The Essential Guide To Building An On-Demand App

The Essential Guide To Building An On-Demand App

April 6, 2016 • Product Success

The on-demand hypergrowth is upon us. In the next 5 to 20 years most of people will be able to get anything within a 5 to 60 minute window. – Gary Vaynerchuk

There’s an army of apps to get almost anything you want on demand.

The on-demand app economy allows you to order anything, exactly when you need it. From food delivery, to a ride, to a person to help you build bookshelves, to package delivery, to a spontaneous getaway or a relaxing massage, today’s technology has got you covered it’s all there.

On-demand-economy

Why on-demand apps are such a rage?

The whole idea of on-demand was built on convenience and mobility, so it was obvious for the mobile apps to take a centre stage.

Moreover, the on-demand app business models got validation with success of Uber and we saw a spike thereafter.

The investors also placed their bets on this sector and fueled the growth.

funding for on demand services

Source: CB Insights

Our last article highlighted What Successful Taxi Dispatch Apps Have In Common. In this article though, we get you the essential guide of building an on-demand app – everything you need to know before you set out on your appreneurial journey.

Take a look:

#1 Identifying specific pain or problem

Approximately 80% of the US population owns a smartphone, and that’s a huge business opportunity for mobile app developers.

If you are also hit by Uberification trend, then you must know that there are already plenty of apps going behind ‘Uber for X’ model.

The folks at Digital Intelligence Today published an evolving master-list of Uber-style services that match on-demand requests with real-time supply.

There have been uberification of almost everything, check for yourself:

  • Uber for Liquor Delivery: Saucey, Drizly, Minibar
  • Uber for Cannabis Delivery: Eaze, Canary
  • Uber for Errands: TaskRabbit
  • Uber for Odd Jobs: GladlyDo
  • Uber for Hotel Rooms: HotelTonight 
  • Uber for Beauty Services: Swan, Stylebee, StyleSeat 
  • Uber for Home Cleaning: Handybook, Homejoy
  • Uber for Car Repairs:  Yourmechanic
  • Uber for Babysitting: Urban Sitter 
  • Uber for Pizza Delivery: Push for Pizza 
  • Uber for Medical Equipment: Cohealo
  • Uber for Quiet Spaces: Breather
  • Uber for Vet (Home Visit): vetPronto 
  • Uber for Dog Sitters: DogVacay
  • Uber for in-home Massage: Massage, UnwindMe, Zeel
  • Uber for Doctor House-call: Medicast, Pager
  • Uber for Doctor (Remote) Consultation: Doctor on Demand, dvisit
  • Uber for Courier Deliveries: Deliv, Postmates, Shyp
  • Uber for locksmiths: KeyMe, KeysDuplicated
  • Uber for Childcare/School Run: KangaDo
  • Uber for Dry Cleaning/Laundry: Cleanly, Dashlocker, Washio, Flycleaners
  • Uber for Hotel Dry Cleaning: Oliom
  • Uber for Mobile Repairs iCracked
  • Uber for Removals: Moveline
  • Uber for Lawnmowing: Lawnstarter, Plowz&Mowz
  • Uber for Restaurant Home Delivery: Seamless
  • Uber for Taxis: Lyft (this is epic)
  • Uber for Home Maintenance RatedPeople, HouseCall, RedBeacon
  • Uber for Home Decoration: PaintZen
  • Uber for Home Deliveries: Anyvan, Doorman, Instacart, UberRUSH
  • Uber for Dog Walking: Wortheem Swifto, Urban Leash, Trottr
  • Uber for Private Jets: BlackJet
  • Uber for City Parking: ParkingPanda, MonkeyParking, SpotHero
  • Uber for Language Tuition: Cambli
  • Uber for Storage [Valet]: Caddy, MakeSafe, Boxbee
  • Uber for Bodyguards: Bannerman 

But not every problem is a real problem.

If you have an on-demand app idea you should validate it.

The problem should be frequent not seasonal. For example, Cherry, an on-demand car wash app failed because customers probably didn’t need a car wash every day. Maybe every week, at best.

Semil Shah, a columnist with TechCrunch, compares this situation with Uber, “A marketplace for town cars like Uber is something users could do daily, or even multiple times a day, assuming they have the budget. Uber’s transaction volume is high on two dimensions: repetitive use and high-ticket sales.”

Uber is really successful because people need to move from A to B. But if you are planning a similar service, ask yourself, is this a service that is addressing very specific pain or a problem?

Ivan Hernandez of Digital Loop, said in one of his podcast, “I have a friend who was telling me about an Uber like idea for sharpening the edge of your skis. I asked that person, how often do you sharpen your skis? May be once a year, so how effective is this business model?”

#2 Psychology of convenience

Here’s the thing.

People don’t roll up to McDonalds and order a double cheeseburger off of the dollar menu because it’s cheap. They do it because it’s convenient and because it is engineered to taste good.

The psychology of convenience is what drives the market for on-demand apps.

Take a look at this graph.

build an app like Uber

The distance and the time define what is convenient and what is inconvenient. The more time you have to invest in a particular activity, the more inconvenient it becomes.

In fact, when it comes to online shopping, convenience is the driving force.

Let’s go back to Uber once again. The app has a simple psychological appeal – it promises to buy us time and save us effort- in one word – convenience.

