The Four Elements of the On-Demand Economy

Big brands continue to transition to the $57.6 billion on-demand economy, which is characterized by the complete removal of friction from consumer purchases:

  • Jaguar and Shell recently rolled out a partnership to make it possible for people to prepay for gas from their in-car infotainment touchscreens. By using Apple Pay or Paypal configured in a Shell app, Jaguar drivers in the United Kingdom can select how much gas they want and prepay without needing to take out their wallets. The service will expand globally.
  • Walmart now allows customers to bypass lines at its in-store pharmacies. Pharmacy customers use their Walmart app on their mobile devices to order prescription refills and then use an express lane to move ahead of the customer service line and retrieve their orders. Customers can also track order status and view pricing details.

Product preordering is hardly new. As I have discussed on my blog, brands such as Starbucks and Panera Bread have been offering preorder services for a few years. But businesses such as Jaguar and Walmart help legitimize preordering, which is one of the elements of the on-demand economy. Meanwhile, many brands continue to develop services that deliver products to consumers on demand. Amazon removes friction from online (and offline) buying with Dash buttons and Amazon Go stores. Retailers such as (Walmart among them) have launched services that make it easier to either pick up products or have them delivered to your home. Uber deserves credit for being the on-demand catalyst. Now the legacy brands are learning and adapting.

The Four Elements of the On-Demand Economy

The “on-demand brands” typically adopt one or more of the following four elements of the on-demand economy:

  • Making it possible for consumers to prepay and avoid needing to reach for their debit cards or for cash, a model that fueled Uber’s rise. Prepay works especially well with high-volume products that rely on repeat purchases and low consideration, as is the case with Panera, Starbucks, and Walmart’s pharmacy. Typically customers know what they want before arriving at the store and don’t want to spend a lot of time choosing among products.
  • Delivering products to consumers on their own terms, often at their own homes, faster than ever before. For instance, Amazon has launched drone delivery in the United Kingdom to speed up product delivery and is preparing to do the same in the United States. UberRUSH partners with brands such as Nordstrom to offer product delivery, and business such as Heal in Los Angeles bring doctors to your doorstep. These types of services appeal to a variety of demographic segments, ranging from busy parents to urbanites who don’t own cars and lack time to pick up their products. But fulfilling product orders in an on-demand fashion does not need to require the brand to deliver products to the home. Walmart is experimenting with Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.
  • Relying on mobile devices such as phones and wearables. One cannot overstate why mobile has been integral to the rise of the on-demand economy. Mobile searches overtook desktop searches two years ago. There are almost as many mobile phone subscriptions as there are people on earth (which took only 20 years to happen). As Google noted, mobile phone users typically want things done in the moment — what Google calls micro-moments of demand. During micro-moments, people make instant decisions about where to go, what to do, and what to buy: about 76 percent of people who search on their smartphones for something nearby visit a business within a day, and there was a 2.1x increase in mobile searches for stores open now and food open now from 2015 to 2016. Those findings make intuitive sense: when you’re on the go, you don’t have a lot of time to do complex research for things to buy.
  • Using on-demand marketplaces in which people tap into a pool of available inventory to get what they want. Examples of on-demand marketplaces include Uber, Lyft, and Zipcar for either getting a ride (Uber and Lyft) or renting a car quickly. A number of on-demand marketplaces have popped up in local markets to service different industries. For instance, in Chicago, ParqEx connects people who want to rent their parking spaces with people looking for parking in the moment. Many pundits associate Airbnb with the on-demand economy. But I think Airbnb’s success has more to do with opening up a broader inventory of lodging options as opposed to making them available on-demand. Browsing Airbnb is more of an “I am traveling and want an interesting alternative to a hotel” than “I need a place to stay now.”

Voice and Self-Service

The on-demand economy is evolving rapidly in a number of ways, mostly notably through the rise of voice search. Voice search ads a layer of complexity to on-demand transactions: with our voices, we can request more complex services and products. We can ask Alexa, “Tell me where I can watch the movie Get Out this afternoon and use my Stubs discount card” or “Where can I get barbeque ribs in the west Chicago suburbs?” Businesses that want to be found during those open-ended searches need to optimize their online content and data so that they are visible for voice search. Businesses that understand how to make themselves visible for voice will capture more on-demand queries, thus being part of the on-demand journey, from awareness to consideration to purchase and service.

Another major development is the use of buy buttons such as Amazon Dash to enable self-service on-demand. The Amazon Dash button turns any object into a smart device for replenishing items such as laundry detergent. Amazon reports that the Dash buttons, available to Amazon Prime members, have taken off. According to Amazon, Dash button orders occur over twice a minute, and for many popular items, more than half of orders are done via Dash buttons. The list of brands signing up for the program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

It’s easy to foresee a time when Amazon will turn the Dash button into an auto-order device that uses sensors to replenish certain products without the consumer even needing to click a button. Auto on-demand may take hold in other industries and forms for products that are ordered often. For now, brands are responding when consumers call — and faster than ever.

Image source: nextjuggernaut.com

The Collaborative Economy Goes Mainstream

Welcome to the age of sharing. Thanks to easy-to-use online markets like Airbnb and Uber, consumers are increasingly choosing to share goods and services with each other than buy from big brands. According to Fast Company, the so-called collaborative economy represents a $110 billion market. Now, for the first time, comes a report that helps marketers understand just who is doing the making and sharing of goods and services, and why they’re collaborating instead of buying. Sharing Is the New Buying, co-produced by Crowd Companies and VisionCritical, discusses the results of a survey of 90,112 people in Canada, the United Kingdom, and the United States. The report shatters a stereotype that participants in the collaborative economy consist of starving hipsters in Brooklyn or technology nerds in Silicon Valley. In fact, sharing has become mainstream. And brands that want to succeed in the sharing economy must tell stories around value and trust.

