May 24, 2022

On Demand Business Models with Examples: What Model Is Right for You?

On demand service marketplace platform is the need of the hour as people are busy and find difficulty in completing their personal chores. They seek help from service providers to do their tasks. 

To get access to dedicated functionality and to all resources, service seekers need to utilize on demand service platforms and so the demand is unimaginably high. This has made many budding entrepreneurs search for on demand business ideas that will help them to get into the market that is in high demand.

Why On Demand Market Growth Been Monumental

To understand the real importance of on demand service platforms, it is very essential to understand the scope and future of these platforms. Let us identify what stats say about on demand service platforms and what are its benefits.

  • 42% of the adult population in the U.S had used online service marketplace platforms.
  • 22% of the adult population in the U.S is being service providers in any one of the service platforms.
  • 51% of service providers have admitted that their financial condition has been lifted to a higher level after using on demand service platforms.
  • 81% of service providers have decided to stay with the same service platform and continue their work.
  • 33% of workers work with more than one service platform and have increased their work opportunities.
  • Netflix is stated to be the leading video streaming service platform that has 151 million subscribers.

What is an On Demand Business Model?

An on demand business model is an online bridge that connects all local service providers with their local clients and processes the service requests and payment through the platform. Clients search the platform and find their service providers and will request for service. 

Service providers will accept the request and will process their service. Clients will pay the platform and the admin will deduct his commission or any other charges that have been agreed between the admin and the service provider and will pay the balance to the concerned service provider.

On-demand Services Will Become More Personalized

On-demand service platforms have gained greater priority mainly because of their convenience and working pattern. Customers get an omnichannel experience as they can get multiple ways to access the platform and get things done on time.

With ever-changing trends, customers have more expectations with the service offered by the service marketplace and every platform needs to fulfill the market demands to survive in this industry. By tracking customers’ buying behavior, the platform should offer personalized services that will impress them and make them stay with the business for a long period.

Benefits of Using On Demand Business Platforms

  • Users find service platforms to be more convenient to use and get their service on time by saving their precious time.
  • The development cost for building an on demand service model is cheaper as there are many ready-made solutions available.
  • The on demand service model supports ease of payment that will let clients pay and get their service from service providers through the platform. So greater conversion is guaranteed.
  • All on demand service platforms are SEO-friendly and will have better online visibility that will support users to gain the attention of their target audience.
  • Customer relationship management can be achieved easily by utilizing the service platform as there will be multiple communication channels and will provide service.

Top 3 On Demand Service Marketplace Business Models

To succeed in your on demand business you need to look for perfect on demand business ideas that will clearly lead you towards reliable on demand marketplace business models.

Let us analyze the leading business models that will support you in moving your business to next level.

1. Lead-Based Business Model

This is a genuine business model for any on demand business. In this model, clients will request for service and service providers will quote and submit to the platform. The platform will display the quote to clients. 

Clients will select the best service provider whom they find comfortable and will offer their work. The concerned service provider will be notified about the request approval and will be allowed to deliver the service.

In this service model, the platform will not charge service providers on the payment they get for completing the service. Rather the service provider will pay the admin to let their quotation be displayed to their clients. 

The chance of conversion is not guaranteed by the platform but it will allow the service provider to meet his genuine lead. If properly quoted then the conversion is possible. Thumbtack is currently following this business model and has succeeded in satisfying both its clients and service providers.

2. Transactional-Based Business Model

This is one of the beneficial business models that benefits both service providers and the admin. In this model, whenever a transaction is made within the platform the admin will receive the transaction fee.

Clients will find their respective service providers. Will use all communication channels and will get in touch with them. Client and service provider will negotiate and will settle their order. Once the service is completed the transaction will be made through the platform.

The admin will deduct the transaction fee that is agreed with the service provider while getting the provider registered with the platform. In this method the service provider needs to pay only if he gets his order. Else he may not pay and this is the best choice for any start-up.

TaskRabbit is one of these on demand business model examples that has survived well in the market and currently holds more than 2 million active users and thousands of vendors in and around the US also it’s suits for different on demand industries.

3. Subscription-Based Business Model

Certain services need continuous support from service providers like laundry, groceries and many more. Clients need to pay service providers on a recurrence basis. This is where the subscription-based business model works. 

Customers can get their bills on a monthly basis and can pay at once. The platform will charge the subscription charges to the service provider and the service provider need not pay for each transaction that he makes through the platform.

