7 Industries being Disrupted by the On-demand Economy

As published on VenturePact. 

Tap a button and get the world, sounds revolutionary right. That is what is being promised by emerging on demand platforms emerging in different verticals today. For the uninitiated, the ‘on demand economy’ is built on top of a technology infrastructure that brings the online and offline world together. Demand that is aggregated online is serviced offline either instantaneously or in a scheduled manner. This broad concept finds application in different industries in slightly varied forms.

The on demand economy has affected all of us. People standing on busy roads no longer have to wave to stop cabs, Craigslist and Yellow Pages are no longer the only options to find service professionals and virtual restaurants with no storefronts are providing instantaneous meals at the doorstep. What is revolutionary about on demand economy is how it takes a full cycle approach – Search, Discover, Book/Schedule, Consume, Pay and Review – to consumers needs; making it a much more efficient way of consuming services. From the service provider standpoint it means access to more demand (if we are considering an established brick-and-mortar business) or not having to market (if we are talking about freelancers). We have created an infographic that helps you understand the On Demand Economy better.

Let’s go through the top 7 industries which are being disrupted by the on-demand wave and how you can make millions (if not billions) of dollars with your own mobile based platform in one of them.

• Food

The food industry has been called an evergreen one. Doorstep food delivery has quickly become popular among Indian consumers. There are three main steps to tackling food delivery as a business – searching/ordering (either for ingredients or cooked meals), cooking and delivering. Earlier, one had to visit a store to buy groceries. Cooked meals were served in restaurants with no home delivery option. But these traditional models have been disrupted by the on demand economy completely.

Today there are platforms that enable people to order groceries online and have them delivered at their doorstep. Now, there’s no need to dress up and drive to a restaurant to have meals as anyone can have their favourite meals delivered to them with a tap on the phone. Moreover, if a family loves to cook then there are platforms that provide a new recipe with fresh ingredients delivered at their home. And yes, if one wants to go to a restaurant and enjoy food then there are platforms that facilitate table bookings.

This industry has come a long way in terms of technology. Here’s a list of some new business models which can be adopted in the on demand food industry with examples of successful companies already running on them:

• On Demand Delivery
• Grocery delivery (Instacart)
• Recipe and ingredients delivery (Blue Apron)
• Cooked meal delivery
• Hire freelance chefs to cook and deliver with freelance delivery staff. (Munchery)
• Aggregate restaurants that don’t deliver on your platform and offer logistics and customers to them. (Postmates, Doordash)
• On Demand In Store Reservations: Online table bookings. (OpenTable)

While the platforms are impacting the three steps listed individually, the one’s that are tackling all three steps that are order, cook and deliver like Munchery, SpoonRocket & BiteKite have completely opened up the landscape. Once they begin scaling up in size these virtual restaurants can definitely get their unit economics right owing to better customer acquisition and lower infrastructure costs.

In addition, even when it comes to existing restaurants, on demand economy has integrated very well with the food industry. It has not just added convenience to customers’ daily lives, enabling them to order food the way they want but has also helped restaurants in expanding to more geographical locations without investing in infrastructure.

The meal delivery industry is already a trillion dollar industry as per the first quarter of 2015. With huge VC investments in this sector and big players like AmazonFresh entering the business of grocery delivery, we can foresee a bright future for the on demand food industry.

• Ground Transportation

The ground transportation industry is one of the first few industries to be disrupted by the on demand economy. We all know how easy it is to book and travel by a cab within a city. The technology led business model of Uber has grown to a $40bn business in a matter of years transporting millions of people from Point A to Point B while still claiming that it’s not a logistics company and but a technology platform.

Cabs or taxis have completely shifted to the on demand model. Many existing taxi companies have launched their own apps making it easy for their customers to book a cab. However, other ground transportation businesses have not been tapped into yet. Apart from cabs, technology driven platforms have made it possible for people to rent their own cars on an hourly basis and car-pooling platforms are enabling people to travel together and save fuel. Such platforms have clocked in heavy funding from venture capitalists for further growth. Here are a few verticals for entrepreneurs who are interested in participating in an on-demand ground transportation business:

• Cabs on Demand (Uber)
• Ridesharing Platforms or Car Pool (Lyft)
• Transport vehicles on demand like trucks, vans etc. (Cargomatic)
• Rental platform for cars (ZoomCar)
• Platform to hire chauffeurs for personal cars (DriveU)
• On Demand valet parking (Luxe)

With more and more people using such platforms, ground transportation as a business will achieve great heights in terms of customer base and revenue. In areas where Uber has achieved critical mass, it claims that it is not only eating into the business of existing taxi companies but creating a much larger pie with more people demanding taxis in general. Clearly, the customers are getting used to this convenience and expect this to be their default interface with the industry.

• Beauty

Earlier, people used to visit salons and parlors to get themselves pampered but with less time and busy schedules, the beauty industry is shifting its business model to serve clients wherever and whenever they demand.

From salon booking appointments to hiring an in-home stylist, technology has enabled beauty services business to serve clients at their doorstep. Some models which can be tapped into in the beauty industry include:

• On Demand On Site Services:

• Hire your own stylists to serve your clients at their doorstep. (Miniluxe)
• Aggregate freelance stylists and help clients book a stylist of their choice.

