On-demand is in demand

Experience lifestyle commerce

By Mark McDonald

On-demand companies have seized upon the proliferation of smartphones and always-on connectivity to change customer behaviors and
expectations forever. These innovative, digital-first players offer more
than the products and services people want. They provide closed-loop,
human-to-human transactions, deliver experiences that are as
seamless as they are satisfying and, most important, they offer the
convenience, simplicity and immediate gratification that characterize
the lifestyle that digital consumers want to live.
The growing numbers of on-demand playersalong with the
emergence of the lifestyle commerce in which they engageposes
a significant threat to traditional, incumbent businesses. But theres
also a tremendous opportunity. To seize it, established companies must
be willing to use the on-demand disruption as a catalyst for change.
Those that wish to thrive in the on-demand world will enhance their
customer experiences with new lifestyle offerings, build loyalty by
fulfilling their brand promises and differentiate themselves with
new value propositions. In doing so, they will capture new sources
of revenue and growth.

On-demand is in demand |

On-demand demands attention

To appreciate the significance of on-demands disruptive
potential, one needs only to follow the smart money.
Venture capitalists invested $12.5 billion in some 230
US-based on-demand companies between 2000 and
2015. The acceleration of investor demand for ondemand opportunities is impressive, growing annually
by a factor of 265from only $39 million in 2010 to
an estimated $10.4 billion in 2015 (see Figure 1).

$12

300

$10

250

$8

200

$6

150

$4

100

$2

50

$0
2010

2011

2012

2013

2014

2015E

Total On-Demand Companies

Annual Investment ($B)

FIGURE 1 | Investor demand

No sector of service is off-limits. Hairstyling

(GLAMSQUAD), valet parking (Vatler), garbage pick-up
(Rubicon) and at-home car repair (YourMechanic)
are all just one tap away. So are laundering services
(Washio), laptop repair (Techy), manicures (Pamper)
and flower delivery (BloomThat). Enterprise buyers
can also take advantage of on-demands closed-loop,
human-delivered offerings. And why shouldnt they?
They are consumers looking for convenience and
quick gratification, too. And, in a business context,
on-demand services enable them to offload some
of their more tedious and time-consuming tasks.
Qualified freelance talent (Upwork) or reliable B2B
delivery services (Sidecar) move them one step closer
to the workplace lifestyle to which they aspire.

FIGURE 2 | On-demand investment, by categories

Actual
Expected

Some of the more common features of companies

gaining ground in the new economy include locationbased services, seamless payments, and the utilization
of contract or temporary workers. Another is the legion
of fans theyre attracting in virtually all industries.
Today, the auto and transportation space attracts the
most attentionand the most on-demand investment
dollars. But other sectors such as food & drink, health,
household chores, logistics and professional services are
gaining ground (See Figure 2).

Auto and Transportation 76%

Food and Drink 10%
Health 6%
Household Chores 3%
Logistics 3%
Professional services 2%

On-demand is in demand |

A fight for the lifestyle promise

Commerce used to be a battle for wallet share. Digital makes it a
fight for delivering curated and tailored experiences that delight
and surprise. This is where value now lies and this is where
on-demand companies stake their claim.
On-demands disruptive potential has grown under the
radar. That makes on-demand companies even more
threatening. History has shown that disruption starts
small, traditionally from the outside in and bottom
up. It may begin slowlyat one store, one branch,
one citybut it can spread quickly. Too fast, in fact,
for many incumbents to mount an effective response.
We see that today in the transport industry, which
is struggling to shift its focus from owning assets to
fulfilling transportation needs. The same disruptive
forces are playing out in health and professional
services. As digital innovations and customer
expectations rise in every industry, on-demand will
open the floodgates to offerings that we cant yet
imagine. In this environment, no incumbent is safe.
On-demand disrupters pose a formidable threat because
they deliver uniquely packaged offerings and digitally
accessed experiences that resonate with customers for
their immediacy and their contextual relevance. This is
about more than winning the customer experience and
its about more than last-mile delivery. Its about new
competitors injecting themselves into the value chain
of established companies, securing consumer trust,
and stealing valuable and visible parts of incumbents
businesses. Its about on-demand players using digital
to make the lives of their customers better. Its about
making enterprises more efficient. Its about offering
new opportunities for freelance workers with excess
capacity or those trying to get ahead. Ultimately, its
about new businesses offerings and the fulfillment of
a lifestyle promise. This is lifestyle commerce, brought
to you by the on-demand economy.

