5 ways tech startups continue to disrupt the on-demand services sector

Rachitta Juneja | Updated on July 06, 2021

Customers seek better service quality, and vendors unsatisfied with income inconsistency create more opportunities to emerge within the sector.

The rapid advancements in the technology sector have shown a gradual shift in customer behaviour and attitude in recent years. However, the onset of the Covid-19 pandemic accelerated technology adoption, especially during the stay-at-home era. The convenience of shopping and ordering essentials online and satisfied customers also prompted tech startups to bet on business ideas for on-demand service. According to Harvard Business Reports, on-demand companies attract nearly 22 million customers annually. This reveals the present on-demand service sector is already overloaded with a whopping number of online aggregators.

Presently, the on-demand services sector includes platforms for food delivery, car rental, grocery, healthcare services, etc. that have also raised the customers’ expectations at a high level. On the other hand, on-demand startups and companies usually establish themselves as mediators and control a large chunk of their overall customer experience.

Further, during the onset of the pandemic, changes in the regulatory landscape and operations created large gaps in the quality of aggregator services. Typically, aggregators work on a commission-based business model that is charged from the vendor on each transaction. Additionally, aggregators take hold of surge pricing/standardization on pricing during high demand or vice versa. As a solution, more startups are luring the on-demand market with agile business models. It removes operational barriers and gives vendors and customers a sense of ownership and reliability while using or delivering an on-demand service.

The on-demand service sector is continuing to grow organically. Customers seeking a better quality of services and vendors unsatisfied with inconsistency in income is creating space for more opportunities to emerge within the sector.

Affordable cab rides

The cab industry holds a substantial share in the on-demand service sector. However, the fares charged in the industry have always been controversial in the market. Similarly, the Union Road Transport Ministry also issued a guideline for motor vehicle aggregators setting a standardized fee to be charged from drivers and putting a cap on surge pricing at 1.5 times the base fare. Meanwhile, tech startups are identifying different paths to meet the demand more efficiently. With real-time technology, some players have started offering cab rides at no surge pricing. On the other hand, they are formulating disruptive business models that eliminate heavy commissions of aggregators to break their monopoly and benefit drivers associated with them.

Hiring trusted drivers

No matter how much connected the world becomes, the safety of passengers is the foremost thing that cannot be compromised. Many cab aggregator apps provide real-time tracking, feedback and ratings to safeguard the passengers’ travel. To take the security of passengers to the next level, startups look for building a pool of trusted drivers – built on one platform, i.e. a mobile app. This works holistically for family and female security. Furthermore, it provides a sense of belongingness to customers and consistent income to drivers.

Parcel delivery

After the advent of on-demand services, parcel delivery service providers have witnessed a big change in customers’ behaviour. The integration of technology in parcel tracking has played a huge role in enhancing customer experience. Even after this, timely delivery, reliability and booking of the service remain a major concern. For instance, a customer needs to send an electronic gadget like a camera, laptop, mobile phone, etc. to someone in urgent need.

Courier service cannot always be the best option for them as there as associated risks of product damage or theft. This has led to startups brainstorm and come up with a more convenient and reliable process of on-demand delivery for a door-to-door pickup and delivery until the parcel reaches its destination safely

Delivery of essential and non-essentials

The e-commerce sector and on-demand services go hand in hand. The emergence of e-commerce platforms makes the on-demand delivery of essentials and non-essentials extremely convenient. When the pandemic hit the world, non-online users faced terrible difficulties ordering products from their favourite stores. Many local stores were unlisted on the internet, and the movement restrictions hindered the delivery process. Furthermore, the difficulty remains the same for busy customers or avoid exposure by not going to local markets. Startups are betting on the concept of trusted dispatchers who could provide an offline shopping experience to the customers.

Wrap up

The emergence of tech startups in the industry disrupts the on-demand service sector unlike any other vertical. The integration of technology in adaptive business models will likely churn the present market scenario. While meeting the customers’ demand with efficiency, the on-demand service sector holds a huge market opportunity.

(The author is the founder of Whide)

Published on July 06, 2021

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