The Age of On-demand Delivery

Brief overviewEvery industry has its “villains” and deliver services are no exception. Middlemen for carrier services equal to article-photopirates in the movie and music industry. Middlemen are the group of people who are making a living by increasing inefficiency of transactions of any kind. The question is “why would anyone pay for such services?”. It is simply that we had no other choice, until fairly recently. Silicon Valley tech gurus took upon the mission to eliminate middlemen in delivery services of any kind, as part of the peer-to-peer transactions craze.TechCrunch in its The Fall and Software Rebirth of Middlemen, points out that the old school business model with “middlemen” at heart is making a “comeback” with a software redesign at its core. Now, app based “middlemen” will make transactions at a fraction of the time and expense the model used to cost. At least, for the time being.Delivery on-demandOn-demand delivery services are on the rise. Across the world, startups with aspirations to become the “next big thing” promise to cut the delivery time and costs to gain market share. They cater to various audiences, some targeting niche markets, others playing with delivery charges. They all serve the same purpose- disrupt the industry and make it as user friendly as possible.Etsy ASAP, for instance, is a bit pricy compared to its competitors UBER Rush or Amazon’s Flex, yet with a loyal customer base (mostly young females) it seems to be working.UberEats,  a food delivery platform now operates, or about to launch in 32 cities worldwide, including 4 US cities. The average order time is estimated around 35 mins and costs as little as 4.99$ (for US market). Recently launched UberEats in London estimated to lose a lot of money as they rather run short on promise of under 30 mins food delivery. For each delayed or mixed up order (and there are a lot of them), UberEats offers its customers £20 off their next transaction.Amazon follows the suit and waives fees for the same day grocery and restaurant meal deliveries.   Istanbul based Yemeksepeti is believed to be GrubHub of Turkey. Dominating turkish food delivery marketplace, Yemeksepeti caters to 3.5 million active users and takes on well over 100,000 orders every day. It is now hard to believe that just less than 4% of turkish residents had access to the internet, yet alone were making transactions online when Yemeksepeti first launched, back in 2011. Fast forward, and now Istanbul is called a “Digital Bosphorus” with its tech savvy and early adopter residents.  The other side of the medalOn-demand economy craze created and led by Uber is not exactly the “one size fits all”. Now, let’s keep it real, it simply doesn’t.One company in particular, came to this conclusion before it was too late. BloomThat, a San Francisco based fresh flower delivery  startup secured over $5 million in venture capital in just 2 years building the entire business model on “on-demand economy”. They had everything it took to be successful, and yet, quickly realized how much money they were losing in pursuit of becoming the “next Uber”. Before too late, founders and investors teamed up to change the model from “flower delivery on demand” to “flower delivery that has an on-demand option available”. This seemingly trivial change in business strategy saved the company 25% in cost reductions on real estate, supplies, staff and logistics of one-hour delivery.Zirx, a SF based startup to offer on-demand valet parking, quickly came to realization that customers have a certain price point they are willing to pay that doesn’t always cover the actual costs it takes to operate on such business model. So, before sharing the fate of many similar startups that run out of business they abandoned on-demand business model entirely.Room for growth..bii-amazon-prime-vs-costcoWhat is good for businesses isn’t necessarily working for customers. And without happy end users, there won’t be much of business to begin with. When catering to the needs of customers, on-demand economy leaves out small and midsize businesses. There is still a room for an affordable alternative that doesn’t require large investments in real estate and human resources.Business Insider reports that membership based on-demand delivery services are rising and shining. This twist allows them to secure funding in advance in the form of membership.

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