The on-demand economy: after media and food…what’s next?
Digital is changing how retail goods are accessed and consumed, contributing to what we call the on-demand economy. In this post, we analyse why some retail verticals have been disrupted, and unveil what retailers should be looking at to stay relevant.
How technology introduced on-demand experiences
The on-demand economy is growing fast. Thanks to the game-changing smartphone, we have been spoiled with immediate access to information. Fuelling “a sense of entitlement to fast, simple and efficient experiences”, called instant gratification. People want things now!
Instant gratification is a key trait of millennials, who represent “over a trillion dollars in direct buying power and a huge influence on older generations”.
There’s more: smartphones are also driving the rise of multi-channel retail.
Consumers want to enjoy their favourite brands both in store and online before completing the purchase, expecting the same experience across different channels.
A trend well understood by Amazon, who is opening physical stores to become accessible to its customers through different channels. So, smartphones paved the way for multi-channel retail, and spoiled millennials with instant, “on-demand” experiences”. Why? Because it’s convenient!
Why technology alone is not always enough to bring “on-demand” convenience in retail: media vs. food
Convenience is king for millennials. Technology needs to ensure both access and consumption of goods is convenient.
- For example, media consumption has been disrupted because mobile technology made it possible to both access and consume songs, news, movies and books conveniently. It’s no coincidence Netflix started streaming “on-demand” in 2007, and that Spotify launched in 2008, right after the iPhone came out.
- In food, smartphones alone were not enough to guarantee convenience. Ordering food from an app is definitely more convenient than a phone call, but food also needs to be delivered conveniently. And this applies to every other retail vertical where consumption of goods isn’t digital.
Because most retail goods can’t be consumed in digital format (yet), technology needs also logistics to reach mass-market convenience. More specifically, on-demand logistics.
Technology meets logistics to complete the retail on-demand experience
New delivery platforms made their entrance heavily in the food vertical, succeeding by providing restaurants with both e-commerce and on-demand logistics. A partnership model that helped local restaurants joining the on-demand economy, without investing in tech and logistics.
Bigger food brands also want a chunk of the pie, but they want to keep the customer journey and data to capitalise on retention. They need a reliable logistics infrastructure that fit into their e-commerce. Something possible today, thanks to the beauty of open APIs.
Any retail enterprise can use APIs to flexibly integrate its e-commerce with an on-demand logistics infrastructure of a third-party provider, so to keep control of data, key for long-term growth.
The next big on-demand wave unveiled: groceries
Food delivery just paved the way to bring on-demand experiences in other verticals. Now, what is the next big retail vertical that will join the on-demand economy? “The question is “when” the services offered in this economy will begin to be utilized by consumers outside of the tech-savvy, early adopters”?
Bigger players can leverage on higher brand equity, credibility and marketing budgets to increase adoption rates in other verticals.
Research suggests that groceries are already following food delivery’s footprints. Big brands that enter the on-demand economy as first-movers in their vertical will have a better chance to trigger winner-takes-all dynamics. Whole Foods Market is among the first movers in the grocery vertical, choosing to outsource logistics to join the on-demand economy.
This is just the beginning, as other established players are actively watching the space. In the next article, we’ll be sharing more about the on-demand economy future. After groceries, what will it be?
Matteo, Marketing Executive
Interested in finding out more about how Quiqup helps retailers joining the on-demand economy?