The on-demand business model has taken over the traditional business models faster than it was anticipated. For the reason that the on-demand delivery market is all about speed, convenience, accuracy, and quality, it has become the consumer’s first choice.
The Rise of On-demand Business Model
In the past, ownership was the core of the business world. However, the on-demand economy statistics reveal that access is better than ownership today. Would you believe that the on-demand delivery market attracts 22.4 million customers per annum? Further, a report states that consumers spent nearly $57.6 billion on-demand delivery services.
Today, consumers prefer services that are quick and easy. Hence, they opt for the products/services that are a click away. Further, the rise of the on-demand delivery business model has raised the customer’s expectations. As a result, people want things to get shipped on the same day within hours, or even minutes.
From booking a taxi ride to ordering food delivery, healthcare to home services –on-demand delivery software has made it all possible. Certainly, the idea of the on-demand business model initiated by Uber is now disrupting the economic world. And, it seems that the entire economy will soon be “Uberize.”
Do you know how the on-demand business model works? Why is it gaining fame, and what are the prospects for the on-demand delivery market? If you want the answers, then read along.
On-Demand Business Model: The Basics
On-Demand Delivery Definition
The On-demand delivery is a way of instant, immediate, and prompt delivery of goods and services to consumers at their doorstep. Also, it is a way created by tech-driven companies to fulfil the customer’s demands instantly. Further, the on-demand business model is ideal for users who look for fast, easy, and simple solutions.
While most of the on-demand services are readily available all day, some companies offer stand-by or scheduled delivery services to the users. For that reason, companies are now using an on-demand delivery app builder to attract customers. Such a service is to make things easy for customers. As a customer, if you want something now, you can get it instantly because of on-demand delivery models.
On-Demand Business Model
The on-demand business model works on a simple rule: “Access is better than ownership.” Hence, the idea is to make the services and products easy to access, including those the customer otherwise cannot own. For instance, you can rent a car instead of buying one for your use.
Likewise, the on-demand delivery business model works on the same pattern. The objective is to deliver the products to the customer safely in less time.
Because of the new tech, users tend to use mobile apps for most of the services. Due to the increasing trend of on-demand services, businesses are now focusing on on-demand business equipment and on-demand delivery software.
Companies can use non-employees for shipping goods on demand, wherein they may hire local workers or delivery companies to build this business model.
The On-Demand Services
Almost everyone is enjoying the perks of the on-demand delivery market today in one way or another. Also, it’s no surprise when you get almost everything and anything with a tap or a slide on the smartphones. Hence, the instant gratification is attracting consumers like never before.
Certainly, the transportation sector rules the on-demand market. The boom of the on-demand services has to be credited to the likes of Uber. What these two companies have achieved over a decade is great for other players in the industry. Also, their success glorifies is an example of new businesses. Keep in mind that they rose to fame with this model when no other company was doing anything like it.
We will discuss the ideas for on-demand startup business models in the latter half.
Hunger strikes anywhere and anytime; it’s natural. However, one is not always in a mood to cook or go to a restaurant. Even, sometimes you don’t feel like waiting for the takeaway. For all such situations, on-demand food delivery apps are your saviours.
Moreover, the key players in the on-demand food delivery market include startups that are operating globally. The players like Foodpanda, Deliveroo, and Foodra, are attracting investors around the globe.
On-Demand Delivery Service
The on-demand business model has given rise to the customer’s expectations for all services, and the product delivery is no different. Today, a customer is not willing to wait for days for the delivery; instead, the user wants everything fast.
Also, the wide accessibility of smartphones has triggered the development of online on-demand delivery services. However, currently, not many merchants or couriers provide on-demand delivery services. But, if you are in UAE, ViaMe is there to cater to you.
On-Demand Startup Business Models
Who likes to stand in a queue when you can hail a taxi-driver in no time? Why wait 3-5 days for your parcel when it can reach you the same day? And, who bothers to cook food after a tiring day at the office when the pizza is a click away? These are just some of the many on-demand business model examples around.
Probably everyone with a smartphone today knows how to book an on-demand service through a mobile application. And, for this reason, the business sectors have shifted the focus to incorporating mobile apps in their business models.
Further, the growing dependence of customers‘ on mobile apps has encouraged startups to offer on-demand services. And, this is not limited to the transportation sector only; instead, the on-demand business model caters to a broad spectrum.
Hence, a lot of on-demand startup business models are adopting the Uber for X model, thereby contributing to the on-demand delivery market.
Reasons behind the On-Demand Startups’ Growth
There are many reasons for the growth of on-demand startups. First, on-demand startup business models are user-friendly. Also, on-demand startups are convenient, technically sound, and more efficient. However, accuracy, speed, quality, and customer satisfaction remain to be the centre of the on-demand business model.
The growth of the on-demand economy speaks volumes of the success and advantages it has offered to investors, startup owners, and customers alike. Further, the on-demand startups have become a source of attracting customers for the investors. As a result, many people have started investing in startups and are successfully retaining their businesses with innovative ideas.
