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Service Industries That Drive the On-Demand Economy

Dining at a hotel with friends is exciting. But, many people like to enjoy a fancy meal in the cosy living rooms of their homes. And, the on-demand food services have made this possible. The on-demand economy has changed what consumers expect. Now, the consumer prefers fast services. For this reason, you’ll see many day-to-day services that are using the on-demand business model. Service industries that drive the on-demand economy include food delivery, transportation services, instant package delivery, on-demand healthcare services, grocery, and others.

Hence, the on-demand economy is causing waves the old business models and services faster than one could have imagined. Of course, the on-demand services provide instant gratification to the consumer. For instance, if you want to have a creamy pizza with extra cheese topping, you can get it at your door. Thus, you don’t need to cut vegetables, knead the dough, or slice the cheese, and wait for hours to enjoy the meal.

While you want to have your needs met, you want an easy and fast way. As a result, the number of service industries that drive the on-demand economy is growing. Today, the service industries work on a simple idea: “Access is better than ownership.” It seems that the “on-demand” strategy, first adopted by Uber, has clicked.

Uberization has certainly changed the ways to meet the demands. And, it would be no surprise if the entire business economy will soon be “Uberize.”

Further, you might not know how you are giving to the on-demand economy. Yes, the consumers are the driving force behind the rise of the on-demand economy. And, this article will give you an understanding of the on-demand economy and service industries.

What is the On-Demand Economy?

Are you a party-lover? Do you love to throw parties for friends and family? If yes, then you probably know that a party is incomplete without “on-demand” music. Also, you decide the menu that your guests “like” or would probably “want.” Further, you make sure that your guest does not have to wait for food or drinks, and everything is there in a moment. Hence, you confirm the plan, keeping in mind the needs and wants of your friends.

On-Demand Economy Definition

The on-demand economy is no different; it is a means of prompt shipping of goods to the end-users. Also, the on-demand services let consumers request a product, a service, or a piece of data, and get it fast. Hence, the on-demand economy gives instant fulfilment. You want something, and you want it now, the on-demand economy fulfils the need.

While the on-demand economy keeps the users happy through instant transactions and goods delivery, it also helps service industries flourish. Many service industries that drive the on-demand economy have realized the strength of the on-demand business model. Since today most people use smartphones to place their orders or hire services, the industries are focusing on this tech.

On-Demand Economy Statistics

From booking a taxi to calling for food, buying clothes to hiring a plumber, the on-demand economy is all around. And, the rise of startups based on the Uber model, like parking service “JustPark,” and a grocery service “Instacart,” is big proof.

Don’t believe us? No problem. The numbers back our claims.

The Harvard Business Reports state that the on-demand economy attracts 22.4 million customers per annum. Moreover, the report says that consumers spend $57.6 billion on on-demand services. And, as expected, almost half (49%) of the on-demand users are millennials ageing between 18 and 34. Hence, this group has a key role in shaping the future for consumers in the future.

Difference between Sharing Economy and On-Demand Economy

You probably have heard the term “on-demand economy” several times. But, some people often tend to confuse the sharing economy with that of the on-demand model. While both these economies have emerged with the tech-advancement, there is a difference between the two forms.

For better know-how of the on-demand economy, it will be helpful to wrap your head around how it differs from the sharing economy.

Conceptual Framework

As the name implies, in the sharing economy, sources are shared. In 2014, a startup named Omni; the digital market of renting goods; took birth with belief in “access over ownership.” Further, the idea was to use unused assets to build trust in people. It seemed that Omni could create a “sharing economy.”

Hence, sharing economy lets people rent goods and services they either can’t afford or want for a certain period. Also, it allows the lender to use his/her asset by monetizing it for the time.

On the other hand, the on-demand economy centres quick access to a product or service. For instance, you have to reach your office, and for that, you book a taxi through Uber. The rider comes to your location, and the service is not shared between the two of you. Instead, you have only booked the taxi and won’t be riding it yourself; you don’t own the service.

Economic Regulation

Another significant difference is economic regulation. In the shared format, the businesses let the consumers fix the price for a product they want to rent. Also, the shared format does not force the clients to choose certain service providers. Instead, the consumer has the liberty to opt for the provider they find best for their needs.

The on-demand economy is strictly regulated and provides little freedom as a sharing economy. Thus, to uphold the standards, the on-demand economy provides controlled services. They sell service and control it in terms of quality and price.

Reasons for the Rise in On-Demand Economy

With many service industries that drive the on-demand economy, it is no secret that the on-demand economy will be trending in the days to come. Why this form of economy is gaining fame is also clear. Precision, speed, quality, and customer happiness are at the core of the on-demand economy.

Further, the swift user experience, ease, and quick transactions are pulling people; as a result, giving to the on-demand economy. The numbers reveal the rapid growth and spreading of the on-demand economy all over the world. 

Some Interesting Facts

Crowd Companies –a firm that tracks on-demand business platforms –reported that over 280 companies provide on-demand services. Further, these companies are associated with 16 different industries up from 76 companies working in six industries back in 2014.

Notably, the on-demand economy is leaning against tech support, and most importantly, mobile tech. Whether you talk about the transportation sector, lodging, dining, or grocery business, all are using mobile apps to attract consumers.

Above all, the two major factors that have empowered the on-demand economy are instant gratification and electronic transactions through digital apps. Do you know that nearly 2 billion online buyers used mobile phones to make purchases by the end of 2017 only?

Thus, the on-demand economy is consumer-centric; the power is shifting away from the businesses. Now, the consumer does not wait for conventional supply chains or old business models. Instead, the customer looks to fulfil any need with a click. According to an estimate, by 2020 the eCommerce industry will hit the $4 trillion benchmark.

