4. What will fuel the isolation economy?
Technology is a big driver and enabler of isolation. With pervasive mobile broadband networks, smartphones and useful apps, we are able to experience reality virtually. Lockdowns globally have forced people, organizations and societies to experiment with new ways of being. This has led to innovation and acceptance that will be tough to let go of. A business leader can no longer say that teams cannot work from home productively because at present they are finding ways to do so.
5. How will this impact businesses globally?
Travel and hospitality will take a beating for a while, especially if they cannot guarantee hygiene and safety. Cost of sharing will rise. Global supply chains of people and goods may be hit. Virtual reality applications as well as delivery businesses will see huge takers. Digital learning and conferencing will become the norm. Movies could be available first on digital platforms. Investments in mobile and fixed broadband networks and data centres will shoot up.
Srinivasa Addepalli is the founder and CEO of an edtech startup.
