A Complete Guide To On-Demand Economy: A Useful Read For Everyone


June 25, 2020


March 17th, 2023

The on-demand economy demonstrates the journey of an entire economy from companies to customers. The whole attention now goes to the customer regardless of products and services.

The on-demand economy has dominated the tech industry with its sustainable model to fulfill the demand of next-gen customers. From mindsets to methods, the corona pandemic has changed everything and we are still in dilemma about normalcy. This outbreak has forced businesses to rethink their business models. Fulfilling customers’ demands is the first goal of all industries that are resumed their services.

Amid lockdown and disrupted supply chain, one thing is easing this time – on-demand economy. The on-demand economy, also known as the ‘sharing economy’ is helping people and businesses to get back to normal. In this article, we will talk about the on-demand economy and its benefits, models, history, and why the on-demand economy is in the limelight amid corona time.


What Is On-Demand Economy?

Do you want your groceries to be delivered at your doorstep?

Want a car to reach a destination?

Want a room booked for several days?

Want to hire employees to get a specific job done?

Thanks to the advanced technology, all the above mentioned things can be accessed at a few fingertips.

The on-demand economy differs from the traditional model of doing businesses where individuals can hire things, properties, and other individuals in the peer-to-peer model to have immediate access to goods and services.

Popular as an “access economy,” this model is more convenient to meet the demands in a faster, convenient, and personalized way.

Good Read: On Demand Grocery Delivery Apps – A Retailer’s Guide For Online Grocery Services

How Does It work?

Consumer service and consumer behavior – both have drastically changed over time.

After the dot-com bubble, this is one of the major disruptions the tech industry has observed. The on-demand economy continues to grow at unparalleled pace across the world because of its clearly-seen benefits.

In an on-demand economy, one is a service provider and one is a consumer who accesses services or goods. They both can connect through the app/website (online marketplace) to perform this transaction. Technology companies act as an intermediator and handle payments, information, and transactions. Also, with the increased digital transformation and technology-driven model of businesses, there are diverse jobs offered by the tech companies to on-demand workers. This is also categorized as an on-demand economy model where skilled professionals are hired to work on a contract base.

History And Growth Of On-Demand Economy:

The on-demand concept is not new. In the late 1990s, companies like Webvan and Kozmo offered delivery of goods to customers’ homes.
With the launch of on-demand ride-hailing service Uber and lyft, the on-demand concept was all set to reshape business models. But this time, technology acted as a game-changer.

The always-on and hyper-connected smartphone era, convenience, and advanced technologies are crucial factors behind the successful model of the on-demand economy.

Here Are Some Examples Of The On-Demand Economy:
  • Ride-sharing platforms like Uber, lyft, Ola
  • Airbnb – a marketplace for tourism and primarily homestays
  • Instacart, BigBasket(India) for groceries at the doorstep
  • All eCommerce companies
  • On-demand media streaming services
  • Industries like travel, education, healthcare, professional workers, home services, transportation, P2P goods, health & beauty workers

Why On-Demand Is In Demand? What Are The Benefits Of It?

“Customer service shouldn’t just be a department, it should be the entire company. “ – Tony Hsieh

This quote makes sense in the era of a consumer-driven economy. This on-demand model offers instant access, better care, and personalized experience. It also helps businesses to start faster without significant investments in labor, technology, and infrastructure.

Benefits From Business Perspectives:

  • Customer Satisfaction:

This is one of the prime benefits of the on-demand model. Today’s customer’s expectations are different. They have resources to explore, research, and analyze before they can make a single purchase decision. They are more sophisticated. They prefer personalized experience and immediate response to their needs. Customer satisfaction matters the most in this global economy.

On-demand helps businesses satisfy the needs of customers in an efficient, cost-effective, and faster way. Providers and consumers both – connect, communicate, and collaborate in the peer-to-peer model, ensuring the best customer service.