So, the service industries that drive the on-demand economy allow customers to request a service or product in real-time. Also, these industries handle the process from start to finish based on the on-demand model. The instant notifications, secured and user-friendly customer experience are paramount to a successful on-demand economy.

How Service Industry Drive On-Demand Economy?

What Is a Service Industry?

A service industry, also called the service sector, refers to a business that works for a customer, thereby providing goods occasionally. The business dictionary defines service industries as a group of companies earning revenue by providing intangible products and services. Most of the service industry companies are associated with transport, retail, food, distribution, and other service-dominated businesses.

Hence, the on-demand services empower the consumers to get hold of the desired product at their doorsteps in real-time. And, with the flourishing service industries and on-demand apps, the on-demand economy is expected to gain momentum in the future.

Best Service Industries Examples

While the on-demand economy stemmed from the Uber model, it is not the only service today defining the on-demand service industry. Yes, Uber, Air B& B, and Deliveroo have become household names globally, but there is more to the on-demand economy.

If you look around, you’ll find many examples of the on-demand economy, even in day-to-day activities. Many service industries that drive the on-demand economy have become a part of our lives. From hailing a taxi to buying groceries, seeking on-demand healthcare services to ordering favourite food online, you name it. 

Hence, industries utilizing the on-demand economy include travel, business services, delivery and shipping services, pet care, home services, parking services, reservation and ticketing, and transportation.

While these are only several of the many examples, companies are now investing in mobile apps to stand out in the digital spectrum. And, hundreds of companies in different industries are emerging based on on-demand business models.

Service Industries Driving the On-Demand Economy

As discussed earlier, the on-demand economy attracts 22.4 million people every year, with the annual expenditure exceeding $57.6 billion. In light of the report by Harvard Business Reviews, here are the top service industries that drive the on-demand economy.

  • eCommerce/ online marketplaces top the list with 16.3 million monthly consumers who spent around $36 billion each year.
  • The transportation industry has the second-largest share with 7.3 million consumers each month and $5.6 billion annual spendings.
  • The food and grocery delivery stand in third place with 5.5 million monthly consumers. The annual expenditure on food delivery services is nearly $4.6 billion.

Besides these giants, other service industries that drive the on-demand economy include home services, freelancing, healthcare, and beauty services. And, these services combine account to $8.1 billion annual spendings with the rest of the on-demand services standing at $3.8 billion.

Probably most of you make online purchases and are well-acquainted with online shopping. Let’s have a look at some of the other essential service industries that drive the on-demand economy in detail.

The Transportation Sector

The transport sector certainly rules the on-demand economy. Who could’ve imagined a decade ago that getting a cab in peak hours during public holidays would become this easy? In the same way, people used to think twice before travelling to remote locations. Probably, it was due to the possible hardships and hassles in getting a taxi to the destination.

However, thanks to the likes of Uber and Air B&B, the old approach to travelling and shipping has changed. Hence, the feats of these two companies have open doors for other players in the transport industry. Now, you can book a ride or plan a trip, using apps at anytime and anywhere.

Food Delivery Services

There was a time when you had to wait for the fixed working hours of eateries and restaurants to treat yourself with some fancy meal. Also, not long ago, one could fulfil the wish of enjoying some delicacies only by landing in a restaurant physically.

The scenario is, however, different today. Now, you can order your favourite food anywhere and anytime when the hunger strikes. Several on-demand food delivery startups are working globally, and the industry is growing fast with each day. While the food services have a big share in the on-demand economy, the industry is also creating jobs and employment for the youth.

Health Sector

Probably, a positive impact of the on-demand economy is on healthcare services. Finding a doctor and booking an appointment with doctors had been unpleasing for many. Likewise, for buying medicines, one would have to comply with pharmacies’ timings. Nevertheless, things have changed for the better with the on-demand economy’s rise.

Now, many healthcare apps are useful for people to book appointments as well as to get instant delivery of meds. Further, the patient can keep the medical records save in digital form. For instance, Doctor on Demand is a medical app that provides access to doctors 24/7 via video link. Also, it answers the queries of people about the symptoms of cold and flu, allergies, eye issues, and other health issues demanding urgent care.


One of the many service industries that drive on the on-demand economy is freelancing. With the rise in the on-demand economy, jobs are being outsourced like never before. As a result, employers are now hiring freelancers for technical and non-technical works of all kinds. First, the employers are saving the cost of hiring a full-time employee and completing the short-term projects within weeks.

Also, the on-demand economy links freelancers with employers and vice-versa. Thus, the freelancers register themselves on apps and affirm that they are there to give the service.

On-Demand Delivery Service

The on-demand economy has affected the package and parcel industry as well. Hence, it has given customers a reason to expect instant shipping in real-time at their doors. So, today’s customer is not ready to wait for a parcel for days. Instead, he/she looks for a fast shipping service in town. 

Like the other service industries, the use of smartphones has caused on-demand delivery services. But, currently, not many merchants or couriers provide on-demand delivery services. If you are in UAE, ViaMe is there to cater to you.

Final word

The landscape of the on-demand economy is only spreading, and it seems too big of a chance to miss. Today, the customer expects a secure and mobile-friendly experience. For this reason, the companies in the business world are making use of this form of economy and tailoring their services to the consumers’ demands.

Also, the companies and service industries are aware that the on-demand economy is slowly affecting known business practices. And, the on-demand economy is going to add value to products and services across every field. So, those failing to adapt to the new ways will find it hard to keep going.