Six things to consider before starting an on-demand delivery business

The on-demand economy has seen exponential growth in recent years, disrupting traditional business models and transforming industries as we know them

Six things to consider before starting an on-demand delivery business

From ride-sharing and food delivery to home services and healthcare, on-demand businesses have completely overhauled the way we access products and services.

But there are still many industries ripe for disruption. And with on-demand businesses predicted to contribute £63.25 billion to the UK economy by 2026, we’ll see many new players enter the space. If you’re considering venturing into the world of on-demand delivery services, here are six factors to consider before you take the plunge.

Identify your target audience

The first thing you need to do when building an on-demand delivery service is determine who your target audience will be. Ensure the market is large enough to be profitable, but don’t fall into the trap of trying to be everything to everyone. It’s a good idea to create customer profiles, segmenting the market into groups based on shared characteristics. Clearly define their demographic, behavioural and psychographic traits so you can better understand their needs. Once you’ve identified your target customers, the next step is to find out more about them. Use online surveys, social media groups, and forums. Run focus groups and speak with people in the street. Find out exactly what their pain points are to learn how your service can help. 

Understand your competition

In a crowded marketplace dominated by big players – such as the on-demand delivery world –  it’s crucial to figure out how to differentiate your brand early on. Conduct extensive research into your competitors and identify their strengths and weaknesses. Keep in mind you’ll be competing with both traditional providers of services, as well as other on-demand platforms. Think about what you can offer customers that your competitors can’t and bake this into your strategy from day one. It might look like building social media features for users to share their experiences to encourage engagement and build a sense of community. Gamifying your product is another proven way to foster loyalty and interaction.

Calculate demand for your service

Calculating and managing user demand is one of the trickiest parts of offering on-demand services. This is especially true in the early days of building your business when you don’t yet have user data to work with. Speaking with the providers you will be working closely with is helpful for gauging demand at the start. If you’re launching an on-demand flower delivery platform, go out and chat with florists. Lean on them and their industry expertise. Ask them about the times of year, seasons, and events that see an uptick in demand for their services.

Decide on your pricing model

Pricing is one of the most critical considerations for on-demand platforms. Customers are willing to pay a premium for convenience, but there’s a limit to how much they’ll tolerate. With this in mind, platforms need to carefully consider their pricing strategies. It’s vital to strike a balance between profitability and good value. Some on-demand platforms adjust prices for individual items to cover costs, while others tag a “service fee” onto total orders. Regardless of your approach, prices should not deviate too far from what customers would expect to pay in brick-and-mortar stores. 

Get on top of regulations

The on-demand industry is subject to constantly evolving regulations and legal scrutiny. Depending on your niche and location, you may need to navigate various legal requirements, permits, licences, insurance, and tax obligations. It’s essential for platforms to stay on top of these and be ready to adapt to any changes. This can be especially tricky when you’re looking to launch in multiple markets at once, so it’s a good idea to focus on one region to begin with. Working closely with legal and compliance experts that know the area will help you overcome complex regulatory hurdles.

Starting an on-demand business is an exciting endeavour, but it comes with a unique set of challenges. By conducting thorough market research and getting your head around regulations, you’ll position your business for success. Keep in mind that the on-demand economy is extremely competitive and constantly evolving, so agility is crucial for achieving long-term growth and sustainability.

Deyan Dimitrov
Deyan Dimitrov

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