  • Easily Scalable And Reduced Cost:

One of the reasons businesses prefer this type of model is cost-effectiveness. The on-demand economy helps businesses to start and operate at a lower cost compared to the traditional model of business. With the third-party marketplaces and underlying structure of technologies, starting a business is easy. There is no need to hire and train staff and no need to invest in infrastructure set up as technology helps establish your business. Technology also eases the scaling process as you can build an online presence with the help of the SaaS model and add resources on-demand.

  • Countless Business Opportunities:

You will get a wider network and options to expand your business. You need to reach out to a large number of audiences to increase the visibility of a business. A number of marketplaces already exist where you register your business and start selling products/offering services.

  • Sustainable Business Model:

This economy encourages sustainable practices such as reuse, recycle, decentralized logistics, self-organized business conduct, and higher flexibility. This is beneficial for small businesses and independent professionals. Renting and reusing can cut down on pollution and less consumption of resources.

How On-Demand Economy Is Advantageous To Customers?

  • Multiple service providers to choose from for the same service
  • Customers can track their orders
  • Faster and online payment options
  • Customers can rate and review products/services
  • Faster access to products and services
  • The easy, faster, and convenient purchase process
  • Personalized experience and best services at cost-effective rates

For technology companies, ensuring the best user experience and glitch-free systems is a top-most priority. On the other side, customers need to ensure the security of personal data.

Good Read: Understanding On-Demand Apps – The Next Generation Technology

Limitations Of On-Demand Economy:

  • Job Insecurity:

The on-demand economy encourages people to have more than one income source as these jobs are flexible and majorly based on customer demands. This leads to the insecurity of roles and jobs.

  • Lack of Customer Loyalty:

This is one of the major limitations of the on-demand business model. The reason is simple, customers have plenty of choices. They keep changing brands or service providers and no longer stick to a specific brand. There are hundreds and thousands of apps for one service.

  • Personalized Service Is Expensive:

Sometimes, receiving personalized services at your doorsteps cause a penny. There is still a mass of people who are not using the on-demand model on a regular basis because of rising costs.

The pandemic time has increased the popularity of on-demand apps once again. As no human contact principles have taken place to minimize the COVID-19 spread, on-demand is helping people to get essential services.

COVID-19 Scenario And On-Demand Economy: Opportunity Or Orientation?

According to the official Amazon source, Amazon is opening 1, 00,000 new roles to meet the demand of customers in this stressful time.

Delivery services are observing higher demands at this time as the supply chain is disrupted and productions are stopped. People are concerned about groceries and other home services like house cleaning, salon, laundry, and others. In such times, the on-demand economy has seen the highest peak in customers due to less human-to-human contact and convenient shopping.

How On-Demand Apps Are Observing Skyrocketed Growth Amid COVID-19?

  • Due to lockdowns and social distancing norms, people are afraid to go out of their homes to purchase essentials. On-demand apps deliver essentials at doorsteps, making it a more convenient option to purchase items.
  • Major Ecommerce companies have started offering contactless delivery according to safety guidelines. Also, digital payment helps reduce human-to-human contact, making things easier for buyers.
  • Faster access to the goods and services helps people to establish trust in the on-demand model along with satisfactory and sincere services.

Coronavirus has negatively affected almost all industries. While travel and transportation have observed a sharp decline, eCommerce is experiencing a sudden hike with the increasing spread of COVID-19.

Possible Scenario Post COVID-19: Is On-Demand Economy Permanently Reshaping Business World?

Digital remains a pivotal post-COVID-19.

According to McKinsey, governments worldwide have allocated more than $13 trillion to stabilize economies. We have to live with the virus and take necessary precautions to prevent getting infected. The post-COVID world is completely different for working and living. People prioritize health and hygiene above everything.

Responding to the crisis may lead to novel opportunities and innovation. More and more people will shift to digital and on-demand due to:

  • Ease of availability
  • Flexibility
  • Instance access
  • Convenience
  • Safety

According to the PwC report, the market for on-demand mobile apps is projected to reach $335 billion by 2025. The on-demand economy holds great potential to survive such pandemics in the future.

Whether it is on-demand education, telehealth, groceries, or food delivery, on-demand app development continues to grow regardless of regions and industry sectors.


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