Here’s how convenience model works for service industry:

understanding on demand apps

Source: http://edtech2.tennessee.edu/

Now if you look at Uber, it delivers on every count:

  1. Decision Convenience – Making it fast and easy to choose
  2. Access Convenience – Making it fast and easy to acquire
  3. Transaction Convenience – Making it fast and easy to pay
  4. Benefit Convenience – Making it fast and easy to enjoy/use
  5. Post-Benefit Convenience – Making it fast and easy to re-purchase

No matter which industry you are in, it’s important to deliver convenience with these must-haves:

  • The ability to do live tracking. It is satisfying for the customers when they can live track their order. They feel they have some kind of control over this situation. When they order a service online and can view how far the service is, it actually gives them an assurance and trust. The continuous updates provided by real-time GPS trackers can be viewed by users at anytime from anywhere.
  • Frictionless payment. The USP of on-demand mobile apps is the ability to make payments without cash. The process gets more convenient if the payments gateways are frictionless and provide all popular payment options.
  • Ratings and reviews. Looking at ratings and reviews can ensure high-quality experience for on-demand platforms, marketplaces, and online companies.  Customers go by the word of other customers and choose one service provider over another based on reviews (both good and bad). Ensure regular reviews and Real-time feedback to create a trustable environment. At Uber, a driver’s career depends on his ratings.

uber business model

#3 Getting suppliers on-board

Think of Uber without its drivers, or StyleSeat without any stylists, or TaskRabbit without its taskers!

Not possible, right?

Yes, even if you are building an online business with your on-demand app, the roots lie in managing and training the actual human beings who will be the backbone of your system.

There are two sides for any on-demand app business – the consumer side and the supply side.

Before you even get started with the consumer side, you have to find the supply for your on-demand business.

  • Who will drive the cars for my on-demand taxi app service?
  • Who will deliver groceries for my on-demand grocery store app?
  • Who will consult the patients for my on-demand medical consultation app service?

Again, there’s a lot to learn from on-demand taxi app, Uber. See how they ensure rising popularity by expanding their services.

Uber for X

Try these techniques to get your suppliers on board:

  • Cold calling works when you are no one

Uber got its first few drivers in San Francisco when Travis Kalanick, Uber’s CEO, made cold calls and asked the licensed drivers to join Uber.

“First 10 guys I called, 3 of them hung up, a few of them listened for 45 seconds and then hung up and 3 of them were like, we are interested, let’s meet. If you are cold calling and got 3 out 10 those are interested means you got something,” – Travis Kalanick, Uber’s CEO.

  • Clearly compare the remuneration and perks of association

Uber clearly states and compares the earnings of its drivers per hour. But it also highlights the requirements like- cover your own gas and vehicle expenses. Before you decide make sure to consider all the factors. But Uber tells the prospective drivers – “The great news with Uber is that you’re the boss.” – now that’s a big incentive.

Uber business model

  • Lay clear ground rules

The supply guys need to be found and ground rules should be set even before you launch you app. For example, StyleSeat gives out detailed guidelines for anyone who wish to list their business on the app or become a stylist.

State every possible situation and the rules for that. For instance, what if the customer cancels the order at the time of delivery? What impact will it have on the supplier?

#4 The Matching Algorithm

Matching logic of an app determines which service provider is to be allocated to a new customer request. It is important for an on-demand app how it matches the two sides.

These apps don’t match and route people manually. Instead, software and underlying algorithms make these technologies work. There are two algorithms for matching demand and supply in an on-demand app:

Automatic matching that takes place when logic to assign (or shortlist) service providers is built into the application code.

on demand apps

Manual matching where app administrator manually assigns the customer request to one of the service providers (works for businesses with small volume of transactions)

successful on demand apps

In fact this demand and supply ratio can also influence the market prices.

Travis Kalanick told Wired in 2013, “[Uber is] not setting the price. The market is setting the price. We have algorithms to determine what that market is.”

To ensure these matching algorithms works successfully for your on-demand app, you need to consider these factors:

  • Pursuing local first

Jumping straight into a national-scale service can be a mistake. You must have significant consumer demand for what you’re selling and freelance suppliers ready to meet the demand in an instant. You need to start locally for these algorithms to work.

PostMates provides the best roadmap for growth:

  1. Create a small, local service.
  2. Iterate until it’s perfect.
  3. Expand and repeat.
  • Use technology to build trust

Trust can bring more and more customers on board.

In a TED talk on how reputation is the new capital, founder of the book “What’s Mine is Yours,” Rachel Botsman talked about how technology is key to build trust and to empower each other to make meaningful connections and eventually start sharing.

Rachel said, “The real magic and the secret source behind collaborative consumption markets like Airbnb isn’t the inventory or the money. It’s using the power of technology to build trust among strangers.”

  • Manage suppliers and active jobs

One of the most challenging aspects of building an Uber for X business is connecting disorganized consumer demand with disorganized suppliers. You will not actually employ these suppliers but will still have to manage them through cloud. Ensure, your backend services are solid to manage the data/information about the suppliers and customers both.

Hope this guide was useful to you in your quest for building a successful on-demand app. If you are looking for a development partner to develop an on-demand, do reach out to us for a free consultation. Get in touch here.

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