If you thought the on-demand economy was big in 2016, just wait until you see how things will unfold in 2017. The on-demand economy is growing at an astronomical pace and the influential effects of this expansion will be experienced in just about every industry.
The Growth of the On-Demand Economy
In case you haven’t noticed, the on-demand economy is absolutely booming. According to the National Technology Readiness Survey, the industry scaled to an impressive $57 billion in 2015. In large part, this growth is due to an increase in the number of people accessing some sort of on-demand application or marketplace every month.
“The on-demand economy is attracting more than 22.4 million consumers annually and $57.6 billion in spending,” Harvard Business Review reports. “The largest category of on-demand spending is online marketplaces (e.g. Ebay, Etsy), with 16.3 million consumers each month spending almost $36 billion annually. Transportation (e.g. Uber, Lyft) comes in second with 7.3 million monthly consumers and $5.6 billion in annual spending, followed by food/grocery delivery (e.g. Instacart) at 5.5 million monthly consumers and $4.6 billion annual spending.”
Other on-demand services include freelance services, home services, health and beauty services, and other similar services.
Think this is just a trend? The majority of customers – 49 percent – are millennials, while 30 percent are between the ages of 35 and 54. This means activity and growth should continue for years to come. What’s even more encouraging is that 46 percent of consumers have an annual household income of less than $50,000. This means the on-demand economy isn’t just for the wealthy.
What it Means for the Business World
Okay, that’s all fine and dandy, but why does all of this matter? Well, even for businesses that operate independently of the on-demand economy, the reverberations will be felt. The growth in this segment is actually revolutionizing numerous aspects of the American workplace. Specifically, the following changes are being felt across the board:
1. Emergence of Online Service Marketplaces
While most consumers are familiar with online service marketplaces like Uber and Airbnb, these aren’t the only platforms of their kind. There are hundreds of other marketplaces popping up all over the world and they all have one focus – or as business consultant Glenn Laumeister puts it, they all have a secret sauce.
“The secret sauce is not the technology, although that plays an important supporting role. It is the single-minded obsessive focus on solving one big universal problem for the buyers, and removing that friction that existed in transacting offline,” Laumeister notes. “When the solution is understood, built and solved at scale, this ‘secret sauce’ enables marketplaces to grow exponentially.”
More and more businesses are discovering their own version of this secret sauce and it’s creating a ripple effect throughout many industries. As a result, businesses are being forced to respond and reconcile with these changes.
In the coming months, don’t be surprised if you see dozens of new online service marketplaces emerge to fill voids that exist in their respective industries. Not all will be successful, but some will be groomed into billion-dollar businesses like Uber and Airbnb.
2. Increased Emphasis on Entrepreneurship
Historically, there have been two types of successful professionals: (1) those who prefer to work for other people and find opportunities with companies that have significant growth potential, and (2) those who would classify themselves as entrepreneurs and prefer to blaze their own paths.
The on-demand economy is sort of blurring the lines between these two categories. Entrepreneurship now permeates every level of the business world and it’s possible for professionals to have one foot in both.
Take the Indian marketplace UrbanClap as an example. This influential platform has allowed thousands of local service professionals in India to increase their earning potential by providing a new avenue for business. In other words, it’s creating a high-level of entrepreneurship that wasn’t before possible in some industries.
This increased emphasis on entrepreneurship is changing the workplace before our very eyes. Businesses now have to respect the fact that their employees are exposed to entrepreneurship and may want to experiment with the notion. The full effects of this mindset shift are yet to be seen, but something to keep an eye on.
3. Demand for Personalized Work
Customers have gotten a taste of personalization and (not surprisingly) they want more. For businesses that operate in industries where on-demand services haven’t yet taken root, this represents an opportunity to pivot. If you can offer what everyone else is offering, only with better personalization and quicker service, you’ll have a real winner.
The trouble is that you aren’t the only one who understands this. Lots of businesses are working hard to be the first one to market in their niche. As a result, it won’t be long before better personalization is available across the board.
4. Workplace Flexibility Becoming More Important
“The typical 9-to-5 workday is dead, especially with apps designed for the on-demand economy,” entrepreneur Adam Fridman proclaims. “Data reveals that an on-demand worker is likely to work part-time, with 72% of part-timers choosing to work as independent contractors in the on-demand economy to earn more money.”
This is just the latest development in the demand for flexible work. As work-life balance has become a huge focus for millennials all over the world, we’ve seen businesses respond with remote working policies, flexible scheduling, and even unlimited vacation days. The growth of the on-demand economy could mean that more people will become interested in adding part-time work or spreading their time between multiple gigs.
How Will the On-Demand Economy Impact You?
We’re officially in a new era of business and the question you should be asking yourself is this: How will it impact me? The on-demand economy isn’t going anywhere. Your business needs to decide how it can adapt.
This isn’t to say you need to go out and launch an ecommerce marketplace, but you should want to adapt your business model to the changing climate around you. Customers are demanding flexibility, personalization, and responsiveness. At the very least, you must be able to satisfy these desires.
Changes you make now could have a far-reaching impact on your business down the road. Don’t resist change. Instead, recognize this change as an opportunity to grow your business and connect with new customers.
