Why On-demand Services Startups Are The Next Big Thing

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Speed seems to be the name of the game in today's on-demand economy. Almost everything from medicines, food, groceries, to services are booked through mobile apps.


In the 90s, it was the fast food boom, and today it seems like it's the on-demand boom. Uber has raised nearly $ 10.2 billion till date, Ola cabs raised about $ 1.18 billion in 7 rounds of funding, other players like Urban Clap – a marketplace for services raised about $ 35 million, Jugnoo about $ 6 million, founded in 2011 New Delhi-based Zopper raised about $ 20 million in 2015, grocery delivery startup ZopNow raised $ 10 million, in April 2015 PepperTap raised a Series A funding of $ 10 million. There are several startups that have been able to raise capital at lucrative valuations in the last one year.

What makes these startups attractive investment options?

There seems to be a shift in attitude and behavior, consumers are looking to be satisfied instantaneously. Smartphones have been the game changer, the level of delivery and convenience is unprecedented. People can book a taxi, order groceries, hire plumbers or beauty services right from their smartphones. The demand for these services seems to be increasing almost every day. Industry experts believe that there is an enormous shift to the sharing way of doing business. Car pooling apps like BlaBlaCar, services like Airbnb and JustPark have been major disrupters to the traditional way of doing things.

CEO of JDP, a company that invests in startups operating in the on-demand economy, James O'Connell said, "We feel we are at the very early stages of an enormous shift to the sharing economy way of doing business. More and more entrepreneurs are unlocking the huge potential within it and consumers are embracing the dynamic benefits the on-demand economy brings. There is a deep transfer in consumer behavior happening and we are excited".

Although, a lot of these startups are yet to be profitable, their revenues seem to be growing.

Travis Kalanick, CEO of Uber said, "We're at least doubling [revenue] every six months." Research reports suggest that their revenues are greater than the entire taxi and limo service put together.

Future of the "on demand' economy

The on-demand concept looks like it is here to stay. Consumers seem to be embracing this new way of doing things. EV Williams, co-founder of Twitter, believes that the really big things on internet are realised by doing things faster without making people think.

Several businesses may be solving problems, but the ones that provide solutions faster and make it more convenient for their customers are going to win in the "on demand' economy. The future for many of these startups is going to depend on primarily 2 things – speed and convenience.

Many of these startups will have to help consumers get things done faster and make it easy for them to do business. The two questions that startups need to ask is:

  • Can we provide a service faster than anyone else?
  • Are we the easiest company to do business with?

Product lifecycles are dramatically shortening. We're going to see startups fail and grow faster than ever before. Along with quality and price, companies also need to start focusing on speed and convenience. The future for the on demand and hyper local segment looks exciting, and consumers are soon going to be spoilt for choice.