The On-Demand Economy Is Growing, and Not Just for the Young and Wealthy

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The On-Demand Economy Is Growing, and Not Just for the Young and Wealthy

Posted by: pubco
Category: Technology

On-Demand Growth is unavoidable

The on-demand economy is large, and getting larger. Economic activities centered around online platforms, where independent sellers can offer goods or services to customers, are attracting significant consumer attention and spending, according to new data from the National Technology Readiness Survey* (NTRS), which has tracked technology behaviors and beliefs in the U.S. since 1999. The most recent study, conducted in October 2015, surveyed 933 U.S. adults sampled at random from a consumer research panel.

To estimate on-demand spending, respondents were queried about whether they purchased on-demand products and services in a monthly period, the categories of the purchases, and the amount spent. Results were projected to the U.S. adult population (18 years and older) with internet access in the home, based on data from the U.S. Census Bureau’s American Community Survey. Here’s what the numbers show:

The on-demand economy is attracting more than 22.4 million consumers annually and $57.6 billion in spending. The largest category of on-demand spending is online marketplaces (e.g. Ebay, Etsy), with 16.3 million consumers each month spending almost $36 billion annually. Transportation (e.g. Uber, Lyft) comes in second with 7.3 million monthly consumers and $5.6 billion in annual spending, followed by food/grocery delivery (e.g. Instacart) at 5.5 million monthly consumers and $4.6 billion annual spending. Other on-demand services including home services (e.g. TaskRabbit), freelancer services (e.g. Elance), and health and beauty services (e.g. StyleSeat) account for $8.1 billion in spending each year, and all other on-demand activity comes in at $3.8 billion.

Tech startups like Uber and Airbnb comprise the majority of on-demand firms. But major corporations are starting to enter on-demand markets. GM’s investment and partnership with Lyft, and hotel giant Accor’s recent acquisition of Airbnb competitor Onefinestay are recent examples.

These firms recognize that the on-demand economy is becoming too big an opportunity to miss. They also see that it’s too risky to ignore. Like all major disruptions, on-demand economy startups are challenging industry incumbents with new business models and new ways of engaging customers. Existing companies will need to embrace the on-demand economy and transform their service and delivery systems to meet consumer demand, or find themselves disrupted by those who do embrace this shift. This requires incumbents to transform service delivery systems to ensure they are accessible, secure, and mobile-friendly, while leveraging the potential pool of providers who would like to participate in the on-demand economy.

Charles Colby

Rockbridge Associates, Inc.

Author: pubco

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