Are You Ready for the On-Demand Economy?
We live in an on-demand world, where help and expertise are a click or a call away. New online platforms, sophisticated mobile apps and an increasingly independent workforce are the driving forces shaping the on-demand economy. Put simply by Steve Schlafman of RRE, “Welcome to the Uberification of our service economy.” (A reference to Uber, the on-demand taxi company with a valuation of $18 billion).
There may be big implications of “on-demand” for your business, which I’ll cover later. But first, here are some examples how this dynamic is cutting across different industries in both B2B and B2C.
Venerable Professions are Going On-Demand
- Doctors. Worried about a nasty rash at 3am? Telemedicine providers like Asentra Health provide live medical expertise from physicians who are on call and accessible for quick remote consults on any smart phone, tablet or PC.
- Financial service providers. Unhappy with your financial advisor? No worries. Covester lets you “follow” experienced portfolio managers and mirror their actual trades. In other words, sophisticated investment models are readily available on-demand.
- Legal services. Need an attorney with a specific expertise right way? Companies like Hire Counsel are redefining the legal economy by providing fast access to vetted, qualified lawyers with deep specialization, in addition to a broad range of other legal services.
- Design. Need a new logo or brochure in a hurry? Crowdsourcing sites like 99 designs provide affordable services from designers around the world in hours or days. However, there are caveats since the nature of this service is a far cry from top tier professional services firms like Hire Counsel. I’ve used crowd-sourcing before and have some strong opinions if you’d like to ping me.
- Home services. Is your home a mess from that big party last night? With services like Handy, cleaning help, plumbers and painters can be booked online in 60 seconds and you can schedule your home service for as early as tomorrow. Recently I met an entrepreneur who is developing a location based app so you can find local contractors within a geographic radius of your home who are currently available – even at midnight.
- Food delivery. Want a burrito delivered to your door in 5 minutes? Seamless provides food delivery from local restaurants, and users can choose from thousands of menus on any device. They now have nearly 4 million active monthly users and are growing over 50% a year according to Mike Jaconi, an on-demand expert. The trend is going up-market too. Some companies are now providing prepared home cooked, organic meals on-demand, delivered to homes.
- Chores. Don’t have enough time for daily tasks? Check out Task Rabbit. A friend of mine suffering from a concussion needed help replying to some emails. An on-demand helper came to the rescue within hours, courtesy of Task Rabbit.
It of course depends on your industry and the specifics of your business. That said, look out for:
- Potential disruption from On-Demand players. If your customers can instantly find a suitable replacement at a fraction of the price, you may no longer be the go-to source.
- Becoming a commodity. Your competition may no longer be across town. It’s likely across the world, which presents the risk of your service becoming a commodity which puts downward pressure on pricing.
Strategic Considerations and Opportunities
- Be Aware of on-demand trends in other industries, because they may affect your own. And by the time this happens, you may be at a disadvantage. In the legal industry for example, 89% of law firm leaders feel that legal work will be more commoditized going forward, according to Altman Weil. And 68% of large law firms are shifting work to contract or temporary attorneys.
- Service, Service, Service. If your company is being disrupted by on-demand forces, consider rethinking and upgrading your service offering. Premium, unparalleled service and a deep understanding of your customers go a long way.
- Specialization. In an increasingly commoditized sector, it pays to specialize. Some home contractors are now specializing in treating basements to differentiate themselves, for example.
- Partner with the disruptors. Consider adding value to your service by working with on-demand players. For example, American Express launched a partnership with Uber earlier this year. Amex got a foot in the door by allowing customers to earn double points on their Uber spending with an American Express credit card.
- Invest in relationships. One way to hedge against on-demand disruption is to build deeper relationships with your customers.
- Become a great place to work. To keep your employees from walking out the door and becoming on-demand freelancers themselves, investing in your people and your culture can help increase employee retention.
Some of our clients are on-demand innovators mentioned in this newsletter. Others are facing disruption from the on-demand economy. We’re seeing an acceleration of this trend and if you’d like to discuss, drop us a line.