The Online Gig Economy: Healthy Competition or a Race to the Bottom?

The gig economy has been one of the biggest trends to impact the workforce and the future of work in the past few years. With roughly 1.1 million people working in the sector in the UK alone, it is a rapidly developing part of the UK’s labour market, with little to indicate that it’s slowing down any time soon.

What is the gig economy?

The gig economy refers to freelance work commissioned on a short-term basis, rather than permanent contracted employment. Workers get paid for each ‘gig’ or job they complete, from food deliveries and car journeys, to graphic design, online marketing and writing and translation – the list of services are endless.

What has driven this change?

The growth of technology has led to the increase in the global digital workforce and the rise of the gig economy. Cloud-based platforms and digitalisation means that we can now access resources and services all over the world, putting freelancers in touch with those offering work and those looking for help in touch with freelancers. One way of doing this has been through online platforms like Fiverr, Upwork and Freelancer.com which offer a place for ‘buyers’ and ‘sellers’ to connect.

If you’re a freelancer or a business owner, then you’ve probably heard of these sites and may have even used them. For small business owners, with limited time, budget and resources, these sites are very appealing. Having the ability to find an affordable skilled person to support them with one-off projects and tasks can be a lifesaver, particularly during peak times.

How does it work?

Let’s start by taking a closer look at Fiverr – one of the most popular of these gig economy platforms.

Fiverr is the world’s largest freelance marketplace for digital services. Founded in 2010, it started out only offering gigs or jobs at a “fiver” ($5 US) per task, hence its name. Since 2015, this has changed slightly as freelancers are now able to charge more than $5 per task.

The site was created to take some of the ‘friction’ out of the freelancer process, making it a lot easier to purchase a service – just as you would buy a product off Amazon. The range of services is huge – with some more bizarre than others. Paying someone to write a love letter for example, or having someone write your Tinder profile for you. Other more business like services include marketing, social media, blog posting, video creation and content creation. It also offers some jobs that aren’t as ethical as others, like buying fake Facebook page likes and fake reviews.

Whether you’re lacking expertise in a specific area, need help with a design project or are looking for someone to help you with some admin, sites like Fiverr promise a quick and cheap solution to pretty much any job you have going. The appeal: for buyers it seems like a great place to find workers who are skilled and experienced at a low-cost, you can see how your worker has been rated, and the platform provides staff to help resolve disputes. The appeal for sellers: it allows those with little experience to sell their work, get good reviews and build a portfolio. People, especially those living in lower-income countries, have been able to leave poorly paying jobs and it’s been claimed they can make a decent amount of money in U.S. dollars from sites like this.

As good as this sounds, is it too good to be true?

Every freelance website has its pros and cons and Fiverr is no exception. Here are just a few of the main pros and cons of using sites like Fiverr.

The Pros of Fiverr

Gives small businesses access to resources so they can compete with larger businesses

Larger businesses have the budget for in-house graphic designers, editing and marketing teams. Smaller businesses, on the other hand, don’t. You can often get services cheap or for bargain prices way below the market value meaning smaller businesses who might need occasional help have cost-effective access to thousands of freelancers in an enormous range of areas.

Buying on Fiverr is easy

It’s easy to set yourself up and create an account and you can pay for work quickly. The platform is simple to navigate your way around, even if you haven’t had any experience using an online platform before.

You can see information about the seller

A seller’s rating is provided so you can see how they have been rated by other buyers. This builds a level of trust before you start working with them and helps you make your decision on who to contact. Some sellers show examples of their work which again is great to be able to see before you go with anyone.

Huge opportunity for freelancers to sell their services

From a seller perspective, talented people have a way of accessing potential clients globally, broadening their network of people and giving them the opportunity to showcase their work in front of the world. This can be great for people just starting out on their freelance journey.

The Cons of Fiverr

Overly competitive

Freelance websites like Fiverr attract a lot of freelance projects and therefore a lot of freelancers selling their services. The initial attraction of $5 for a service means that people using this site as buyers automatically think they should be able to get a decent service for that amount. This low cost has created an overly competitive market as everyone competes for the same gigs resulting in people having to lower their prices to get a chance of competing on a job.

The majority of sellers are from countries that will still sell their services at $5, places such as Nigeria, the Philippines, Bangladesh, who have a lower cost of living, and the buyers are usually from higher-income countries such as the UK and U.S. To win a bid you must compete on price. So how do people compete with those offering their prices at $5?

This endless competition means that highly talented writers and marketers for example, are lowering their rates to compete with less skilled writers in order to win the job. This race to the bottom effect is because of this oversupply of workers and can be argued that it’s making a mockery of the professionals who are no longer able to set their rates at what they are worth.

Unethical services

This isn’t the case with everyone, but there are a number of unethical services being offered on the site including fake reviews and junk links. You need to be aware of this when using the site!

Quality of work

You get what you pay for. If you’re paying $5 for a task do you think that freelancer is putting in all their time and effort to give you the best service? Probably not. Bearing in mind, the freelancer is also promising a quick turnaround, then they’re probably using an automated system.

Hard to know who you’re hiring

Anyone can create a profile and start selling their services straight away so it’s important to be very careful when choosing who you work with. There is always a risk factor with any type of work as you are never 100% sure that you’re hiring the right person for the job or if they are a complete fraud. If you are willing to pay more than $5 then this gives you access to some fantastic freelancers who will be able to do a great job for you. Try to ask for samples of work. Unfortunately a lot of sellers don’t show you examples so it can be difficult to know if the person you’re hiring is capable of carrying out the work until later on.

My personal experience with Fiverr: the Good, the Bad and the Ugly

So how did I find Fiverr?

As a business owner, working with freelancers is part of what I do. With the ability to buy different services online, the internet is a powerful tool for small business owners like myself and this is something we can take advantage of.

Earlier this year I decided to try something new and outsource some writing work using the site Fiverr. I began my search for the perfect person to support me and soon came across someone who I thought could help. It was simple, easy to use, and I was promised high-quality writing and a quick turnaround.

What started out as something convenient and cost-effective soon became a complete waste of time. The written work I received from the person on Fiverr had either been written by a 5 year old or a content generation app (I’m guessing the latter). Bad spelling and grammar scattered throughout and a lack of meaning to every sentence meant that I couldn’t use the work. When I contacted Fiverr customer services for the support they say they offer, they concluded that I had got what I asked for and wouldn’t refund me the money despite having clear evidence that this wasn’t what I’d asked or paid for.

Was my experience with Fiverr a good one? No. Would I use Fiverr again? No. Did I learn something from this bad experience? Yes.

Summary

On reflection, should I have really expected that for $5 I would have got a quality product and service? Definitely not.

My story isn’t unique and there are a number of similar stories out there showing the negative side of using sites like Fiverr, both as a buyer and a seller, as well as accounts of success stories.

This is not a post to put you off hiring freelancers using sites like Fiverr, as there some good ones out there, but finding the right person for your job is important. If you’re looking to outsource some of your work to a freelancer it’s important to remember that services that will help your business and produce results can’t be done on the cheap. Investing in the right person is key. If you are looking to hire a freelancer, sites like Fiverr may look appealing to start with but often come with lots of negatives that you need to weigh up before signing up. There are so many other ways to find talented freelancers at affordable rates that you can work with long-term – social media groups, word of mouth and Google are just a few.

So are sites like Fiverr a race to the bottom? Do they make a mockery out of the professionals? Do they create less competition? Are they a necessity for those who can’t afford the pros?

Do you have a success story or a similar experience to me? Do you use Fiverr yourself or have offered services through it? Share your knowledge and experiences below!

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