“Contrary to the image of sharers as tech-savvy urban hipsters, sharers are very much like the population as a whole: in other words, a lot like your customers,” write authors Jeremiah Owyang, Alexandra Samuel, and Andrew Grenville. “Sharers are part of the mainstream set of customers that businesses cannot ignore.”

Sharing Is the New Buying is an important read for any marketer who wishes to tap into the zeitgeist of the collaborative economy. After all, publications ranging from Forbes to The Guardian cite the sharing economy as an important trend affecting how business is conducted in 2014. So it’s no surprise that big brands such as Patagonia and BMW have been learning how to tap into sharing behaviors by offering ways to share goods instead of buying them outright. Sharing Is the New Buying offers a snapshot into who exactly is doing the sharing. Some key findings:

  • Sharers are mainstream, making up 40 percent of the general population, meaning 80 million Americans, 23 million Britons, and 10 million Canadians. People who rent and share from each other cut across a broad spectrum of demographics, with women comprising 55 percent of the sharing population.
  • Sharers are affluent: more than 27 percent of “neo-sharers” (users of emergent sharing services like Uber) have incomes between $50K-$100K, just like the overall population.
  • Sharers are young: about half of active participants in the sharing economy are between 18 and 34 years old.
  • Sharers are practical: most people share because of convenience and cost savings, as well as the desire for quality goods and services.

Savvy start-ups have already tapped into the wants and needs of sharing consumers, as have established brands. Airbnb has quickly challenged the hegemony of the larger hotel chains by making it possible for everyday people to Continue reading

“We Are a Catalyst”: Jeremiah Owyang Discusses Crowd Companies, His Bold New Venture for the $110 Billion Collaborative Economy

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If you have ever rented your home or apartment to make extra income while you were on vacation, or if you’ve used a markplace like Lyft to rent a car from someone just like you, then congratulations are in order: you’re contributing to the rise of the $110 billion collaborative economy.

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As consumers become more cost conscious and environmentally aware, we’re increasingly sharing goods and services with each other instead of buying new products from brands — behavior that Danielle Sacks of Fast Company labeled as the “sharing economy” (aka the collaborative economy) in 2011. And brands want a piece of the action, too. On the one hand, a new breed of start-ups such as Airbnb and Lyft have quickly established themselves as popular marketplaces to link people who want to rent to each other. And legacy brands such as BMW and Patagonia are helping consumers either rent (in the case of BMW) or buy gently used products (in the case of Patagonia) from each other.

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To help brands embrace the collaborative economy, entrepreneur Jeremiah Owyang has launched Crowd Companies, a council of heavy hitter companies ranging from Ford to Whole Foods. Members of Crowd Companies are committed to helping brands learn new ways to collaborate with their customers instead of selling to them in the traditional way. Where appropriate, the council may foster partnerships among brands and start-ups to co-innovate. The council is akin to a think-tank and educational resource, earning its revenue from membership fees and from speeches and workshops. The organization is owned entirely by Owyang, who is also an active participant in the collaborative economy in his personal life, as he has discussed on his own blog.

Owyang recently took time to share more insight into the launch of Crowd Companies and the significance of the collaborative economy. As he points out in the following Q&A, the collaborative economy is not necessarily new — but the uptake of digital technology, in particular, mobile apps, has fueled an explosion of collaborative behavior among consumers. In fact, as Owyang says, the word “consumer” might become a thing of the past in the new world of economic collaboration. Here’s what he has to say:

How do you define the collaborative economy? How big is it, and why is it here to stay?

The collaborative economy is an economic model where people, corporations, and startups are creating products and sharing them. The traditional model of corporation-to-consumer is not the only model.

You’ve been an active participant in the collaborative economy in personal life. How did the collaborative economy first capture your interest?

We’ve all been active, as we’ve been using social media to source ideas, get confirmation, or share thoughts — so in some ways, the collaborative economy is not new. I’ve been using TaskRabbit for a few years, and before that renting via VRBO (Vacation Rentals by Owner), and before that eBay; so some of these technologies are not new. However, recently, with the adoption of mobile and location apps, we’re seeing greater velocity in the uptake of these tools. We can get access to idle resources in our own neighborhood (such as cars available on Uber) or even activate thousands of idle workers on CrowdFlower to solve complex problems.

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PSFK Challenges Brands to Do Good

On November 1, I was honored to appear onstage with Jermaine Dupri at the PSFK  Conference San Francisco 2012, where we discussed how Dupri’s Global 14 social networking site brings community back to social media. The entire conference featured designers, creative thinkers, and marketers who shared innovative ways to operate businesses and build brands. The underlying theme was that brands should seize the opportunity to do good, not just make money.

All the speakers demonstrated different ways brands can do good. Jason Oberfest discussed how Mango Health uses a gaming app to help people manage their health. Scott Bradbury of Brandstream asked marketers to “find art in everything you do.” Dupri and Joe Gebbia of Airbnb challenged everyone at the conference to embrace real community. Airbnb, the online site where people rent their personal residences to each other, creates relationships, not just temporary lodging.

Global 14 helps emerging musicians develop their careers and creates an environment for all members to share ideas, not just social updates. (“We have lost communication on social networks and have become a social notifying world,” Dupri said.)

Regina Ellis of the Children’s Cancer Association delivered the most powerful presentation, which concerned the business of spreading joy. She opened her talk by describing the loss of her own daughter to cancer — an experience that Continue reading