How rapidly-evolving consumer behaviour is changing the on-demand service game
Mita Srinivasan
10x Industry

How rapidly-evolving consumer behaviour is changing the on-demand service game

In the UAE the on-demand home services sector is estimated to grow at a compounded annual rate of 9.7 percent from 2021 to 2026. To keep up with the rapidly shifting consumer behaviour in the experience economy, on-demand home services are reshaping their consumer journeys with innovative services. Nitesh Agarwal, Regional Head for the Middle East at Urban Company shares what he sees as the changing consumer behaviour in the “on-demand service” sector

After living through the pandemic in an increasingly digital world, new-age consumers seek convenient, affordable, and quality services. The increasing importance of work-life balance and flexibility in the new work models has also escalated the want for on-demand home services. For example, the number of consumers who avail of beauty or handymen services during working days has been rising steadily.

Like any other consumer-facing industry, omnichannel experience is vital for scaling growth in the on-demand services sector. Moreover, digital development and accessibility to information have been reshaping purchasing behaviour and spending patterns. It is now easy for consumers, who are well-connected and informed, to shift their brand loyalty over the slightest inconvenience and leave a negative review; more than 65 percent of consumers will sever ties with a brand over a lousy service experience. Further, the purchasing behaviour of consumers in an on-demand economy reflects their specific requirements and demands and is influenced by social, cultural and demographic factors.

To deliver a remarkable experience and ensure customer retention and loyalty, businesses must adapt to the needs and preferences of consumers, and one of the ways in which businesses can strengthen their relationships is by mapping the customer journey. In UAE, there are 9.9 million internet users, and businesses offering hyper-personalised and localised services will generate more engagement and long-standing relationships. At Urban Company, for instance, we have noticed that the number of women availing our beauty services from the comfort of their homes has increased. This is a significant shift given that brick-and-mortar salons are very prominent in the region.

Unlike before, brand loyalty cannot be taken for granted as consumers constantly reassess their relationship with businesses in the experience economy. Tech-enabled consumers prefer meaningful experiences at all brand touchpoints, including simple user interfaces and hassle-free payment gateways. Moreover, they prefer real-time updates on their requests, and on-demand services should heighten the focus on customer relationship management to ensure customer retention. Easy user registration, in-app chat options and addressing consumers' online privacy and security concerns also influence brand loyalty.

In the experience economy, businesses offering a memorable and delightful experience can create a long-lasting impact on consumer beliefs and gain a competitive advantage. This is an excellent opportunity for businesses in on-demand services to scale their revenue stream. A recent study by Barclaycard shows that around 52 percent of consumers would rather pay for a good experience than material possessions and 52 percent of consumers also prefer telling their friends and peers about a delightful brand experience of a product they have bought.

On-demand service providers have to be ahead of the game and anticipate customers' needs. With heavy competition, consumers question the USP of these services other than convenience; this is where on-demand at-home platforms have the opportunity to disrupt the market with the most premium experiences at home at an affordable price point with the smart use of technology and tooling. It is essential to provide unique services that other platforms do not offer.

Rapidly evolving consumer behaviour in the on-demand economy puts businesses in a position to make impactful decisions, which will allow them to stay relevant and ensure future readiness. According to Biztech, the global online on-demand home services market is estimated to reach $4.1 trillion by 2027, with more service providers and vendors introducing and enhancing sustainable, scalable and convenient services as per consumer preferences. Moreover, businesses must constantly identify and bridge the gap between businesses and consumers and adapt and change quickly as per the ever-evolving environment.

About the author

Nitesh Agarwal is the Regional Head for Middle East at Urban Company. Nitesh joined Urban Company when it was a budding startup, as Assistant Vice President - Business Development in 2015. His stint in the UAE began last year with his appointment as Vice President - Middle East, responsible for the growth of the brand's business in the region. He is a seasoned senior management professional with over a decade of experience in e-commerce, consulting and banking solutions.