On-Demand Economy | Currencycloud

On-Demand Economy

Written by: Currencycloud
Published on: March 18, 2016

In an age of the modern consumer, the on-demand model has the power to dominate markets. We take a look what businesses can learn.

Although Uber didn’t invent the on-demand economy, it’s become the most commonly cited example. Back in the mid-1990s online grocery retailer Webvan tried to tap into consumer demand for more convenient shopping. Similarly, Kozmo.com launched a hyper-local, super-fast convenience shopping service for New York residents, delivering food and entertainment within one hour.

Both services were innovative in their approach to instant gratification and convenience – the hallmarks of modern on-demand services. Unfortunately, the technical infrastructure and supply chain logistics for both services simply did not exist, particularly as they sought to expand and scale beyond their original, hyper-local offerings. As a result both Kozmo.com and Webvan ceased trading at the turn of the century.

The rise of the smartphone and supporting technologies means that modern on-demand services can (and do) flourish. The prevalence of mobile technology has enabled users from every generation to engage with the on-demand economy, leading to the development of convenience-based services across a multitude of industry sectors.

The TaskRabbit marketplace allows local freelance laborers, known as “taskers” to sell their availability to anyone needing assistance with physical jobs. Designed to help time-poor service users complete basic tasks quickly and efficiently, exploiting smartphone apps to provide on-demand access to manpower. The local nature of the service has seen TaskRabbit described as “neighbors helping neighbors”.

Wide-availability of advanced, inexpensive consumer technologies is also driving new innovations allowing “traditional” industries to deliver on-demand services. Sense.ly has developed a “virtual nurse” service that assists with post-discharge care of patients, ensuring they are properly following the care plan defined by their doctor. Not only does this reduce the need for patients to visit their doctor’s office (or vice versa), artificial intelligence built into the on-demand system can escalate cases for immediate attention by a human medical professional should concerns be raised during the consultation.

As the Internet of Things (IoT) gathers pace, on-demand services will become more prominent and valuable to their customers. Fitness wearables like those from FitBit and Jawbone are generating vast amounts of health data from their individual users which could, in time, pave the way for highly personalized medical treatments and advice to be delivered remotely – again on demand. Scalable cloud-based systems will allow users, and their medical practitioners to access a lifetime’s worth of health data and detect potential health complications without manual intervention by either party.

The on-demand economy took its first faltering steps twenty years ago, and in that time we’ve learned a lot about what it takes to succeed in the instant gratification marketplace:

  1. The On-Demand Economy is Selling a Lifestyle – The basic premise of this New World is that of reducing "inconvenience" by any means possible. Technology has empowered us, but it’s also bought with it a sense of entitlement to fast, simple, and efficient experiences. Businesses need to remember that the most important purchasing factor – even more than cost – is "convenience."

    Munchery, a gourmet food delivery service seeing rapid growth in the US, is considerably more expensive than cooking food yourself at home. However, ready availability, high quality ingredients and a socially responsible ethos mean it fits right into the modern on-demand marketplace. Convenience isn’t the only factor in their success, however. Rather, Munchery’s Michelin-starred credentials and eye-catching graphic design combine convenience with the quality of a high-end restaurant, an unbeatable combination for the hard-working but discerning workers of San Francisco’s tech communities, where the brand started.

  2. Customer Experience is Everything - As many traditional service companies have realized, if you don’t embrace the on-demand model someone else will, dominating the marketplace by offering the exact same service more conveniently and efficiently. This means businesses need to think hard about every aspect of their customer experience, ensuring they offer a faster, slicker app, a simpler UX, and better customer support. Today’s consumers don’t just want you to go the extra mile, they expect it.

    Take Airbnb for example, whose support includes hundreds of agents available via phone, chat and email, 24/7, in every time zone and in 30 different languages. Customers who have reported last minute cancellations impacting important events (i.e. weddings) have received instant $1000 credits. People care a tremendous amount about how they’re looked after, so brands must go to inordinate lengths to demonstrate the added value throughout the entire customer journey that today’s customers have come to expect.

  3. Your Online Reputation Matters – Alongside the focus on customer experience, the on-demand economy has brought with it an increasingly transparent and review-centric marketplace. Businesses need not merely deliver exemplary service, but to visibly demonstrate it.

    In Airbnb and the Digital Revolution, Ben Thompson explains the key role played by digital trust in the on-demand economy. Part of Airbnb’s success, is that it replicates "the shared mores, and common accountability" of real community. With both property owners and renters strongly incentivized towards offering the best experience they can, this accountability is a key factor in Airbnb’s growth. With ratings for over 60 million stays, Airbnb’s genius has been to integrate trust directly into the reservation system, giving the brand a key competitive advantage. Their customer service staff also includes a team of 50 investigative agents who track down guests who abuse their hosts' generosity.

  4. Anything that doesn’t have an on-demand service yet soon will – When the on-demand economy began, services like Amazon’s Kindle Unlimited ebook-lending service offered a cutting edge twist on something which had been around for a very long time, and thus gained rapid market traction. The release of the inexpensive Kindle ebook reader opened a new market channel – electronic books – before allowing Amazon to move in on traditional lending libraries with the Unlimited service, allowing subscribers to “borrow” books without leaving their house.

    From this we should conclude that anything that doesn’t have an on-demand service yet likely will. Miniluxe is disrupting the beauty industry by sending stylists to serve clients at their doorstep, TelaDoc offer patient consults through audio and video, Blue Apron offer recipe and ingredients delivery combined with a strong ecological ethos. Even the most secure businesses now find themselves under siege from a rapidly evolving marketplace where existing services are reinvented for the on-demand customer base.

Our whole society and culture are being shaken up. MIT Professor Andrew McAfee, co-author of The Second Machine Age, spoke recently on Huffpost Tech about the extraordinary impacts the on-demand economy may bring; “The changes will keep coming as innovators do their work.” he comments. “Autonomous cars. Machine learning. Drones. These things will not run out of steam. They will get better quickly. When they do, they will bring changes to the economy, labor force and society. Many of these changes are already becoming salient and un-ignorable.”