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Why On-Demand Services are In Demand ?

Here we take a broader perspective than usual, we will talk about the on-demand economy that is obviously larger than the personal service industry. But we think that what applies to one applies to another, and we really wanted to share a few thoughts with you, especially the reasons explaining the rapid growth or this industry. Please comment we would love to read about your arguments.

Man booking at-home personal service online
Man booking at-home personal service online

On-demand services are a thing more than ever

The definition of on-demand economy (also called gig economy) is broadly shared and accepted. Let's roll with this one : "The On-Demand Economy is defined as the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services. Supply is driven via an efficient, intuitive digital mesh layered on top of existing infrastructure networks." (Business Insider, 2014).

Passed the e-commerce boom in the 2000', it turned out the on-demand economy is more about services than products : driving services and logistics, food order, home maintenance, cleaning services, wellness and beauty services, coaching/tutoring, pet services … you name it.

And now it is hard to imagine living without those services we so easily access with the touch of a fingertip … and an app.

The growth of on-demand services past and future

Considering the on-demand services include transportation, homes services, freelance services, food and groceries, health services, beauty and wellness, the US market size is estimated around $60 billion in spending and 25 millions of users.

The growth has been spectacular and projections are very (overly ?) optimistic : back in 2014 this market was only $14 billion and some projections expect more than $300 billion in revenues by 2025. (Sources : Harvard Business Review).

On demand services players
On demand services players

Reasons for the expansion

My opinion and understanding is on demand services have not grown (and are not growing) uniformly, it looks more like "industry clusters" to me. It generally started with some disruptive and very useful on-demand services/companies (like UBER), then followers or competitors appeared (like LYFT) creating entire industries based on on-demand services, then new disruptive companies emerged disrupting other industries using the same principles as the pioneers (HANDY is the UBER of House cleaning).

So I wouldn't consider that technology is the main factor for most of us to start using these new services. Obviously technology is key factor, it is a precondition, but is not a sufficient factor. Look, UBER was started in 2009 and became really popular by 2012-2013, compared SOOTHE (on demand massages) was started in 2013 and became really popular in 2018-2019. The technology that enabled UBER in 2010 was available for SOOTHE too …

Therefore, allow us to think the main reason is the perceived value the service brings to consumers, let's call it the "usefulness".

And one of the biggest things we value as consumers nowadays is conveniency, that I would mix up with time saving.

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