The on-demand delivery saw a steep rise during the pandemic. As the major countries like ours, Canada, witnessed an increase in the numbers of Corona cases, the government imposed nationwide lockdowns, which have boosted the need for on-demand delivery services.
Now that Canada is embracing the “new normal,” more on-demand delivery market leaders are coming to the country to serve this sudden requirement. This also brings an excellent opportunity for app developers in cities like Toronto, Vancouver, or others in Canada.
There is no doubt that the on-demand delivery business has seen massive success over the years in terms of revenues. The market is growing at a compound annual growth rate of 8.6% and will reach $2.499 million by the end of 2020 in Canada itself.
If you are a business person wondering how to dive into the on-demand delivery market with a mobile application, here is a comprehensive guide for you!
On-demand Business Model: How does it work?
The on-demand business model strives on the single crucial aspect- on-time service delivery. Most of the on-demand delivery businesses offer 24/7/365 services, and that is the uniqueness of this model. On-demand apps are developed for different types of service deliveries like,
- On-demand food delivery
- On-demand freight movement
- On-demand personal transportation
- On-demand home services
On-demand freight movement services are dedicated to the ease of moving goods from one place to another. We can consider ride-hailing services like Uber or Lyft to be in the on-demand personal transportation category. At the same time, TaskRabbit or Thumbtack are examples of on-demand home services. On-demand food delivery models act as a middleman between consumers and restaurants to deliver their favorite dishes instantly or scheduled at their doorstep.
There is no limit to the type of on-demand businesses you can build based on this model. Take an example of the SnowMowr app. It is an on-demand snow plowing service in Canada. SnowMowr app helps with scheduling, communications, and payments for snowplow drivers. It allows customers to have the freedom to opt for online payments and schedule the services rather than paying weekly.
Let’s understand a few aspects of the on-demand business model for deeper understanding.
Before you ideate to create your next on-demand app, understanding the marketplace is crucial. You need to have a model that continually adds value for both customers and sellers in the long term. Even if you have a long-term vision of serving the consumers without too much dependency on sellers, keeping the platform as a side base can work wonders. Moreover, the on-demand structure should be able to facilitate better interactions between the customers and sellers. So, the onus of meeting demands, in the long run, does not fall on your shoulders.
Also, it is an excellent practice to have several iterations before the grand launch. Keep the on-demand platform as a one-sided problem during the startup’s initial stage, and as the customers get to know your servicing capabilities, you are bound to see a spike in organic demand.
Consumer Choice vs. Anonymity
There are two types of delivery services popular in on-demand business models. The first one allows the consumers to choose service providers of their choice, while others explore anonymous professionals for the job. However, the choice level will depend solely on the kind of services.
For example, AI(Artificial Intelligence)-based algorithms in the home services app will automatically offer service providers according to work type. Simultaneously, an app like Uber lets you choose multiple options near your location for booking a ride.
Types of On-demand delivery apps
On-demand delivery applications are quite popular due to the flexibility of ordering and instant deliveries. But, both these functionalities vary with different types of delivery markets. There are three types of on-demand needs famous for developing an app.
Business to Customer
B2C markets cater directly to customers. Take an example of a brand like McDonald’s that launches McDelivery to offer delivery services. It is purely an enterprise to person business model that does not include any aggregator.
Business to Business
UberRush is an example of one such B2B module. It allows Uber drivers to pick up and delivers packages for businesses. Suppose you are thinking about a corporate service delivery business. In that case, all you need is one of the best mobile app development companies in Toronto to create the next B2B on-demand application.
Customer to Customer
C2C is one of the most popular on-demand delivery services. It allows people to offer services to other people or products. Take an example of Airbnb, where people provide their apartments, houses, and cabins for rent. Here, the on-demand delivery app works as a platform rather than a service provider.
On-demand delivery apps: Revenue model
There are different types of revenue models followed in the on-demand economy. From a commission basis to delivery charges, everything depends on the scale on which services are delivered. Let’s look at some of the most popular revenue models in on-demand delivery apps.
Delivery fees are commonplace for eCommerce delivery and food delivery businesses. As of now, UberEats charges around $4.99, depending on the delivery location. While FoodPanda takes a 10% cut on each order.
It is a common practice among ride-hailing companies like Uber. Drivers offer on-demand rides at different process during peak hours. Peak pricing is a great revenue model for on-demand apps to beat the cash crunch.
Most popular among all the revenue models is commission charges. It is a model that is not limited to food delivery or cab aggregators and is used by almost all the on-demand apps.