Alfred, a New York based company offers this business model and has set to be the best on-demand service platform example. Now this platform is getting millions of service requests that makes this platform standalone in the market.

Key Factors of a Successful On-Demand Business Model

Few crucial aspects are to be considered that will have a major impact on the success of any on-demand service marketplace.

Rapport with the service providers

Service providers determine the credibility of your service platform. If they deliver quality service then you can gain better credibility else you may lose your reputation. So, it is very essential to maintain a good rapport with your service providers and offer them better features through your service platform. Get their feedback often and make sure they are satisfied with staying in your marketplace.

Pricing structure

While framing the online business model for your on-demand marketplace platform, you need to be more specific in framing the pricing structure. You can either go for a standard and fixed pricing strategy or can have a flexible pricing slab. Allow your service providers to define the pricing factor as they need to be benefited from the plan.

Scheduled delivery

Most people think that on-demand service platforms are preferred mainly because of their fastest delivery services. Customers may get their services instantly. But it is not true that all customers expect instant delivery. There are customers who prefer to have a scheduled delivery as per their availability. Your platform and your business model should support scheduled delivery too.

Partners/users of the platform

Every platform will have a defined user group. Before finalizing your business model, you need to be clear with the number of users who are going to access your platforms. For e.g. When we consider the OLA app, passengers and drivers are the two main user groups. But at the same time, when we look on the Postmate app, the users will be restaurants, customers, and the delivery agent. So, you need to plan your business model accordingly.

4 Popular Startups that have Captured the Market with the On-demand Business Model

Before you start building your own on-demand marketplace, you need to identify the leading platforms that have succeeded in their business by choosing the same on-demand business model. Let us have a short look at the most popular marketplace platforms.

TaskRabbit

TaskRabbit is a genuine service marketplace platform that connects service seekers with service providers who are available in their local area. Seekers get connected with any individual contractors who are also termed taskers. They will have a team of experts and will render professional services which can be house renovation, plumbing, electrical repairs, and many more.

Seekers can search for the required service in the platform or in the app.  The platform will list the nearby contractors and seekers can compare their works with other taskers by checking their reviews and ratings. The price for delivering the service will be negotiated and after completing the job the seeker will pay the amount through the platform and the tasker will receive the amount from the admin after deducting his commission.

DoorDash

Doordash is a reputed on-demand food delivery service platform that allows customers to order food from restaurants that are listed on the platform. The order is collected from the restaurant and delivered to the customer by a freelance delivery agent who doesn’t belong to the restaurant.

The platform operates in hundreds of cities in the U.S. Restaurants in the U.S. get connected with the platform and can use their delivery services to deliver the food to customers. Restaurants find it more useful as they need not pay or hire any delivery agent as it is taken care of by the platform.

Wag

Wag is an American-based service platform exclusively built to take care of dogs. Many dog owners find no time to take their dogs for a walk. With the help of this platform, they request a walker who can take care of their dog and take them for a walk. The platform will allocate the job to a walker who is already registered with the platform and the walker will take the dog and will go for a walk and will safely return the dog to its owner.

The amount can be charged on an hourly basis. The platform will get a commission and the walker will get the rest of the amount paid by the dog owner. Customers can use either the platform for the dedicated mobile application to request a walker. Apart from walking, you can also get trainers to train your dogs.

Doctor On Demand

Doctor on demand is a leading marketplace platform that delivers medical services 24/7 to patients. The platform connects patients and doctors remotely and offers them virtual care. More than 98 million Americans are using this service platform and getting benefited widely. More personalized care for your health is offered through this platform.

The medical records of every patient are maintained by offering better data security and only the concerned doctor and the patient will be able to access them. Patients are allowed to choose specialists who are available in the nearby locality and can get connected to them directly. The consultation process will take place either through phone calls or video calls and the doctor recommends treatment and medicines. The consultation fee will be paid through the payment gateway.

Conclusion

Hope our on demand business ideas have helped you to understand more about on demand business models and its types and benefits in detail. Although setting the perfect business model is essential to determine your success in the market, still you need to have brilliant features that will attract enough visitors to your platform. Also you need to have a mind-blowing marketing strategy that will promote your brand and get you to reach your target audience easily.

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Glory

Glory is a proficient content writer who delivers engaging content that elevates our business credibility among our audience. She is a creative story teller within quality brand standards.

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