On-Demand Economy

Girish Kant Sood


What Exactly is On-Demand Service?

Most of you might have heard about A-LA-CARTE i.e channel-on-demand or Video-On-Demand etc. if not than Netflix is definitely something all of you must be familiar with, well, this all collectively is a part of what you know as On-Demand service. It basically is the power that enables you to choose your favorite label, food, customize your order etc not in a few hours, not day after tomorrow but now, in this very moment. On-demand service is a conciliator between customers & businesses of various sectors. Nowadays, rather than outlay time & effort for receiving what they need, users prefer to pay a small fee for a swift & convenient process offered by these services & apps such as UberEats etc. The major difference between on-demand apps & other mobile apps is in the services offered, as on-demand service saves a lot of time & money of the consumers whilst also providing simplicity. With these apps, you may get your service in a split-second when required. From food delivery to a taxi ride, to rent a car, or buying grocery it takes into account everything one can think of.

The on-demand hypergrowth is upon us. In the next 5 to 20 years most people will be able to get anything within a 5 to 60-minute window. – Gary Vaynerchuk

Why is On-Demand in demand?

The whole plan of on-demand apps & services is based on speed, convenience & quality, so it is obvious for the development firms to have a center stage & as consumers want to be happy in a flash, this is the opportunity that these firms have capitalized upon & even more are still doing so. Today, individuals & mostly millennials who are time-starved are hiring technicians, beauty & laundry services etc. right from their mobile screen which means that shifting to on-demand services has become necessary. For eg:

“Oh god! I am getting late for a movie. I need to book a cab immediately.”

“Honey I am too tired to cook now, let’s order food from the neighboring restaurant.”

It has just changed the opinion of the majority of the working class from WHY to WHY NOT. Also, the on-demand economy has replaced conventional business models more rapidly than it was expected to. These services combined with a pair of robust apps authorize catering of products & services in a flash. As Forbes has already said it “Let’s Uberize The Entire Economy”.

The biggest advantage that on-demand services provide, is the ease with which even an unemployed or a common person can earn his livelihood accordingly or earn some valuable extra income in his spare time to meet his personal needs whilst also helping the businesses to cover the growing consumer demand.

Figures of On-Demand Economy:

A Harvard Business Report states that on-demand firms attract nearly 22.4 million customers annually & $57.6 billion in spending

Users paid 98% more on on-demand apps for entertainment in 2017 as compared to the year 2016.

India’s on-demand economy is expected to rise to $307 billion by 2020.

How the On-Demand Business Works

The On-Demand business operates by taking service for eg: like booking a cab, buying groceries, food delivery etc using the internet with apps & websites to connect vendors with consumers, where each involved party registers an account to avail the services. Then if a consumer needs a service, he uses the app, submits their orders, a request is made with the supplier. The supplier is then notified through the app & embarks to complete the required job for the consumer. After the job is finished, payment is made online through credit/debit cards or through 3rd party wallet services or by cash. Safety measures adopted in the app ensures that no personal data is exchanged among the parties involved. To enhance the system & service quality, the groups involved are advised to provide feedback.

Businesses that Impel the On-Demand Economy

The emergence of the on-demand economy around the world has expedited the expansion of trade verticals & galvanized businesses to modify their services. These services provide doorstep delivery for consumers like Uber & Grubhub, while others like Netflix offer their services on several devices in the form of digital content. Let us take a look at the major industries that drive the On-Demand economy:

1. Travel & Transportation Services - This is the dominant sector that consumes the lion’s share of venture capitalist funding with the likes of Uber & Airbnb.
Uber’s valuation at the end of 2018 is a little less than $90 billion which is expected to raise around $120 billion after its IPO in 2019 while it’s main rival, Lyft’s valuation is expected to rise up to $30 billion. Airbnb, the hospitality giant is valued at around $31 billion.

2. Food delivery - After an exhausting Sunday of cricket or football with friends I am totally drained to cook so I use UberEats to order quality food that too at a discounted price. I am quite sure that there are many others who do the same albeit doing it while in their workplace for breakfast, lunch or dinner & that too almost every single day. And it is one of the few reasons for the growth of the food delivery business.