• On Demand In Store Reservations: A model facilitating salon / parlour bookings (StyleSeat)
• Marketplace Model: A platform listing stylists with ratings and reviews.

The on demand platforms in the beauty industry have not only helped customers with quality services at the convenience of their home but have also helped salons and parlours to expand their customer base. These models have provided freelance stylists with an opportunity to employ themselves and also help entrepreneurs to make earn in the form of a small commission from every service booked.

These platforms providing reasonably priced doorstep beauty services will enjoy more consumer popularity in the near future as they offer saving on time and effort to an increasingly price sensitive demography.

• B2B Services

B2B services enable a business to focus on its core business activities while outsourcing other background aspects upon themselves to ensure smooth operations. B2B companies help businesses in running lean while ensuring they always have access to ancillary services without having to hire permanent employees for such tasks.

They offer help for stuff like hiring staff members, organizing corporate events,  logistics and some other professional services. These on demand startups have completely removed fragmented middlemen services from the picture.

Some verticals that are successful in the on demand B2B space include:

• Temporary Staffing: ShiftGig, TaskRabbit.
• Corporate Events: Vanuebook.
• Corporate travel: Rockettravel
• Corporate Catering: Grubhub, ezcarter.
• Outsourced Consulting: HourlyNerd.

With the ease of contacting another business to get specific pockets of work done in a fast and efficient manner, startups in the B2B segment are becoming more popular. They have, therefore, attracted huge venture capital investments too.

• Services

Skilled service professionals do not wait for customers to call them anymore. Customers looking for professional help have also stopped depending on the Yellow Pages or other online directories to find phone numbers. Skilled workers have, in turn, stopped listing their phone numbers across various traditional channels but rather opt to register on to tailor-made platforms where customers are actually looking for them i.e. the on demand platforms.

The main reason for customers shifting to these platforms are that they are customised to make searching, booking and making payments easy. Some live examples of on demand models in the service industry include:

• Home visits by Professional Help
• Hire a team of professionals and manage bookings. (Wischen)
• Aggregate freelancers and sell their services to customers. (Mopp)
• Marketplace Model: A platform connecting customers and skilled software firms to develop software products. (VenturePact)

A mobile app catering to plumbers, electricians, lawn mowers or any other service professional in a particular geographical location is going to be a sure shot success. Mainly because these services essentially make the entire process of hiring a help a one-step process on a smartphone.

• Healthcare

The healthcare industry is a global trillion dollar industry and is becoming one of the most favourite destinations for entrepreneurs who want to build an empire in the on demand space. Earlier people had to visit a doctor whenever they were ill and queue up for a chance to see the doctor. On demand apps in this industry have now reinvented the way patients interact with doctors and have also made it possible for them to order prescribed medicines to be delivered at their doorstep.

Some common on demand business models in the medical sector include:

• Doctor visits patient at his location (DoctorOnDemand)
• Patient consults doctor through audio / video channels (TelaDoc)
• On Demand Ambulance service. (Stat)
• On Demand Medicines. (MedPlus)
• On Demand Nurse / Caretakers. (Go2Nurse)
• Marketplace model – An aggregation of doctors, clinics, hospitals etc. (Practo)

Tech startups in medical field are attracting huge investments as they are making it easy for patients to get good healthcare facilities with ease and at affordable rates. In near future, there will be more such platforms which will be dedicated to health care aiming to make medical facilities affordable.

• Logistics

Courier companies were the only set of reliable services for individuals and corporates who wanted to ship goods from one location to another within a specified geographical domain (either domestic or international). Technology has played an important role in expanding this sector to other small players as  live customer notifications and online & SMS courier tracking were introduced. But delivery time and booking process still remain a factor of concern. Also, many consumers are not happy with the disparate price structure prevalent in the industry.

All these problems were solved with the onset of on demand services within the industry. Corporates can now book a truck for their cargo through an app and track their cargo right from dispatch to receiving it at the other end. Sending anything to anyone within a city has become a breeze with on-demand startups like Deliv.

Some business models which have made it big in this field include:

• Local goods deliveries with crowdsourced workers. (Postmates)(Deliv)

• Outstation cargo deliveries by hiring drivers who own trucks (TruckBuddy, GetWagon)

The world is getting smaller and people are short of time. It has become increasingly important for a delivery company to offer doorstep pickup and drop services and also be accountable for the time taken for the process. Many platforms in this sector have disrupted courier companies that stuck to traditional operation models as they work more efficiently, reliably and are more user friendly. Millions of dollars have been pumped into the on demand delivery and logistics platforms to help them expand their presence.

There’s no denying that the on-demand economy is playing a vital role in making our lives simpler. Helping us accomplish tasks in an easier and quicker way, the on demand economy is creating a disruption in many business verticals. This new economy which aims to connect consumers with service providers through sound technological infrastructures has brought a change in the way businesses serve their customers. We created a map of around 800 such startups in the On Demand Vertical and were surprised to see how prevalent the trend has become even if it started only five years ago.

Irrespective of regulatory hurdles surrounding the business model, I believe the on demand economy will steer through the challenges and emerge successfully since the fundamentals on both sides of the marketplace are strong. Expect to see many entrepreneurial initiatives in this space across the globe and traditional industries leveraging the on demand technology to improve customer experience in the next five years.

Want to get the business model of your On Demand Idea right?
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