26 Oct On-demand startups that failed -things to learn
Uber – the Origin of on-demand service. The on-demand concept started from Uber where people can book or call a cab anytime directly from their mobile phone apps. And then, Startup market stuck with the concept and now we have Uber for everything. Uber for Food, Uber for courier, Uber for goods delivery, Uber for beauty and more.
If you are planning to dive in this flow, wait a minute. read this article so you don’t fall in the same category of failed start-ups. Let me just give you small intro about what is the on-demand services?
In on-demand services, there are 3 main modules that link up to provide some sort of service. First is a user that will order or demand that service from the mobile apps (Generally) then another one is the company who receives the request and forward it to the appropriate service provider. And last one service provider who goes to the place and delivers the service and charge a certain amount.
After the success of Uber, Zomato & Postmates, people started thinking everything in On-demand will work and took some wrong steps and end up with a failed status. Sometimes the time is not perfect to launch or the market is not ready to accept your product.
Here are some startup listed that are failed and what you can learn from them before jump into the on-demand economy.
1. Exec: Hands on Everything
Concept: Provides errand runners to do any jobs on the demand
Issue: Started services for all the possible jobs.
Exec main concept was to provide field specialist or workers for each possible job. but for that, you need to hire all type of workers that turned costly for them. Service demand was high only on weekends and during other days they do not get sufficient orders to pay for the hired workers.
And for this type of spiky demand, they need to hire more workers to fulfill requirements but only for short time and then in regular days no big amount of orders. also, workers need to work on the weekends. These all resulted in hired by Handybook in 2014. Handybook took over the Exec company.
Advice: Focus on minimum niche, max of two or three so you can understand the demands properly and it will give you more room to understand and work according to the customer’s behavior.
If you start including other products like if you are in the taxi business and then you add grocery and food delivery into your title. You need to work on three different markets and this analysis and working in a different niche not going to be that easy.
2. Tutorspree: Lake of Market Channel
Concept: Tutorspree provides tutors and teachers on the demand for different subjects and streams.
Problem: Tutorspree were depended on a single channel which shifted suddenly. They do not have any other channel to gain new clients. Tutorspree thought the SEO of website will be sufficient to gain clients from search engines for business and not focused on other marketing tactics.
Advice: Diversify your marketing efforts. you can’t depend on a single source for new customers and need other channels to market your stuff. You need to find other media and marketing scope to gain new customers. This mistake turned down the company.
3. Homejoy: Not Able to Hold New Customers
Concept: It is a home-cleaning service provider. Homejoy works with independent contractors and provides home cleaning service on the demand.
Problem: Homejob started marketing with promo codes. that bring lots of new customers but after the first use of service with coupons, only 15 to 17% of customers booked the service second time.
Advice: Homejoy started big with the promo codes but not able to hold the client boosted by the codes. they need to get ready with other strategies to retarget the customers and turn them into regular users. Instead of totally depending on the Groupon type of single channel you can broad your marketing channels.