Domination of the On-Demand Clones
You’ve most likely heard of the term ‘Uber of X’ being used to describe businesses where products and services are delivered with the click of a button. The on-demand economy is growing, and according to Harvard Business Review reports, it is attracting more than 22.4M consumers annually and $57.6B in spending.
MENA is witnessing a flood of on-demand startups. Last week while attending Step Conference 2017 in Dubai, I noticed that a large percentage of the startups present were on-demand startups. I also noticed that most of the on-demand startups were nearly identical players offering services in mainly parking, transportation, food delivery, beauty services and home maintenance. While one may argue that competition is healthy, these verticals have become saturated, with most companies following the same basic business models and offering minor if no advantages over their competitors with hopes of raising money fast and growing faster.
Last year, funding to on-demand startups fell by nearly 50%, according to CB Insights, with several on-demand startups with millions in venture capital meeting their demise in the past two years. The startups which included the original ride-hailing US company Sidecar and house-cleaning service Homejoy, faced a variety of obstacles including tough competition, difficulties in scaling, and lack of funding. While an app may do well in a specific country, whether that country be abroad or in MENA, it does not mean its business model will work as well elsewhere. Moreover, while someone could use an app like Uber or Careem everyday, they will likely not use an on-demand beauty services app as frequently.
Disruptive innovation may be expensive and risky, however startups must stop creating ‘Ubers of X’ just for the sake of it, and rather have specific reasons and advantages for their on-demand service going online. If a startup chooses to clone rather than create, it must at least operate its business model differently, innovate further or add or adapt their startup to the local market and offer significant advantages over competitors. Rather than hitch a ride on an already established business model, startups can and should benefit from identifying unique consumer pain points and creating products or services that people actually need.