You can have in-app advertising for creating revenues. But there are more exciting ways to advertise. For example, you can opt for a mobile app development company in Toronto that helps embed video ads on screens placed inside the cabs that operate across Canada for your ride-hailing app.
Now that we have a complete idea about the types of on-demand apps, business models, markets, and even revenue models, let’s understand how to build one?
Steps to Build an On-demand delivery app
Step 1: Research & Ideation (SWOT Analysis Approach)
Right before you formulate the solution to a problem for developing the idea behind an on-demand app, there should be well-researched documentation. The document must include all the strengths and weaknesses of the solution. Let’s take an example of a food delivery app in Vancouver and see what SWOT analysis can consist of?
- Faster delivery with the on-demand model
- Connecting the customer to local restaurants
- The flexibility of order cancellation
- Freedom of choosing your favorite dish
- Non-standardization of food quality
- Availability of dishes and menu updates
- Revenue sharing concerns
- Availability of delivery service across all locations
- Increasing reach in the market
- Growing your customer base
- Collaborations with third-party service providers
- Lower investment with better revenues
- Greater competitors like Uber
- Challenges of execution
- Tech-stack development challenges
- Tech support issues
A SWOT analysis can help you understand the critical points in developing the mobile application for on-demand business.
Step 2: Customer Journey Roadmap
So, what clicks with customers? It is a question that can give insomnia to almost any entrepreneur. But, if you create a well-structured roadmap during the ideation phase, you will not have to figure it out after failures of getting customers.
Design wireframe of how consumers can get onboard to the final checkout page. Here, development companies in Toronto can help you by creating a mobile app process flow visualizations.
Without proper research and identification of customer pain points, you may miss the target by miles. For example, Quibi was a promising startup that launched in 2019. The short video bytes platform helmed by Hollywood giant- Jeffrey Katzenberg raised $1.75 billion. But, the startup failed and was shut down this year.
The prime reason for its failure was the lack of a market. Jeffrey Katzenberg targeted daily commuters to spend $4.99 on shorter videos by Hollywood celebrities-a colossal miscalculation. If they were to conduct a thorough SWOT analysis and a customer journey roadmap, they might have gauged such a failure before investing such high money.
Step 3: Feature Identifications
Once you review the entire customer experience wireframe through visualization, the next step is to understand the features to enhance different app touchpoints. Here, SWOT analysis can help you understand the threats and weaknesses discovered during the research phase. You know the customer’s pain points and just need to add features to make them redundant.
Features for Customer App
Customers can track order live on their applications through this feature. But, you can go ahead and make it more interesting by adding details like estimated time of arrival, personalized graphics saying (“your delicious food is on the way”), and even live chat. Real-time tracking features can be more intuitive with BLE(Bluetooth Low Energy) and push notifications.
Ease of Payments
Digital payments are already here, but we can further integrate payment options like Bitcoin, Etherium, and other cryptocurrencies. For example, Shopify offers BitPay APIs(Application Programming Interface) to integrate Bitcoin as a payment option for eCommerce websites.
Preferences & Support
Preferences are the next big thing in on-demand applications because they can offer better personalizations for customers. For example, Téo Taxi in Montreal, Canada, employs electric vehicles in partnership with Tesla and offers passengers preference to choose from a fleet of electric cars.
Advanced customer support systems will dominate the on-demand app development strategies in 2021. We have already seen the rise of AI-based chatbots in customer support systems. On-demand app developers can take advantage of such technologies to create more reliable customer interactions in 2021.
Reviews & Feedback
Reviews are one of the essential parts of any app as it helps gauge the performance of an on-demand service. Instead of conventional rating systems, you can use more intuitive and personalized feedback systems by asking critical questions regarding services like,
- How was the delivery experience?- Good, Bad, or Worse
- How was the behavior of delivery professionals? Polite, Bad or, Inappropriate
- Did you like the packaging? Yes, No, or Maybe
Answers to these questions will help you improve the customer experience.
Features for Service Provider App
Service request management is the most vital function for an in-house delivery service or a third-party service provider. Apart from the basic functionality like accepting reject services, an on-demand service can add features like tracking service request history and scheduling requests.
Push notifications and instant service alerts are paramount for service providers to offer immediate response to customers.
On-demand businesses can ensure flexibility by adding features that allow service providers to start and end their services. For example, some regions have restrictions on restaurants to operate only for specific hours in a day, so this feature will help them to end their services and let customers know about it through the app.
