How Disrupting a Traditional Channel Reshapes Platform Consumption and Provider Resilience: Evidence from Uber Eats During the COVID-19 Pandemic
63 Pages Posted: 16 Jun 2020 Last revised: 20 Jan 2023
Date Written: July 31, 2024
Abstract
Using data from Uber Technologies, we study how the COVID-19 pandemic and the ensuing shutdown of businesses in the United States in 2020 affected consumer behavior and small business restaurant supply and demand on the Uber Eats platform. We present evidence that consumers changed their behavior on the Uber Eats platform in response to this shock-increasing the number of orders, spendper-order, and variety-seeking behavior on the platform. These effects were particularly large for newer consumers with less experience and lower billings on the platform. These changes in consumer behavior have implications for small restaurant performance. Small restaurants experience significant increases in activity on the platform following the closure of the dine-in channel, and we consider how these increases are moderated by changes in the supply of restaurants on the platform as well. We observe an increase in the intensity of competitive effects following the economic shock and show that growth in the number of providers on a platform induces both market expansion and heightened inter-provider competition. Finally, we show that restaurants with larger demand shocks had a higher on-platform survival rate one year after the lockdown, suggesting that the platform channel contributes towards long-run resilience following a crisis. Our findings present evidence that a disruption to traditional distribution channels can change the nature of composition on digital distribution channels and underscore the critical role that digital technologies play in enabling resilience in the economy.
Keywords: COVID, coronavirus, platform, sharing economy, crisis, Uber, competition, disruption
JEL Classification: L1, L83, L86, D43, O38
Suggested Citation: Suggested Citation