Toyota introduced the Just-in-Time business model in the early 1960s to reduce lead time. After World War II, Japan lacked cash to support mass production and high investments in inventory. It lacked natural resources and suffered high unemployment. The situation led to Just-in-Time: a system that revolutionized supply chain models. Businesses working on the JIT model summon required raw materials when customers place and confirm an order. It helps in saving inventory management costs, avoiding product erosion as well.
The JIT system permits businesses to control their inventory and supply chain processes. On the contrary, On-Demand solutions entitle consumers to place orders whenever, wherever, and however required. It saves customers from paying extra charges, offers paramount convenience, and empowers customers to control when and where to avail services.
On-Demand business model dates back to 2009 when Uber was first launched as a peer-to-peer ridesharing service, overshadowing the taxi industry. Nobody had heard of such a business model, and now Uber enjoys a market value of $72 billion.
Advancements in technology spur On-Demand businesses, for food delivery, laundry service, salon services, on-demand clothing alterations, and more.
Rising consumption of smartphones has altered consumers’ buying behavior in the last few years. Statista predicted 2.53 billion smartphone users worldwide in 2018. The number will exceed 3 billion in 2020, indicating the unlimited potential for businesses.
Users are closer to their mobile phones than any other digital device. Research shows that more than 62% of smartphone users made an online purchase in the last six months. Companies understand the preferences of today’s digitalized consumers. For example, McDonald's has introduced its mobile app for delivery along with a traditional fast and efficient customer service via phone.
Millennials dislike phone calls and over 75% smartphone owners living in the UK never use it to call. The generation has grown up with text-based communication platforms like MSN Messenger, MySpace, WhatsApp, SMS, Tinder, and BBM. They avoid interacting with customer representatives and choose a mobile application to place orders.
The potential of businesses via mobile phones is contributing towards high demand for On-Demand mobile solutions.
Benefitting from the Law of Instant Gratification
Humans are programmed to want things immediately, called instant gratification. It shapes consumer behavior and influences decision-making. They do not like waiting for the pleasure instead desire things instantly. They impatience hurdles e-commerce businesses that take two to three working days to deliver products. Customers make efforts to visit retail stores as the product to immediately own the product. Fortunately, On-Demand businesses cash the powerful force of instant gratification.
On-Demand businesses guarantee pleasure as soon as possible. Uber books a ride within a few seconds and the car arrives in as less as two minutes. Udemy, an online learning platform, provides instant access to lectures after the payment. Handy, an online home service company, sends workers at the clients’ desired time.
Millennials are more impatient than other generations. Growing up with advanced technology that allows instant communication has fueled their impatience. On-Demand mobile solutions are highly effective for millennials, providing pleasure promptly.
Low Startup and Operational Costs
On-Demand mobile solutions, like Just-in-Time model, bare minimum costs of holding and managing inventory. Toyota orders automobile parts from its suppliers after the order is received. It does not maintain extensive warehouses, saving costs and efforts of the business.
Similarly, On-Demand businesses hold limited or no stocks. For example, Uber does not own any vehicle. It is merely a platform that connects drivers and customers. The company has no inventory that wears out or depletes, even if no sales generate for a year. The food delivery service prepares meals after it receives an order. Unlike retail stores that must maintain a certain level of inventory, On-Demand businesses are free of any such obligation.
Uber started with four vehicles and now owns over 2 million cars. It began with a mere mobile application and no other inventory. It did not incur any costs of vast warehouses or physical stories, but only of mobile app development.
The minimal startup costs attract entrepreneurs from different industries towards On-Demand mobile solutions.
High Customer and Employee Engagement
On-Demand mobile solutions offer utmost convenience to customers and employees. For example, Uber drivers choose their working hours independently. Often people doing different jobs work with Uber to earn extra cash. Such businesses attract self-motivated employees. With minimal training and development, employees perform with absolute commitment as they’re self-driven. Nevertheless, On-Demand businesses have several service providers, minimizing reliance, ensuring a smooth flow of business. The company saves overall costs of employee management.
The mobile application engages customers via personalized promotions, discount codes, and creative user interface. It allows them to provide instant feedback and communicates the company’s concerns and regards for customers’ experience. The idea of communicating with the company instantly via the app fosters a sense of credibility in the consumers’ minds. For example, customers can give low ranking their service providers on the app.
On-Demand mobile solutions are the future of businesses, offering services when and where desired. The technology is paving into different industries and marking its territory?
Are you ready to kick start your On-Demand business today?