Insight & Research

May 26, 2016

The rise of on-demand and changing consumer expectations

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How are on-demand models shifting consumer expectations and how can companies adapt without overhauling their business models?

Written by Ella Majava, Brand and Innovation Strategist, Insight & Research

The last couple of years have seen a rise in on-demand services, infiltrating more and more areas of our life. From food delivery to blow-dries to laundry services, the number of opportunities at our fingertips is vast. There has been a language change: companies less frequently aspire to be ‘the Google of’; rather tech companies are continuously pitching new ideas that promise to be ‘an Uber for’ new categories where on-demand is not yet offered. Advertising for new services are appearing in cities around the world as start-ups are trying to build brand awareness quickly in the fast moving landscape, and be the first to get there in their verticals.

As on-demand becomes a bigger part of our life, businesses in all industries have lessons to learn from the rise of this convenience economy. Whilst currently the biggest sectors for on-demand include market places, transportation, food deliveries, home services and beauty – on-demand apps are permeating more and more categories. Crowd Companies, a firm that tracks on-demand platform businesses, has listed over 280 enterprises providing on-demand goods and services across 16 industries.

Another reason for existing brands to pay attention is that recent market analysis, reported by Harvard Business Review, has shown that on-demand has been taken up by broader audiences than the usual suspects: urban millennial early adopters. For instance, in the U.S., 30% of on-demand consumers are aged between 35 and 54, and 22% are aged 55 or older. The users of these services also span wealthy and less wealthy audiences, and are spread geographically.

Many traditional businesses might see the rise of on-demand as a threat, there is also an opportunity to learn from these brands and respond to the emerging consumer needs and expectations – even without rewriting whole business models:

  • Consumers are expecting businesses to be ‘always available’ and adapt to changes – so they don’t have to. On demand services are masters are predicting consumer demand, and have developed sophisticated algorithms – e.g. Deliveroo food delivery has algorithms to predict the weather in order to have the right levels of drivers available – to ensure consumers never have to wait for a long time or go hungry.
  • Consumers are willing to help and ‘do their part’ – they understand the value equation and their role within it. On-demand services frequently enable service providers to rate customers; modern consumers understand the expectations companies have of them and are increasingly accepting that good behaviour as a customer can lead to advantages and privileges. As attitudes are changing, this gives companies an opportunity to be transparent about how customers can help and gain benefits through it.
  • Consumers are seeking and willing to pay for ‘hyper-convenience’. On-demand services have gotten consumers used to the idea of outsourcing tasks and saving time, from running errands to doing laundry. Consumers’ new-found love of this hyper convenient lifestyle gives brands an opportunity to sell added services that save consumers time – from furniture assembly to beauty services accompanying product purchases.
  • Consumers are used to having their voice heard – and responded to – quickly. On demand services are changing expectations of consumer services – with support often available to solve issues within minutes, any time of day.
  • Consumers are seeking seamless services and experiences, and expecting brands to collaborate to provide these. Uber has already partnered up with brands from hotel chains to restaurants, enabling streamlined booking and travel experiences. As the industry keeps growing, there will be a wealth of opportunities for brands to partner with various on-demand services to create experiences that delight consumers and are beneficial for both brands.

Rather than viewing the rise of on-demand as a threat, innovative brands can borrow some tricks from their book and offer optimal user experiences that meet the emerging expectations of consumers in order to remain competitive in the changing environment.

 

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