On Demand Business Model #1- Scheduled vs Instant Delivery Model
This blog is the part of Juggernaut Special Series on ‘Understanding On Demand Business Models’, where we reviewed different facets of On Demand Business Models
One common misconception goes on to equate On Demand model with instant. Instant (15-45 minutes reckoning time) and scheduled can be equally viable business options, one more suited for a particular situation than the other.
Take a look at these services/products: Taxis – Fast food/ Meal Delivery – Groceries – Massage/Beauty – Laundry – Courier Delivery. As we move from left to right, the scheduled delivery model starts becoming more and more viable. In addition to the nature of demand that you are aggregating, the logistics of the supplier side infrastructure should also be taken into account while zeroing in on the exact model. Unless you are already in the space, in which case you are just adding the technology layer above the business model to aggregate demand, the economics of instant delivery/servicing the demand are a lot different as compared to its scheduling counterpart.
Instant gratification model puts a lot of pressure on your servicing infrastructure because of the unpredictable demand. The tactics like surge pricing and complicated prediction models can only go thus far but they can never compete with exactly knowing your demand, a luxury available in case of scheduling. That being said, many On Demand instant startups are already functional. VC War chests are betting on the potential and supporting them in the initial stages till the point they achieve economies of scale.
In a nutshell, the choice should be guided by how the end customers want to consume the services and whether the business model is creating enough value for the service providers to offset headaches of instant delivery.
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