The on-demand business model has taken over the conservative business model quickly in the last few years. The idea for this is the speed, accuracy, convenience, and quality that the on-demand delivery market brings to the consumer making it his top choice. These values have helped on-demand startups to manage their processes effectively, stay technologically relevant and steer ahead of the competition.
What is an On-Demand Business Model?
There is a simple rule for the on-demand business model, “Access is more valuable than ownership.” It works on the notion of making products and services easily accessible to the consumers, including those that the consumer need not own. For instance, one can rent a car instead of buying one.
The 2 components of the on-demand business model are on-demand services and on-demand delivery. On-demand delivery is the immediate and prompt delivery of goods and services at the consumer’s doorstep. Tech-driven companies adopt this model to fulfil their customers’ demands instantly. On-demand services refer to the services delivered that exactly match the customer demand. The characteristics of on-demand service are variety, accessibility, and no compromises.
With the influx of digital technology and smartphones, consumers can get their product or service delivered with just a click or swipe from the mobile phone. Startups can leverage the immense potential of the on-business model and witness a huge boost in sales and consumer satisfaction.
Reasons why Startups must adopt the On-Demand Business Model
The entire model of on-demand business has proved to be very effective and successful for startups.
Here are the top reasons why:
Business applications have become highly technologically advanced and anyone who is exposed to a smartphone is aware of how on-demand applications work. The digital revolution in the on-demand services industry came via the internet and the introduction of smartphones took it to the next level. Customers who were using web portals to book a flight ticket or a cab migrated to dedicated smartphone apps. Startups can leverage this technological boom to enable consumers to access on-demand quickly and conveniently.
Several startups operate in a single sector, all trying to gain a competitive edge. To gain success in this cut-throat competitive space, startups must adopt the on-demand services model. This brings to the business improved product quality, better customer service, delivery accuracy and greater convenience for the customers. These values help the startups to stand out from their competitors. The technological backing of the on-demand business model encourages young and ambitious minds to streamline their business processes and manage startups in a structured and systematic way.
Big players in the startup sector will be keen to contribute capital and ride the on-demand startup growth wave. The drastic transformation in the operations and shift in consumer behaviour would be something they would like to benefit from and will be keen to invest even millions in this booming business model. Investors will have more faith in the on-demand businesses as they are more likely to earn better ROI’s in the future with scope for overseas expansion as well.
For instance, On-demand startup giants such as UrbanClap and Swiggy managed to raise $75 million and $113 million through funding in the years 2019 and 2020, respectively. Going by this trend, on-demand businesses have proved to be quite profitable for all their stakeholders including investors, consumers, and owners.
Enhanced User Experience
The ultimate aim for any business, including startups, is to offer the best possible experience for the end-user. Users tend to sway towards brands that offer superior experiences. To earn the consumers’ trust and loyalty, the app must be innovative, user-friendly and meet their demand optimally.
The on-demand business model provides a great platform for innovations where companies can continuously improve features, and upgrade systems based on user feedback. They can gain actionable insights that drive them to discover unexplored functionalities. This translates to improved sales, customer appreciation and enhanced user experience.
Shift in Spending
One of the primary reasons industry experts lobby for the on-demand business model is due to the tectonic shift that has taken place in consumer spending habits. Consumers who traditionally used to go to stores to compare products and make a purchase physically are migrating to online digital platforms. Through the digital business model, they can view several products, compare features, and take an informed decision at any convenient time or place. This business model also reduces the number of intermediaries in the business channel, reducing the final cost of the offerings. The spending shift has given a major impetus in sales and revenue to on-demand businesses.
The entire framework of the on-demand business model is built to scale great levels in the future. The model brings with it a tide of technological progress and innovation. On-demand delivery and services are bound to extend across all realms of life. On-demand mobile apps are going to grow by leaps and bounds striving to offer a superior user experience. Startups are going to benefit immensely from the on-demand business model in terms of service delivery, maintenance of quality standards and increased customer base.
The Final Word
To succeed with the on-demand business model, startups must find their niche market, build an efficient unique app, optimize the value chain with a feature-rich interface, and build a user network through various digital platforms.
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