This sector consists of businesses like Grubhub, UberEats, DoorDash, Just Eat etc. But UberEats, valued around $20 billion is gearing to sell its operations in India to Swiggy ($3.3 billion) with a 10% stake to cut losses as it gears for its IPO in the US.

  • GrubHub's valuation stands at $7.2 billion closely followed by DoorDash at $7.1 billion.

  • Just Eat is at third with a valuation of around $5.24 billion, followed by Zomato at $3.6 billion.

3. Health Services - This is the sector which was in dire need of a boost from on-demand services. Prior to these services, patients at the hospitals had to wait for hours in long queues to see the doctor which sometimes proved crucial in case of an emergency & also the fact that the pharmacy would be open for limited hours only. But with the on-demands rise in healthcare, many issues have been handled & solved such as consulting a doctor through video call & buying medicines online which is just a matter of few clicks as one just needs to select the prescribed drug, pay for it, & it will be delivered at their door. Some of the apps are:

  • Doctor on demand - It has been named the fastest growing company in the Prestigious Annual Top 50 in Digital Health List. It has received a total of $160.7 million in funding.

  • ZocDoc - It is the “Uber for Healthcare” & helps to find doctors & book appointments to see patients within 24 hours. It allows patients to book appointments with over 50 different medical experts including dentists, general physicians & more whilst booking them instantly.

  • According to reports, ZocDoc was valued around $2 billion in 2017.

This sector consists of businesses like Grubhub, UberEats, DoorDash, Just Eat etc. But UberEats, valued around $20 billion is gearing to sell its operations in India to Swiggy ($3.3 billion) with a 10% stake to cut losses as it gears for its IPO in the US.

4. Professional services - It is the sector with a much wider reach & flexibility that has undergone colossal overhaul due to the on-demand economy. But it also has the utmost potential & is even appealing & benign because of the pro services it provides like:

  • Plumbing

  • Electrician

  • Dog walking services

Apart from this it also supplies more specific services like hardware & software programmers & also a plethora of choices for the customers as they can enlist experts for any general or domestic work. But the biggest benefit is the opportunity it provides for skilled individuals in the form of employment.

  • TaskRabbit, Thumbtack, Fiverr cover the major market share in this domain.

  • Thumbtack is valued around $1.6 billion, while Fiverr at $766 million & TaskRabbit at $150 million.

5. E-Commerce - t is apparently the answer to this question: if we are able to buy & sell anything online, how awesome would that be? “Anything” means anything one can think of from buying domestic goods to sports items or grocery to clothing online. This is a domain which has come into presence due to On-Demand services.

  • Amazon, Walmart, Alibaba are the giants of e-commerce

  • Alibaba’s is valued around $462.8 billion while Walmart’s valuation is about $386.3 billion & Amazon stands at $160.5 billion.

After taking a look at a much wider picture about the potential that these firms have accomplished, they embolden others to eye them as motivators instead of challengers, & envisage what an on-demand model can do to a startup if put to practice in an efficient way.

Uber’s Revenue Model

Uber is alone the biggest service provider in this economy & has a B2C business model which is being adopted by almost every other service provider. Usually, money collected by every single ride is the only source of revenue for a cab company, but Uber’s revenue model covers various other aspects.

It makes money in the form of commission through the user’s ride fare. Uber takes 20% of the total fare charged to the customer & the balance 80% is for the driver. It charges 1.5x, 2x or more as per the demand of the passengers during peak hours, extreme weather conditions or festivals, which is known as “Surge Pricing”. This pricing algorithm has led to a huge increase in Uber’s profits. They also make a profit from the cancellation of rides by the passengers, which is collected from the user in their next ride.

Salient Aspects For Uber’s success

  • Various cab models to cater to everyone’s needs.

  • Surge Pricing feature.

  • Different options for Inter-city traveling.

  • Uber had no prior rivals in the business which helped them to entrench a stable base, branding & customer faith.

There have been uberification of almost everything such as:

  • Uber for Task: Thumbtack, TaskRabbit.

  • Uber for Hospitality: Airbnb.

  • Uber for Babysitting: Urban Sitter

  • Uber for Food Delivery: UberEats, GrubHub, Zomato.

  • Uber for Healthcare: Medlife, ZocDoc, Doctor on Demand.

