Here's Why “Uberification” is a Lazy Way to Describe On Demand Services

We now live in a world where it’s not size of your company that matters — it’s the speed at which it can adapt. The big question, is: what will your customers want tomorrow? Sometimes you can ask them, often you need to show them.

We can see this happening with the new “On Demand” culture. If revolution number one was media’s shift to “On Demand”, (BBC iplayer, Netflix, Amazon Prime TV) the next chapter was “products on demand’ (ecommerce & then ‘onmi-channel’ shopping), then the third wave is all about “services on demand” enabled by technology. The opportunity to aggregate large multi-billion dollar fragmented markets, with limited price transparency, wild variations in quality standards and limited realtime data is vast. These services offer the customer an exciting new world of lifestyle convenience. Sometimes you will go to the physical space where the service is offered, on other occasions you will book the service to come to you (blow LTD. for beauty, Housekeep for cleaning, Deliveroo for restaurant food, Laundrapp for dry cleaning, Bizzby for a handyman and countless others).

This is often explained away as “the uberfication” of services. But that only describes one of the many models emerging now. Like the evolution of ecommerce, the way this plays through will be different in each market segment, with different benefits to both sides of the marketplace and importantly differing business models. In some markets, the models will more likely resemble the operational elements of the industry in which they aim to disrupt, be they beauty, cleaning or logistics.

‘Uber for x’ is a lazy umbrella moniker which has been applied to On Demand services and while it has certainly helped companies like ours explain the opportunity for our customers, it doesn’t explain how you crack it. For taxi services this has meant single click instant consumer gratification, cashless payment, vetted drivers with ratings, ability for drivers to earn more per day minimizing downtime (based on market frequency) and more flexible working. The levers are similar in many markets: convenience, quality standardisation, accessible pricing on the demand side vs more money, flexibility and other incentives on the supply side. But the way these levers are deployed, the structure of the business model and the core capabilities of the company that will scale in each market are fundamentally different.

The beauty services market is of similar size to the private hire (Uber) market, roughly £6bn in revenues with more than 250,000 professionals in the UK. It is large, hyper-fragmented (with over 55,000 salons, 94% owner/manger) and equally ripe for disruption. When we launched blow LTDs “salon to your home” service last year to bring expert blow-dries, makeup, nails and other beauty services to your door, we were faced with some pretty fundamental industry issues to crack (but who said disruption was ever going to be easy?) The key issues centre around quality and consistency of service, capacity utilisation of staff (in stores), volume of jobs for most freelancers, and non-transparent pricing in a mono-service industry (hair salons specialising in hair, nail bars on nails alone etc). Add to this the traditional view that beauty is built around the spa model of slow, time-out pampering (vs speedy services for the new generations of affluent time poor women).

It’s no coincidence that the first service platforms were “connection platforms” — ie on the supply side. anyone with a drivers license and a clean CRB check could work for a taxi or food delivery company. This meant these companies could build supply fast to deliver the consumer promise. As you move down the high street to services which require you to visit a consumer’s home and deliver a highly personal one-on-one service (blow dry, manicure, makeover, waxing or massage), the core capability of the company is not purely technology and marketing, but its ability to deliver an outstanding end to end service in a scaleable way.

While product designers focus on the characteristics buyers will value, service designers focus on the experiences customers want to have again and again.

Finding the very best professionals, then testing, vetting and equipping them to deliver an outstanding experience is at the core of this market. For example, at blow LTD just 15 % of professionals who apply to become part of the blow LTD “squad” are accepted onto our curated marketplace.

The “on-boarding” process is extensive and based on the experience of building training programmes for our physical spaces (beauty bars in Covent Garden & Canary Wharf). These spaces are now being used as ‘operating hubs’ (profit centre vs cost centre) where we technical test prospective On Demand professionals across off peak hours. The funnel involves a complex series of interviews, technical testing, document checks (eg insurance, CRB, HMRC registration, passport/visa), on-boarding to professional apps & an ideal customer journey, as well as a quality control & engagement programme based on realtime consumer ratings.

Unlike booking a taxi, booking a beauty service is not just about the convenience of timing (eg at your door within an hour). This market is characterised by being ‘scheduled’ (vs purely on demand). In most cases our consumer plans her service — she knows when she wants it eg before a wedding, a girls night out, or early morning before an important client meeting. We looked at when and how she wants to book and have worked back from there to shape a business that fits into her busy lifestyle: ie open from 7am till late, multi-service offering vs ‘mono-service’, faster appointment times and the option to book to her door rather than make her come to us.

From a tech and operational standpoint this requires applications built for a two-sided marketplace: for consumers to book (now or in the future) and rate; and critically apps for vetted professionals to set their own availability, accept jobs and track their earnings. While we do not touch most of the 1000+ jobs that are booked across the platform each month, unlike Uber you sometimes need a friendly voice at the end of a phone– so that requires a seven- day, early to late customer service team.

Creating a trusted brand where you book a slot not a person, allows you to set transparent and accessible pricing. Traditionally, salons have charged more for the services of a senior stylist than a junior stylist — often trading customers up to more expensive services. But an On Demand beauty squad with expertly vetted and tech tested professionals means all pricing is identical and transparent — and this includes our pricing for wedding guests (why should the “w” word involve extra naughts on the cost of a service)?

These pricing models will become even more sophisticated and disruptive — dynamic pricing, pre paid packs, subscriptions, discounts for multi-service or group appointments (allowing multi-skilled staff to earn more per hour). We will see more ‘black taxi’ type strikes in new markets — this change is uncomfortable for incumbents.

But this change is a positive one for a Millennial workforce. These 18–35, tech savvy professionals have higher expectations than previous generations (with access to online information, training, & opportunity). The more entrepreneurial, are seeking greater flexibility in the way they work and more purpose in what they do (as well as more money). Data from the US suggests this structural shift is happening fast: 86% are in service jobs (vs 14% goods producing), 81% of people are now urban dwellers (vs 46% a century ago). The top two most valued benefits for millennials are training and development and flexible working hours — not just pay. The nature of work is increasingly transient, multiple relationships vs single employer and built by trust, respect and purpose vs purely money.

While, the days of ‘fast venture money’ based on the premise of selling to the consumer at 80c vs the 1$ cost and religiously copying the “Uber for x” model are over, the revolution in service markets is only just starting. Each will be tackled in a different way, enabled by technology, and consolidating each market. A service business is about people — it was ever thus. The tech startup market is quickly learning this critical lesson all over again.

Dharmash Mistry, co-founder of blow LTD. is a former Venture Capitalist (Balderton), former NED at Dixons PLC, Hargreaves Lansdown PLC and currently NED at BBC & BBC Worldwide.