The on-demand economy hit $57 billion in transaction value in 2018. It’s engulfed and transformed the way we move, eat, learn, travel, and connect. It’s huge, and there’s no sign of it slowing down.
There’s a number of trends and technological strides that got us to this point. But with great progress comes great challenges — and as we become more and more reliant on the on-demand economy, those challenges continue to grow in complexity. As a result, technology companies are finding new ways to face these demands — and create a more efficient, delightful and sustainable on-demand economy.
What’s Driving the On-Demand Economy?
We’re hooked on the on-demand economy. We want services, goods, data, and we want it now. We don’t want to wait, and we want up-to-the-millisecond updates every time the status changes along the way.
The on-demand economy is fueled by the desire for instant gratification. After all, it’s embedded deep in the human psyche. As marketing expert Neil Patel puts it:
In most psychological models, humans are believed to act upon the “pleasure principle.” The pleasure principle is basically the driving force that compels human beings to gratify their needs, wants, and urges. These needs, wants and urges can be as basic as the need to breathe, eat or drink. But they can be as complex as the “need” for an iPhone 6 or some other cool new product.
That emotion that comes from being delivered a service or piece of information the moment you request it is what makes the on-demand economy such a roaring success. We want to know our Uber is on the way. We want to know where our pizza is. We want to book a house instantaneously and be able to communicate with the host whenever we want to.
Beyond the psychological driver is the state of the world itself. Accessibility to smartphones, and high-speed internet to connect them, has skyrocketed.
Take a look at India, who is currently experiencing a smartphone revolution, with experts saying that India’s tally of 300 million smartphone users could grow by more than 50% in the next few years. This is due to the drastic drop in the price of data — India now has some of the cheapest mobile data in the world, with high-speed data plans available for as low as $2.30 USD a month. And with it, stripped-down, low-end, and basic smartphones are available for just over $20 USD.
Point is, mobile data is cheap and smartphones are cheap, and it’s leading to a massive number of new users coming online year over year. And with that, it’s given these users access to the many on-demand economy services available.
But with all the always-on, always-connected users armed with smartphones out there, it’s important to recognize the technology powering it as well. Reliable, secure, fast and globally scaled networks are the lifeblood of the on-demand economy and the connected shared experiences they deliver — and is the key to solving the many challenges that arise, which we will look at next.
The Challenges of the On-Demand Economy
With massive userbases, high expectations, and global presence, building a beloved, successful on-demand application is not easy. From inception, architectural and design decisions are crucial — with hundreds of frontend, backend, and UX considerations from proof-of-concept, to global deployment.
The first (and arguably the biggest) challenge is scale. Creating a world-class, connected on-demand experience starts with being able to connect as many clients and servers as necessary, so their contributions to the shared process can be expressed and viewed by everyone in realtime, regardless of where each participant is in the world, what device they’re using, and what network they’re connected to. The big question is, how do you deliver a reliable and seamless user experience to every user, no matter where they are, and maintain that experience as the number of connected users grow and new features are deployed?
On-demand apps are growing in data intensity. Originally just letting you submit a request, maybe get some updates, and get confirmations, on-demand apps are now rich in interactivity. The connected experiences include chat, both with the service provider and support, pinpoint progress updates, geotracking, dashboards, live notifications, and more. This blending together a variety of features and capabilities into a comprehensive whole means leads to large scale challenges.
But these features and capabilities are one of the big differentiators in a crowded, cut-throat on-demand economy landscape. These are the features that not only retain existing customers, but engage new ones as well. So knowing what features to bolster the user experience is another challenge, and getting them to work seamlessly together is apart of that challenge.
That’s because when building an on-demand app, it’s actually three applications — the customer, the service provider, and the administrator. Extensibility is the last big challenge, ensuring that multiple apps on multiple device types and operating systems, connected to a wide variety of networks, can talk to one another.
How Are Companies Meeting These New Demands?
With more success and market penetration comes those challenges we outlined above. The good news? The building blocks and underlying infrastructure is there, it’s accessible, it’s affordable, and it’s incredibly powerful.
As we said before, building an on-demand app involves connecting a massive amount of users. And to be competitive, on-demand products must combine a number of interactive, realtime features to deliver an unmatched user experience to compliment the service itself. After all, that’s how the instant gratification we mentioned earlier is fulfilled.
To meet these ever-increasing demands, developers are turning to pre-built components — the right set of APIs and infrastructure to get them from POC to MVP to full-on growth. That doesn’t just mean faster time to market, but future proofs the app as the requirements and expectations grow heavier and more robust.
There are four major elements from a technology standpoint that companies use to deliver on-demand applications today, and solve the challenges they face:
- High-speed messaging and signaling APIs: this is the transport layer that delivers information and updates between connected users. Live chat, realtime location streaming, pricing updates, dispatch requests, live notifications — all realtime features that are delivered through these high-speed messaging APIs and associated infrastructure.
- Presence detection APIs: this is what identifies who is online and recognizes when they go online or offline. It’s what keeps a finger on the pulse of user status, and for on-demand applications at scale, a key feature of matchmaking and dispatch.
- Cloud gateways and integrations: this is what lets on-demand companies innovate. Being able to integrate other microservices and APIs directly into your existing infrastructure is crucial for launching features like language translation, mobile push notifications, and chatbots (mission-critical for massive-scale customer support).
- Serverless compute: this is what allows computation to take place at the edge, or as close to the individual user as possible. Serverless compute means that precious resources aren’t being wasted sending data between server and client.
Combining these interactive APIs with a trusted infrastructure is how companies can effectively solve the big challenges faced for a large scale on-demand product. That underlying network must deliver messages quickly enough for realtime, regardless of geography; provide high reliability (preferably at least 99.999% uptime guarantee); and scale to trillions of messages transported, quelling the risk of outages when your app takes off in the marketplace.
It’s safe to say the on-demand economy is here to stay. It’s reinvented the ways we live our lives, and more and more businesses will be disrupted by on-demand services. It’s the reason that other industries are taking on-demand functionality and delivering new experiences across the board. With more and more devices coming online each day, the on-demand economy is showing no signs of slowing down. The big question is, will on-demand services make the right design and architectural decisions to keep up?
Feature image via Pixabay.