Uber may have pioneered modern peer-to-peer transactions, but it is far from the final word on the sharing economy – especially when it comes to mobile apps. In reality, any industry that fails to address its inefficiencies or inflated costs is waiting for an upstart to begin developing a business application that will disrupt them. What’s stopping you from launching the next Uber? For entrepreneurs and startups asking that very question, here are some key considerations to take your on-demand business model through the discovery and design phase and beyond.
The State of Uber and the Sharing Economy
If there is a story shared by the hundreds of startups pursuing peer-to-peer platforms, it’s that no industry is untouchable. From transportation and hospitality to food services and pet care, industries are being disrupted by sharing economy apps, and that trend is only expected to increase. Juniper Research forecasts that the sharing economy will reach $40.2 billion by 2022 as established companies increase revenue and new apps continue to break into the market.
Is that prediction accurate? As of now, Airbnb made a $93 million profit in 2017, Uber is closing the gaps on costs while maintaining growth, and Lyft is on its way to profitability as it tries to find a balance between business expansion and profit generation. And though we can confidently say a number of sharing economy businesses are building a stable foundation, not every peer-to-peer platform remains viable in the long term.
Homejoy, an on-demand app aiming to revolutionize home-cleaning services, closed for business after issues with rapid scaling and high customer attrition. SnapGoods, a lending service for their underutilized tools, failed to provide enough cost and time savings to support their value proposition. Others have encountered a similar fate but provide a helpful cautionary tale and plenty of lessons for entrepreneurs and startups looking to achieve profits through this business model.
The Secret to Profitable Sharing Economy Apps
So how do you become the Uber of Drying Cleaning, Uber of Dog Walking, or the Uber of any other industry under the sun? There are specific considerations to keep in mind as you take your application from vision to reality.
Research the Market and Demand – What aspects of your target industry are primed for disruption? Is there a sustainable number of potential buyers for your app? How do you encourage and incentivize suppliers to adopt your application and remain loyal? What other sharing economy apps will you be competing against? How will you differentiate your service? Answering these questions and others will ensure that you avoid the pitfalls that early sharing economy startups have faced while encouraging greater retention and profitability.
Embrace Mobile Re-Engagement – One challenge of mobile apps generally is that only 38% of users open an app more than 11 times. Preventing user attrition from hitting even higher levels requires mobile re-engagement campaigns. For sharing economy apps, that can involve push notifications about discounted services or promotions or even remarketing ads that follow users to other applications or websites as a subtle reminder to keep using your platform.
Offer a Premium Service – People are willing to pay for a premium. Uber Black costs $2.65 more per mile than UberX, yet business professionals who want to arrive in style willingly upgrade their ride. Fautus taps into the premium quality of professional photographers on-demand, allowing customers to capture their life moments in high definition. By learning users’ preferences to create a more memorable experience or launching different service levels to convey a sense of higher status, on-demand apps have been able to boost their revenue streams. Best of all, premium services don’t need to be determined at the initial launch. They can be future add-ons to the minimal viable product (MVP), providing an ever-evolving experience that retains users longer while generating more income for you.
Want to learn more about successfully launching your sharing economy app? Reach out to us to put your application on the right path to engage your users and monetize your idea.