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How Technology Has Shaped the On-Demand Economy

The on-demand economy works by taking services—such as hairstyling, subscription deliveries, or repairs—and using technology to connect consumers and suppliers. What are the advantages to this modern economy? 

By
JJ Watt, Partner
4-minute read
on-demand economy

You might have heard about on-demand services, which involve connecting workers to customers to do tasks as needed. Usually, the workers are engaged only temporarily. The arrangement is beneficial for workers who want to make extra money and customers who want convenience.

What is the on-demand economy?

Th on-demand economy is all about the economic activity that technology companies and online marketplaces create when fulfilling customers’ needs. This is achieved by offering nearly instant access to services and goods. The process is also sometimes called the access economy, and it offers a convenient method of getting goods to those looking for them.

Today, thousands of companies benefit from the process. Consumers are prioritizing efficient, simple, and quick experiences. That means the demand for fast access to goods is growing quickly. Simplicity and convenience are at the heart of what customers are looking for to meet their needs. For those who have the skills to meet the growing demands of consumers, the advantages of picking working hours and filing spare time are appealing.

How on-demand services work

The on-demand economy works by taking services—such as hairstyling, subscription deliveries, or repairs—and using technology to connect consumers and suppliers. The connection often happens via an app or website. Both parties create accounts to use this service. Then, when the consumer wants the service, all they have to do is open the app, enter the requested information, and send requests to connect with the providers.

When the consumer makes a request, the provider will get an alert through the application and perform the task for the customer. Once the job is done, the payment usually goes through the tech company. That way, no personal information is shared between parties since the technology company safeguards the data. Often, both parties will offer ratings and feedback for each other to ensure service quality and to improve the system. The market depends on several factors, including:

  • Convenience. Customers want to be able to get what they need easily without technical barriers.
  • Punctuality. People expect their tasks to be done within a certain time frame.
  • Quality. While clients need to get their services and goods quickly, it’s equally important that those services and products be of good quality.
  • Simplicity. Easy payment options make the platform more attractive to customers.
  • Service awareness. To make on-demand services accessible, people need to be aware of them.
  • Availability. People want workers near them. One example: getting food delivery within a short time of placing an order.
  • Cost-effectiveness. While there might be delivery fees, the products need to be affordable for a range of clients.

Examples of on-demand services

One example is ride-sharing platforms. With the app or website, drivers can be matched with people who need a taxi-like service. Often, the platform can arrange a ride on short notice. The customer enters their location and where they need to go, and a driver can accept the request. The application handles the payment, so the driver doesn’t handle any credit card info. Food delivery can expand a restaurant’s reach to a larger customer base.

Some platforms have seen success by working with smaller, independent restaurants. The process can work the same way ride-sharing does. The customer places their order through a third-party platform, and they pay for the food and the delivery fee. A deliverer gets a notification about the order and can choose to accept it. They then pick up the order and deliver it to the customer’s location.

Subscription boxes are recurring deliveries of related products packaged to create a certain experience. Unlike many other products, subscription boxes offer exciting experiences since you don’t know exactly what’s in the box until it arrives. For example, if you get a subscription marijuana delivery, you’ll get cannabis-themed items each month. Depending on regulations where you live, the box might include vape pens, rolling papers, bongs, edibles, and other goodies.

Advantages of on-demand services

One of the main advantages of the on-demand economy is that the demand for services and goods can be fulfilled in real-time. Plus, this setup makes it is easier for consumers to find a skilled provider.

Technology companies facilitating the arrangement also prefer it. It lets the company meet the needs of customers efficiently and in a scalable way. Technology companies can offer services and gain profits without the costs associated with traditional models. They don’t have to find or train as many staff members or offer as many benefits.

For service providers, the arrangement allows them to earn money, often in their spare time. They can work as much as they want, and depending on what they’re offering, they can often get paid on the same day.

When companies (such as restaurants) go through a platform (such as an on-demand delivery service), they don’t have to worry about finding clients since the app or website can provide a steady stream of customers.

Best Practices

For companies offering platforms, it should be a priority to ensure that customers get a seamless interface because users want more convenience and simplicity. For customers, a priority should include safeguarding their personal information. They should also participate honestly in ratings and review systems. The on-demand economy relies on fair feedback from both sides. Providers offering service should avoid overstating their qualifications and offer the same quality they would like to receive. On-demand services are here to stay, and this form of commerce is growing quickly thanks to the internet. As customers look for greater simplicity, convenience, and speed in getting tasks done, providers will continue to adapt to meet the growing needs.