Consumers today expect instant gratification, and the services industry has obliged. The on-demand economy has radically transformed how we interact with services, enabling customers to satisfy their every demand for convenience at the tap of a screen.
According to research by McKinsey & Company, the Middle East has one of the highest levels of consumer digital engagement in the world, with the use of digital channels and spending expected to continue to grow in the coming years.
This new business model has enabled customers to get what they need quickly and efficiently while providing businesses with a unique opportunity to grow and thrive. With the UAE laser-focused on making Dubai the digital economy capital of the world by 2030, backed by the UAE Digital Economy Strategy, and the perceived value of convenience among consumers, there can be no doubt that on-demand services will continue to grow and evolve. But what impact does this industry have on the wider economy and society?
Impact on business
On-demand services have revolutionised the service industry, allowing businesses to streamline operations, reduce overhead costs, and increase profits. Access to data, thanks to cutting-edge technology, has enabled businesses to monitor their performance in real-time and adapt as needed to ensure they are consistently meeting the ever-evolving preferences and needs of their customers. Through analytics, businesses can track buyer behaviour, monitor supply and demand, and maximise marketing efforts in order to reach the right prospects.
Leveraging insights and providing access to 24/7 customer service has also allowed companies to create highly personalised and engaging customer experiences and significantly improve the customer journey. This approach has enabled many businesses to scale their services and reach a broader customer base, ultimately leading to more opportunities and revenue.
Impact on society
The evolution of the on-demand economy has had many positive benefits for the local community, including employment opportunities. On-demand services have created a whole new ecosystem and job opportunities for individuals with various skill sets, including data analysts, drivers, couriers, and professional service providers. It has also created more flexible work arrangements, allowing individuals to work on their own terms and schedules.
The effortless and frictionless nature of on-demand services has also revolutionised the concept of convenience. Location is no longer a barrier, with most on-demand platforms expanding their geographical operations and scaling their services to reach more customers and provide greater access to their offerings. Whether it’s hailing a taxi, ordering groceries, or having your laundry collected from your front door – the sky is now the limit for the services people can access from the comfort of their homes.
Impact on the economy
On-demand services have increased competition and lowered prices. By allowing consumers to easily compare prices and services, their growth has forced traditional businesses to adapt or risk being left behind. This has led to a more competitive market, with companies striving to offer better prices, quality, and service to stay relevant. It’s not surprising then, that the MENA region’s ecommerce market was valued at $37bn in 2022, with the fastest growing verticals including food and drinks, consumer health and home care. By 2026, this figure is expected to be around $57bn.
Mainstream commercialisation of these services has also made it easier for entrepreneurs to start their own businesses. With platforms like Etsy and Airbnb, individuals can easily turn their hobbies or spare rooms into sources of income. This has led to a boom in entrepreneurship and innovation, with more people pursuing their passions and creating unique products and services.
As more companies adopt this business model, consumers are getting increased access to a wider range of products and services. By connecting consumers with businesses and individuals who offer specialised services, on-demand platforms have made it possible for people to access products and services that might otherwise be difficult to find. This has led to a more diverse economy, with a wider range of products and services available to consumers.
Balancing the ecosystem
Despite the many benefits of the on-demand industry, there are some concerns about its impact on local businesses that do not have the resources to compete with larger on-demand companies.
This is one of the reasons Laundryheap has adopted its lean business model that partners with local laundromats to execute its services, while focusing on operations, logistics and exceptional customer service.
Not only does this approach allow us to focus on continuously improving our operations to provide a faster and more convenient service, but it also ensures we are supporting existing businesses with years of expertise within the local community.
From safety to fairness, and training to quality control, the on-demand economy has a duty of care both to employees and customers – in all aspects – to keep the ecosystem beneficial to all stakeholders involved.
By creating jobs, increasing competition, enabling entrepreneurship, and expanding access to products and services, on-demand platforms have helped to fuel economic growth and innovation. While we can expect challenges to arise as we continue to adapt to this new way of living, these platforms will continue to evolve and play a critical role in shaping the future economy.