  • Uber for Laundry: Cleanly, Washio & much more.

Pros & Cons of On-Demand Economy

Every economic system has its pros & cons but this is something which everyone should look in to. Here we discuss some major points about it:

1. Affordable, Speedy, Time-Saver - On-demand services are very cost-efficient & provide doorstep services. It allows customers access to attractive deals & heavy discounts on a variety of products.

2. Employment at a very large scale - It’s biggest advantage is that it provides employment at a very huge scale. With the increase of users for Amazon, Uber, Zomato, UrbanClap etc. unemployment is being reduced at a higher pace.

3. It’s a pattern of 3 R’s - Recycle, Reuse & Repurpose. We, humans, love to buy cars, properties etc which over time can or are used lesser. So in this sharing economy, private owners can rent their cars or properties to others for a fee. All this exchange limits the wastage of resources.

4. Tracking Facility - As soon as a user places an order, he/she can track the item as it is on the way. Usually, users get notified along with the precise real-time location through Google Maps API or custom API of that specific app.

5. Cashless Payments - There are many options to pay the service providers like using credit & debit cards, or by payment gateways or online wallet services. This facility has made it easy & swift to pay for any service.

Automobile Industry - In December 2013 a Tesla model S was reported to have been bought at a whopping price of 91.4 Bitcoins. Later a 2014 Lamborghini Gallardo LP 550–2 Coupe was also purchased for 216.8 Bitcoins.

Smart Contracts - Some Cryptocurrencies have built in Smart contracts. They are built in protocols to facilitate, verify and enforce a contract. For an example, you could be paid by a minute for the freelance work you do

Payments - There are many options to pay the service providers like using credit & debit cards, or by payment gateways or online wallet services. This facility has made it easy & swift to pay for any service.

Cons of On-Demand services

1. Unjust - It is many times unjust to those who earn their living by traditional services like private taxis, shopkeepers, vendors as on-demand services take away profit from them.

2. Government’s Loss of Revenue - One more setback of this economy is the potential loss of tax revenues for the government. Since most do business online by offering services like content writing, Web designing etc that are not regulated, so all those who earn an income, don’t pay tax which must have been added to the government’s revenue.

3. It leads to scams & frauds - By trading of products & services online, the customers are not entirely protected from fraud specifically if there is an intent to mislead. Online buyers are exposed to sellers who offer poor quality items which can be stressful for the buyers. Also, many times freelancers can be scammed by phony clients who demand work but do not respond after the task is completed.

Future Scope of On-Demand Services

All a user requires in service is swift response, personalization, & flexibility. So, one needs to fulfill these specifications to broaden On-demand services & need to embrace it before their adversaries do. Whether we believe it or not, but the on-demand economy is here to remain. Majority of the users of this economy are millennials & 30% are of 35-55 age group. Users of on-demand services have pretty high expectations & they need it to be instant & dynamic, & who doesn’t want to avail such services & avoid unnecessary hassles.

This economy persists to evolve naturally with the help of technology, & being powerful & flexible, it honors those who are bold enough to not only commence & also compete for the neck to neck with already established firms. It promotes the sharing economy, flexibility & significant agility of these services. It is moving towards a larger facet where even autonomous vendors can offer their products & services to users through apps. The on-demand service can & is still rattling many other industries. With advanced technology in play, it is a cutthroat competition between the corporations to provide top-notch services in the least possible time with the utmost quality.


Assuredly, on-demand applications have made our lives much comfortable than ever. Influenced by high tech gadgets, everyone has developed a sense of assertion to fulfill their needs for things they require in an affordable, simple, swift & convenient fashion. Also, the niche is that of vying with the competition to introduce a straightforward on-demand app so that it is certainly ahead than the competitors. The development companies are already examining technologies & have also put them in the testing phase to provide out of the way ideas for UX on their apps. Hence, the on-demand economy is fully equipped for a glistening future.

But at the same time, it is as if that on-demand is a synonym for "for rent". Because "renting" is an over-reliance that opposes custody which can either be temporary or permanent & it is just like treating symptoms of a problem instead of the root cause & this approach if accepted by the whole, can give rise to an unstable community which will eventually turn into a lopsided one.

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