The On-Demand Economy

Don't care how, I want it now!” So sang spoiled rich girl Veruca Salt (Julie Dawn Cole) in the classic 1971 movie Willy Wonka and the Chocolate Factory, starring the late Gene Wilder. And that’s pretty much how consumers feel these days about receiving purchased goods and services— they increasingly expect it to be delivered or available to them immediately, thanks to the likes of Uber and Amazon Prime®. It’s a development that is redefining behavior and consumer expectations and irrevocably altering the relationship between buyers and sellers.  

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The On-Demand Economy

Jun 4, 2018

The On-Demand Economy

Don't care how, I want it now!” So sang spoiled rich girl Veruca Salt (Julie Dawn Cole) in the classic 1971 movie Willy Wonka and the Chocolate Factory, starring the late Gene Wilder. And that’s pretty much how consumers feel these days about receiving purchased goods and services— they increasingly expect it to be delivered or available to them immediately, thanks to the likes of Uber and Amazon Prime®. It’s a development that is redefining behavior and consumer expectations and irrevocably altering the relationship between buyers and sellers.

Believe it or not, though, this revolution may be just getting started. It won’t be long before retailers and other businesses are delivering all types of products to consumers before they even order them, as sellers begin using past purchase histories to anticipate needs.

And while you probably haven’t thought about the connection, it is worth remembering that advances in payment processing technology have played a significant role in the development of this on-demand economy.

How? Thank a smartphone. These days it’s easy to make a sale and complete a transaction just about anywhere with the help of an app-enabled smartphone or tablet. In the case of Uber, the transaction is effectively “invisible,” a payment experience that may become more common going forward, as is the case at the Amazon Go® store in Seattle.

So if you’re not yet taking advantage of cutting-edge technology like mobile credit card processing, it’s worth considering the possibilities, as the ability to offer an Uber-like-convenient payment experience can give your business a competitive edge.

What is the on-demand economy?

According to Business Insider, “the on-demand economy is defined as the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.” Sounds great for consumers, right? So why hasn’t it happened sooner? Actually, it has.

As it turns out, the “immediate provisioning of goods and services” is not a new idea. In fact, one of the most spectacular failures of the dot-com boom and bust era was Webvan®, an online grocery business that aimed to pioneer home delivery of groceries but went bankrupt in 2001, becoming one of the most infamous dot-com disasters. And decades before Webvan, certain food staples—like milk and bread—were often home delivered, hence memories that older generations have about their local “milkman” bringing glass bottles to the back door.

But nowadays, consumers can order countless goods and services, including groceries, and have them delivered right-quick. What accounts for this paradigm shift?

Technology has been the game-changer

The first obvious change since Webvan is the rise of the smartphone and attendant mobile apps, which allow users to search and make purchases just about anytime, anywhere. The Internet has also gotten quite a bit faster since the dial-up days of the turn of the century.  Meanwhile, always-on connectivity and tools like text, chat, e-mail, geo-location and social media have also raised the expectations of consumers, in fact, encouraging a developed sense of entitlement, and because businesses are incentivized to give consumers what they want, the motivation to innovate is strong.

Payment technology has played a significant role in this innovation, especially mobile processing, which gives merchants the ability to accept payments on-the-go—from anywhere inside a retail location, for example. And with younger generations increasingly receptive to emerging payment options including payment apps and the ability to tap-and-buy, this trend figures to intensify over time.

Expectations for “right now” on the rise

In fact, it’s already clear that consumer behavior has been altered by on-demand thinking and the ability to make purchases on the go, especially considering the on-demand economy, as discussed in an article by James Paine in Inc. Magazine, has grown “from $22 billion in 2015 to $34 billion [in 2016] and ... $57 billion [in 2017].” Moreover, research by Charles Colby and Kelly Bell, published in Harvard Business Review reveals that more than 280 companies provide on-demand goods and services across 16 industries, up from 76 companies in six industries in 2014.

Many of the companies offering on-demand services are technology companies, but the trend has implications for legacy businesses as well, which explains why WalMart is expanding its Online Grocery Delivery option, as reported on Walmart.com, which “will [soon] grow to serve more than 100 metro areas across the country.” 

Competing in the on-demand economy

Of course, with new opportunities come new challenges for businesses large and small alike, which need to adjust to changing consumer expectations. In particular, speed and transparency are now at a premium.

The good news is that a seamless purchase and payment experience can go a long way towards satisfying consumer demand for easy accessibility, mobility and security. And the latest online processing and mobile processing tools allow users to pay, quickly and easily, in many cases defaulting to their preferred method of payment. So when consumers declare, “I want it now,” they may be pretty surprised as technology expands, that the products they want have already arrived at their door.

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