On-demand companies deliver new forms

of value and revolutionize how consumers
interact with providers, across all industries:

On-demand healthcare | Patricia is sick. Its

Saturday, which means she will have to wait three
hours at the Urgent Care facility downtown. Navigating
Doctor-On-Demand, Patricia can get the care she needs
immediately, from the comfort of her home. And it will
cost just $40.

On-demand household | Henrys wife just called.

Shes bringing coworkers home for dinner but the house
is in shambles. Henry accesses Handy via his smartphone and a cleaning crew is at his door within two
hours. Cost? $45.

On-demand logistics | Laurie just sold her first

painting. The online buyer wants it within three days.
The problem? Laurie has neither the packing supplies
she needs, nor the time to run to FedEx. With Shyp,
Lauries artwork is picked up, packed and shipped in
20 minutes. And she never has to leave her studio.

On-demand is in demand |

Seizing the on-demand opportunity

On-demand offerings emerge first in innovative, densely
populated areas.
That makes sense, given the high numbers of digitally
savvy consumers, entrepreneurs and potential ondemand workers who congregate thereall looking
to gain the lifestyle advantage that on-demand
affords them. Yet even in these on-demand hotbeds,
established companies often fail to see both the threat
and the broader impact of the on-demand economy.
Focused on serving national accounts and multiple
customer segments, many established companies
ignore the reality that on-demand services are changing
consumer expectations, altering social interactions
and reimagining transactions in every industry.

Established companies
need to act nowbefore on-demand

companies encroach on their brands and steal their

opportunity to engage in lifestyle commerce. Some
innovative organizations are doing just that.

Whole Foods, Target, Petco and Costco have

partnered with Instacartan on-demand personalshopping and fulfillment company now flourishing
in more than a dozen US citiesto carry out and
deliver customers purchases to their front door in
just an hour.

Groupon acquired OrderUp, an on-demand online and

mobile food ordering and delivery company operating
in nearly 40 US markets.

Anheuser-Busch InBev teamed with Klink to develop

a branded app for customers looking to quench their
Bud Light craving. In the Washington DC pilot
market, customers can receive one to 100 cases
of ice-cold brew with a single click.
Amazon built its own one-hour delivery service for
Amazon Prime customers in Seattle. Amazon Flex
uses on-demand workersnormal folks with
reliable vehicles, a few hours of time, and a desire
to make $18-25 per hourto meet its one-hour
delivery promise.

Uber created UberRUSH, which enables merchants

in Chicago, New York and San Francisco to get their
products into the hands of their customers in just
minutes.

On-demand is in demand |

While companies can use different approaches (i.e., build, buy or

partner) to incorporate on-demand capabilities into their offerings,
they have a common intention: growth. They dont just defend
their existing business models by adding new features, but rather,
pioneering organizations:
Identify weak spots.

Invest holistically in digital.

Leaders seek to understandand addressthe negative

experiences that erode existing customer loyalty.
Accentures 2014 Global Consumer Pulse Research
indicates that long wait times, multiple handoffs,
impolite service agents, false expectations and the
misuse of personal information can all contribute to
customer defection.

Leaders invest broadly in digital resources to improve

the end-to-end commerce experience. Ideal investments in digital technologies include advanced rules
engines, secure payments, last-mile fulfillment, and
location-based services, to name a few.

Develop differentiating value propositions.

Leaders orient themselves around the customer and
have a deep understanding of their consumers
experience pathways. With this understanding, they can
identify new lifestyle offerings that not only strengthen
their existing businesses, but also facilitate expansion
into new, lucrative profit pools.