Since there’re a plethora of choices for the customers, the user looks for the best service and takes no time in switching to a better option. As a result, the on-demand industry is becoming more and more competitive. So, the credit somehow goes to the customers as well who are taking full advantage of the on-demand delivery software.
Essentials for an On-Demand Business Startup Model
So, if you are interested in running a startup on the on-demand business model, here are some of the basic requirements you must know.
Easy to use User Interface
Since there are so many on-demand services in the market, it is challenging to attract the customer. And, complicated software or delivery apps may compel the user to look for other options. Hence, it is essential to make service user-friendly and enjoyable.
The first thing that attracts the user’s attention is the company’s app or website. So, make sure that your User Interface (UI) is easy, and allows tracking of the order. Similarly, simplify the communication between the rider and the customer by streamlining the interaction.
Reliability and Accuracy
Being reliable, quick, and accurate are the essentials for an on-demand service. So, the sooner the order reaches the customer, the more satisfied the customer will be; which is what you want. Hence, customer satisfaction helps to process more jobs and generate more revenue.
However, in a rush to deliver the order on time, also make sure to be accurate. Also, you must have skilled employees and the right on-demand business equipment.
Keep an Eye on the Business Trend
The data your company holds can help you in identifying the possible opportunities in the on-demand economy. So, do consider the data at the macro and micro levels.
The micro-data comprises the customer’s location, the live-traffic updates, and the location and stock of service providers. On the other hand, the macro data keeps you aware of the user location trends and trending services. Hence, analyzing these sets of data will help to highlight the areas of potential growth.
Factors of a Successful On-Demand Business Model
Degree of Commoditization
The degree of commoditization your on-demand business provides is vital to its success. FYI, the degree of commoditization is the number of variables that are associated with your product or service. So, if the service you are providing has less number of variables attached, it will be more commoditized.
For instance, Uber only allows you to select the type of transport you want for the trip. However, Airbnb enables the user to choose the booking date, the location, rent, the number of days, and many other available facilities.
Platform and the Side Supply
You cannot build a successful business without a balanced relationship between the side supply and the platform. Hence, you probably have to aggregate the existing small businesses or contract the supply.
While it is easy to aggregate small businesses, you may struggle with the latter. However, to curtail the supply, you will need a platform, and the on-demand business model may help in this regard.
The Pricing Structure
Another crucial factor in defining an on-demand business model is the pricing structure. It is vital to business success to make the right decision. Hence, you have to decide whether to go for a single pricing structure for the platform on the whole. Or, go with the one depending on the service provider’s choice.
Also, consider the commoditization degree of your service for the final decision. In the end, the wider the margin in the product quality as per the service provider, the harder it becomes to impose standard pricing.
Most on-demand apps or platforms have at least two stakeholders. For example, the two key stakeholders for an Uber service are the drivers and the users. In the same way, in the delivery service market, the courier companies, the delivery agent, and the customer are the primary stakeholders.
However, involving more stakeholders in the process may impact your on-demand business model either way. It might bring in more business, but at the same time, it can hurt your bottom line. You have to remember that productivity does not always mean increased profitability because sometimes, only your revenue is increasing.
The Future of On-Demand Business Model
First of all, it’s clear that the on-demand business model belongs in the future because that’s what the customer wants. Maybe, the evolution of tech will decide how easy or hard the transition will be for businesses. While tech growth is inevitable, you can’t forget that the needs of the users evolve even faster. As a result, it will also be a race of matching the technology with the ever-changing needs of the users.
It is easy to say that On-demand business model is here to stay observing the on-demand economy statistics, The many on-demand business model advantages make it easy to predict that the on-demand businesses will see rapid growth in coming years.
First, it has provided the customers what they have always longed for, i.e., instant gratification of needs. Further, it has evoked a sense of empowerment in the user who can get anything at a tap. Above all, it’s an easy and quick model –what else a customer wants?
Hence, businesses are working hard to improve the value chains, and make the features simple, thereby making friction-less UI apps. The on-demand business model has certainly changed the consumer’s transaction and shopping behaviour around the globe. And, it is likely to see rapid growth in the demand of “on-demand apps” and software.
Of course, AI is going to be a key player for on-demand business models because of what it does. You can say that the time when machines will know what humans want is not too far. You probably see machines suggesting you songs, products, etc. They even try to predict what they want. Type a word in Google’s search box, and you will know.
The main goal of an on-demand business model is the business growth with a constant increase to accessibility. For this reason, it is essential to upgrade your product regularly. Hence, you must have the on-demand business equipment and the supporting architecture. Also, gratifying the customers will in-turn benefit your business in the long run. Therefore, you will be able to enjoy a high Return on Investment.
IoT, AI, and other progressing tech are going to play a significant role in making on-demand business models more viable, but this transition will require adaptation, investment, and confidence from the businesses. While some businesses will fail because they will not adapt, others will fail because they will not have enough budget. On the other hand, some companies might stay afloat only because they adapt well to the changing tech. In addition to that, you have customers who will benefit from it all because they will enjoy the quick and timely shipping of their goods.