Partners should be able to track revenues to find value in doing business with you. Here, you can leverage advanced analytics and integrate into the app to show a graphical representation of the revenue history.
Features for Admin App
A centralized dashboard can help you manage everything from a single point. With the usage of advanced analytics and graphics, dashboards can be more intuitive. It can have easy to navigate menus and sections to manage all the aspects of on-demand business quickly.
An Admin app can help you manage customers through customer registrations, adding or removing the customer profile, customer validations, request management, and a comprehensive service request history.
Admin app can have features that help manage partner or aggregator profiles. These features can also help you interact with the service partners in case of an emergency or a service request delay. You can even add communication features like video conferencing and calling for partner management.
These features can help you manage service providers through AI-based algorithms that match a delivery professional with a customer’s location. It will also enable you to add or remove the service provider’s profile, validate documents, and manage their revenue sharing.
Pricing & Insights
The Admin app can have a dedicated section for pricing and insights. The pricing section will help you manage revenue distribution, commission charges, shipping or delivery fees, and even peak pricing.
Simultaneously, the insights section can help track all the data regarding service delivered and revenues earned. You can also include customer retention, app traffic, number of service requests per month, and many others.
Step 4: Types of Apps(Native/Cross-Platform)
Once you have an idea about your on-demand app and its features, the next step is to decide which platform you will deploy. It is essential to determine the platform because you will know the scale of development and its cost.
There are two popular platforms for app development- Android and iOS. Native mobile platforms like Android or iOS require a separate development process. So, the app development cost increases drastically compared to a cross-platform mobile application that works on Android and iOS both.
Native apps have their advantages, especially in the case of iPhones, where iOS apps work well compared to the cross-platform apps. You can hire iOS developers to create on-demand apps targeted for iPhones and other Apple devices.
Step 5: Partnerships & Delivery
Local businesses, restaurants, fast-food outlets, cab aggregators, and other service providers are your real partners. For any on-demand startup, it becomes paramount to have reliable partnerships.
Standardize your key execution points and norms about the operation with partners. Check on the availability of services in location or region before entering into the development phase, as you will have to add such information into your app. Decide whether an in-house delivery service is a viable option or you need third party service providers.
It will help you gauge the entire startup’s budget and then decide how much you can spend on a technology stack!
Step 6: MVP development
MVP or Minimum Viable Product is one of the most crucial parts of any on-demand app. It can help you in two ways, one you can concentrate on creating more efficient service while the beta version of the app is out providing feedback, and the other is the lower initial cost. MVP is like a teaser of what customers can expect from you.
Step 7: Customer feedback integrations
MVP will help you get customer feedback that can be integrated into new versions of the app. It can help you improve the on-demand service and improve the delivery module as per customer recommendations. Major app development companies offer app performance tracking and customer response measurements.
You need to review all the performance-related insights and improve the on-demand app as you roll-out new iterations.
Step 8: Rollout & marketing
As you roll-out the final version of the app based on the customer feedback integrations and performance insights, marketing becomes quintessential. If you are a startup, keep aside a specific portion of the total budget for marketing purposes.
However, there are app development agencies that offer marketing as a part of their technology stack. You can use marketing strategies like ASO(App Store Optimizations), mobile marketing, advertising, and even online reputation management.
Step 9: Revenue Tracking
Any startup or business can’t sustain without revenues, and that is why revenue tracking becomes paramount. But, one of the most important aspects of revenue management is the distribution of remunerations. Your partners and service providers need to be able to track their revenues. They are the backbone of your business, and if there is no value for their services, the organization’s revenues start declining.
Step 10: Maintenance & Technical Support
Maintenance becomes essential when you are updating your on-demand application with new features. As you add a new feature, applications’ functionality needs to be maintained for uninterrupted customer interactions.
Every new version should be able to mitigate more bugs encountered by customers during the usage. Here, you will need technical support from your app development agency. Be sure to have that covered when you enter a contract with any mobile app development company.
Wrapping it Up:
The on-demand economy has endless possibilities, and to explore them, you will need research, brainstorming, proper execution, and great partnerships. By now, you may have understood that this is not at all a solo business.
As we head towards innovations like 5G technology and AR/VR(Augmented Reality/Virtual Reality), the on-demand market will become highly competitive. To mend the technological barriers and offer better customer journeys, you will need to have a sound tech partner at the on-demand app development helm.
For more information on pricing, on-demand app development, and others, feel free to get in touch with us.