How 'Uberizing' the Small Business Economy Is Driving Growth
On-demand platforms provide convenience for the client, with a high volume of jobs being sent to workers or small businesses.
By Sam Madden •
Opinions expressed by Entrepreneur contributors are their own.
Today's consumer is more or else demanding all services be "Uberized". Meanwhile, today one in three American workers offers independent or freelance services -- that's a lot of service supply.
On-demand platforms have entered the fold claiming to provide the best of both worlds -- Uber-like convenience for the client, with a high volume of jobs being sent to workers or small businesses.
The reality, however, is that these on-demand platforms are doing a great job at supplying needed work to the unskilled workforce (i.e., delivery, transportation, etc.), however for skilled small business owners ("SMBs") -- like in the home services sector -- the jobs are low paying and the clients are "owned" by the platforms themselves.
These venture-backed platforms have revealed themselves simply as an injected middleman taking away direct client traffic to SMBs and slowly becoming their biggest competition.
Easy capital, fast growth.
Money can't buy you happiness, but it can buy you extended periods of growth.
Some of the most well-known on-demand platforms in the home services space include names like Handy, Care.com, TaskRabbit and HomeJoy (now defunct). Combined, these four companies raised $370 million in venture capital funding to grow operations. The money was raised based on a thesis that consumers will shift their behavior to purchase all home services through these platforms as opposed to going directly to the service professionals themselves.
Related: The Freelancing Economy Has Seen Epic Growth
As a result, much of that capital was spent on consumer mindshare -- getting the attention of those same consumers who would normally search and book professionals directly. If you Google "home cleaner," or "babysitter" or "handyman" in a certain city, you'll either see ads for one (or multiple) of the aforementioned on-demand platforms on the first page of Google; or you'll find directories (like Yelp) listed high up in Google, taking you to a more curated and ratings-based search results page where those same on-demand companies are listed or have ads running.
This is fresh advertising capital that no traditional service professional or SMB can really access. Your average SMB struggles to take out a small bank loan to pay for supplies or manage working capital, little alone raised millions of venture funding and launch multi-million dollar advertising campaigns. As a result, more consumers are stumbling into the hands of these on-demand companies as opposed to the websites, Yelp profiles or Facebook pages of the actual small business.
Technology and the customer experience.
Marketing isn't the only use of venture funds -- the rest is invested in a major competitive differentiator: platform technology.
The draw for consumers to book directly with these on-demand platforms is not the allure of "finding the right professional", but more so the convenient, Uber-like customer experience.
Clients want everything on demand these days, but they are also more mobile than ever before. Mobile usage has now surpassed desktop usage, and the average consumer checks his or her phone 46 times a day. On-demand platforms give instant, mobile booking and payment features directly in the hands of clients, so hiring someone to perform a three bedroom clean (for example) is as easy as ordering a movie or requesting an Uber.
Related: We're Turning Into a Freelance Nation. Here's What That Looks Like
From discovery to booking to job reminders to payment, the entire flow of purchasing services has been streamlined with technology built by on-demand platforms to make the average homeowner have a warm and fuzzy customer experience.
Meanwhile, the average service business today is using five to 10 apps or software programs to run their business, mixed between their smartphone and desktop. Business owners think this is simply an organizational issue related to their internal business operations, but the truth is their clients are negatively affected as well. Bombarding customers with invoices in the mail, appointments over email, voicemails reminders, paper contracts to sign and more can be overwhelming and a flat out bad customer experience.
Say what you will, but streamlined technology can make a huge difference when consumers are deciding where to go for repeat business.
Who wins?
It's safe to say that we -- as consumers -- are already operating in a world in which we now have to choose between booking service through an on-demand platform or directly with an entrepreneurial professional.
The accessibility and convenience of the on-demand model is influential enough that it's actually shifting consumers to form a relationship with the platform itself, as opposed to the small business owner. All SMBs can do now is focus on providing a better service quality than the worker these on-demand companies staff jobs to. Either that, or SMBs will be forced to work for the platforms themselves.
Related: Federal Government Hopes to Get a Grasp on the Sharing Economy
In a world where entrepreneurship is a trait that is fundamentally more intrinsic than learned, it seems unrealistic to think that every single professional with a skill and a dream will be complicit in working for an on-demand platform-as-boss model. It is just a matter of time before technology catches up to the long-tail of skilled professionals and SMBs, empowering them with their own technology to compete with these platforms, allowing them to deliver each one of us a mobile, convenient and trusted overall experience any time, any place -- on demand.
