How the Rise of the On-Demand Economy Is Driving Flexible Convenience
As the rise of local on-demand has moved out of its infancy, companies are discovering that some concepts for instant consumer gratification perform well, while others may need some work. Getting someone to seamlessly pick up and drop off your laundry might save you a bunch of time, but having a cup of coffee delivered for $12 might not be a sustainable business model.
Meals and groceries are still leaders in the on-demand space, but consumers are starting to apply that convenience to other areas of their lives, asking for more services in addition to product delivery. Determining the long-term potential of on-demand is leading some entrepreneurs to solutions beyond the efficient transaction and toward an intuitive, flexible future.
“People are getting better at calculating the cost of their time,” said Marcela Sapone, CEO and co-founder of subscription-based butler service company Hello Alfred. “They’re realizing, ‘I’m spending so much time on this. Is there someone who can do this for me at an affordable price?’”
Hello Alfred is not really an on-demand service. Its goal is beyond on-demand, where the service has already happened before the customer realizes they need paper towels or toothpaste or dog food. It organizes other services such as Instacart, Handy, and local dry cleaners to handle tasks, and ultimately aims to anticipate customer needs in advance.
“It feels like we’re taking care of things without you needing to ask,” Sapone told Street Fight. “Services are supposed to be a relationship that you build over time. People aren’t thinking they want another app for travel and another one for dog walking, and suddenly you have 30 apps. I think people would take a lot of relief in having one platform to handle everything. The value proposition is that it’s a lot more convenient to use Alfred to use Instacart. I don’t need to use Handy or go to the dry cleaners; I’m just going to do it through Alfred. And people aren’t going to pay for all those different apps. It’s all included.”
This concept is hugely popular. Hello Alfred, which is currently available in just five areas, has a national waitlist of nearly 50,000 people. Sapone said the company plans to expand into DC and Chicago next, but the priority is to scale deliberately, being cautious and thoughtful, especially when hiring the “Alfreds.”
It’s working because the experience customers are used to – picking up the dry cleaning, moving a couch up a flight of stairs, missing a package delivery only to add a new errand to the to-do list – is being hyper-organized so that it’s painless and affordable.
This kind of hyper-organization in the logistics technology is even spilling over into retail, with Postmates and UberRUSH delivering items from local shops. Package receiving company Doorman is filling another gap by scheduling on-demand delivery, in some cases partnering with retailers’ ecommerce sites.
Doorman receives packages at its local warehouses, and then allows customers to schedule delivery to suit their availability. Zander Adell, the company’s CEO and co-founder, said that he and his team are always trying to understand better what exactly people want out of on-demand.
“Do people want everything on-demand, or will it filter down to be a certain set of things that people do want on demand and a set of things that people will never want?” Adell said. “Is furniture-on-demand something people really need? Food makes perfect sense; sometimes you need food right now. I do think that everyone feels pressure to offer services or products on demand, but the cost over time of offering that will remove a lot of items from that list. Do you really need that t-shirt on demand, or is $20 to have it delivered too much and you can wait a few days?”
In January, Doorman launched a new version of its software that also offers pickup services for outgoing packages. The company’s package volume increased 700% in 2015, and Adell says the company will be expanding into new cities this year.
The convenience of on-demand is solving problems for vendors as well as customers. Handy, an app that finds cleaners and handymen to take care of home projects such as mounting a television or fixing the garbage disposal uses logistics that are changing the way customers buy services.
Oisin Hanrahan, CEO and co-founder of Handy, stressed how the existing buying experience for finding someone to help out around the house can be time-consuming and unreliable, and that frustration is often mirrored on the other side.
“Maybe you go online and look at rating sites or review sites, then you try to call a few people or email them, go on Craigslist and text people; maybe they don’t write back, or if they do write back then you try and negotiate the scope of work and the price,” Hanrahan said. “Then you have to negotiate availability, then they show up and only accept cash, sometimes they don’t show up on time. That’s a common experience for lots of people, but what we don’t understand or realize is that vendors are going through a pretty bad experience too. In much the same way you’re trying to figure out how to get someone to mount a TV on wall, there are a lot of great handymen and cleaners out there and they’re just trying to get more work at time that suits them.”
Using the Handy mobile app, a customer can list a job that they need done, instantly confirm pricing and the availability of a person to do the job, and check out in 60 seconds, Hanrahan said. Cleaners and handypeople can quickly scan through potential jobs, claim one at a convenient time, and know they will receive payment.
But again: this service goes beyond on-demand, and focuses more on the trustworthiness of the vendor and quality of work being done, improving the experience across the board. Most bookings are made one or two days out, although in some veteran markets such as New York, Chicago, and Los Angeles, customers can book with Handy three or four hours prior to needing the service. The geographically dense demand has a snowball effect, something that both Handy and Hello Alfred are taking advantage of as they scale.
“Customers drive booking, bookings drive pros, the pros drive availability and availability comes all the way back around and drives customers and booking,” Hanrahan said.
Handy grew more than 300% in 2015, and the company is watching consumers continue to shift their demands to mobile platforms. Both Handy and Hello Alfred receive requests for pet and child services, which they don’t currently offer but might add in the future.
“We built this platform to take away the friction and deliver pretty amazing experience for both the customer and the vendor,” Hanrahan said. “We talk about the on-demand economy, the sharing economy; we use all these words to describe a part of economy that’s largely just creating flexibility. It’s a more flexible part of the economy than anything else. It’s giving customers incredible convenience.”
April Nowicki is a contributor to Street Fight.