@small_batch This is definitely a problem, and it would be better if there was a fix... I wouldn't say using Word is a fix because Google Docs is so far the best for collaborative work. Word online is OK too, but there is no Zotero plugin for it. Word + dropbox or onedrive is mostly OK, but can have horrible bugs. I don't know anyone who uses LibreOffice so that wouldn't be great for collaborating either, unless it has an online option and a plugin for it?

What I ended up doing when writing with Google Docs is to write the name + date of the references I was planning to use, as a placeholder without linking them to a Zotero reference, and only link them (i.e. actually create the Zotero reference) at the end once everyone was happy about the contents of the document.
That final process is a bit tedious but you only need to do it once.

If I remember well, it might also be slightly faster if you do not have a reference table in your document, even if you do have zotero references in the text, and un-selecting 'auto-update the citations' should also help.

We actually spent months developing a dramatically faster version of Google Docs integration using a different Google framework, but unfortunately there's a critical bug in that framework that causes documents to break, so we haven't been able to release the new plugin. We've reported the bug to Google, but they have yet to fix it.

We're working with Microsoft on a plugin for Word online, and that, too, will be dramatically faster, so that may be an option for collaborative work on larger documents.

Unformatted (plain text) citations are also an option that avoids use of any plugins, and can work well for collaborations. You can insert {plain text} citations to items that are in your library, and collaborators can add a note/comment when they want to add a citation to the document (which you then add once it's in your library too).
https://www.zotero.org/support/rtf_scan

problems when two or more people are editing the same document at the same time

If you save the document on OneDrive, then multiple users can edit it at the same time. Some can even edit it with Word Online, while others do it with the desktop version of Word.

if someone is editing offline then connecting back online and someone else was also editing in the meatime

This is also a problem with Google Docs.

Sure, it is possible to co-edit a Word document saved on OneDrive (or Dropbox), the problem is that - at least in my experience - this is prone to bugs and loss of data so this is not a reliable way to co-edit documents.

At risk of appearing like I am advertising Microsoft products: We have tested the Zotero plugin specifically for this to make sure it works. I am 99% certain it doesn't work correctly with Dropbox, because in that case Dropbox is responsible for syncing the document and won't resolve conflicts. On the other hand Microsoft has implemented native collaboration support for documents saved on OneDrive (and OneDrive only!), where it works pretty much the same as it does on Google Docs.

The advantage it [Google Docs] currently has over other solutions is that it doesn't have any problems with co-editing online AND that it has a working Zotero plugin (which, for example, Word online doesn't have). So this is basically the only available option at the moment when you want to use Zotero while working with collaborators without the risk of loosing your data. It would just be great if it was faster, so it's good to know that this is being worked on!

Word with OneDrive works better than Google Docs, because on Windows it is much faster (about the same speed as Google Docs on MacOS), and if someone works with Word Online and copy-pastes Zotero citations in the document, they will not get unlinked. On the other hand if a user copy-pastes a Google Docs Zotero citation without the Zotero Connector, it will get unlinked.

Yes, I am using it as a shorthand for Microsoft's cloud storage. Teams and SharePoint works fine too.