Orchestrate digital ecosystems.

Leaders establish themselves as an integral team player
and a destination partner for other stakeholders looking
to create compelling offerings. This means they develop
strong ecosystems of friendly relationships across the
customer value chain and position themselves to be
more open, more flexible and more collaborative.

Explore new models.

Leaders differentiate themselves by staying one step
ahead of customers expectations. Some companies may
choose to test novel delivery mechanisms, for example,
opting for last-mile fulfillment from freelance or
contract brand extenders rather than full-time
resources.

On-demand is in demand |

Be disruptive
On-demand competitors have set their sights on winning the
lifestyle commerce market. But they arent the only disruptors on
the battlefield. The on-demand world has room for many players
including established companies that are willing to stretch their
digital boundaries, reimagine their business models, and create
the lifestyle experiences their consumers now demand. The choice
is clear. Those looking to grow, will embrace lifestyle commerce
and engage in the on-demand economy.

On-demand is in demand |

Contact the Authors

Methodology

Mark McDonald
[email protected]

Accenture assessed the number of on-demand companies

and investment funding from 2010 through September
2015. The analysis focused on early-stage, digital-first
businesses that through connected devices offer closedloop, human-delivered experiences to the consumer in
near real time. Companies are identified and vetted by
Accenture, with funding data is collated from a number

Co-authors
Drew Boston
[email protected]
Michael Kovach
[email protected]

of primary and secondary sources.

About Accenture

Sources
1 Accenture analysis, 2015.
2 www.instracart.com
3 Josh Beckerman, Groupon Buys OrderUp Food-Delivery
Service, Wall Street Journal, July 16, 2015. Retrieved
September 15, 2015 from http://www.wsj.com/articles/
groupon-buys-orderup-food-elivery-service-1437086479
4 Press release. Anheuser-Busch Introduces Bud Light Delivery
at the Tap of a Button with New Branded App in Washington,
D.C. www.anhueser-busch.com, January 15, 2015. Retrieved
September 15, 2015, from http://newsroom.anheuser-busch.
com/anheuser-busch-introduces-bud-light-delivery-at-the tap-of-a-button-with-new-branded-app-in-washington-d-c/
5 Greg Bensinger, Amazon Taps On-Demand Workers for One-
Hour Deliveries, Wall Street Journal, September 29, 2015.
Retrieved October 7, 2015 from http://www.wsj.com/
articles/amazon-taps-on-demand-workers-for-one-hour deliveries-1443499263
6 Uber eyes a slice of local delivery, Yahoo News,
October 14, 2015
7 Accenture Global Consumer Pulse Research, 2014

Copyright 2015 Accenture. All rights reserved.

Accenture, its logo, and High Performance Delivered
are trademarks of Accenture.
This document makes descriptive reference to trademarks that
may be owned by others. The use of such trademarks herein is not
an assertion of ownership of such trademarks by Accenture and is
not intended to represent or imply the existence of an association
between Accenture and the lawful owners of such trademarks.

Accenture is a leading global professional services

company, providing a broad range of services and
solutions in strategy, consulting, digital, technology
and operations. Combining unmatched experience and
specialized skills across more than 40 industries and all
business functionsunderpinned by the worlds largest
delivery networkAccenture works at the intersection
of business and technology to help clients improve
their performance and create sustainable value for their
stakeholders. With more than 358,000 people serving
clients in more than 120 countries, Accenture drives
innovation to improve the way the world works and lives.
Visit us at www.accenture.com.

About Accenture Strategy

Accenture Strategy operates at the intersection of
business and technology. We bring together our
capabilities in business, technology, operations and
function strategy to help our clients envision and
execute industry-specific strategies that support
enterprise wide transformation. Our focus on issues
related to digital disruption, competitiveness, global
operating models, talent and leadership help drive both
efficiencies and growth. For more information, follow
@AccentureStrat or visit www.accenture.com/strategy.