The on-demand economy has skyrocketed in the past decade. Consumers are demanding quick and affordable “full-service” services that can be conveniently accessed from their mobile devices. And they want them now.

The Sharing Economy report by the consulting and accounting agency PWC, estimates the global value of the ‘on-demand economy’ will be at a jaw-dropping $335 billion by 2025. The Asia-Pacific region seems poised to be a major contributor to the on-demand boom, with the recent e-Conomy Southeast Asia 2018 report by Google and Temasek projecting a $240-billion Southeast Asian internet economy in the same year.

How Did It All Start?

The on-demand trend started in the transportation industry with the advent of Uber. App designers capitalised on the geolocation possibilities of smartphone apps where anyone’s location can be detected at any time. Uber started as a car service designed to give people a stylish personalised ride to special occasions and quickly became the preferred option for transportation in major cities throughout the world.

The concept of service at one’s fingertips–literally, via phone apps–launched a growing desire for that same fast, efficient service on-demand across a plethora of sectors affecting our day-to-day lives. The on-demand economy began shifting business away from traditional brick-and-mortar establishments by giving consumers what they want when they want it in the comfort of their own homes.

The on-demand digital marketplace gives customers immediate access to goods and services delivered directly to the home, office, or virtually anywhere with an address. The developing economy continues to expand into new industries like retail, lodging, dining, and grocery-delivery businesses. Fueled by convenience, a never-ending desire for instant gratification, and access to affordable mobile devices, the trend promises to continue upward. According to a Nielsen survey report, Asia appears to be leading the growth with 81% of customers saying they would participate in the on-demand economy–well ahead of the global average of 66%.

Which Industries Are Most Affected?

According to the National Technology Readiness Survey (NTRS) by Rockbridge Associate, the on-demand economy grew by 58% in 2017, spanning industries from transportation to real estate and healthcare.

Currently, the on-demand economy is having the greatest impact on e-commerce, digital entertainment, financial services, and online travel, according to the 2018 e-Conomy SouthEast Asia report.

By 2020, it is estimated that global e-commerce spending will total $4 trillion, or 14.6% of all consumer spending. By the end of 2017, more than 2 billion people worldwide were using their mobile devices to make purchases, with ride-hailing, food delivery, general goods, and home services topping the list of sectors most impacted by the on-demand economy.

Ride-Hailing

Ride-hailing is a huge contributor to Southeast Asia’s on-demand economy. In 2017, ride-hailing services grossed over $5 billion USD, more than double that of the U.S. in 2015. Users booked over 6 million rides on the leading apps, Go-Jek, Grab, and Uber. Interestingly, there is still plenty of room for growth in this sector, with just 20% of Southeast Asians currently using the services. A report by Google and Temasek states: “The acceleration of ride-hailing services… reflects steep pent-up consumer demand, attractiveness for drivers as a viable job opportunity, and product innovation leading to improved user experience.”

What changed the ride-hailing industry in Southeast Asia

Two of Southeast Asia’s seven unicorns (valued at $1 billion USD or more) are ride-hailing companies: Grab and Go-Jek. Ride-hailing companies have also experienced rapid growth in food-delivery services–another industry that, unto itself, is seeing major growth as a result of the on-demand culture.

Food Delivery

Earnings in food-delivery services are actually developing faster than transportation services. As one of the hottest startup markets globally, food-delivery on demand has boosted the estimated income for the Southeast Asian economy as a whole.

man riding a bicycle

Investment bank UBS predicts “delivery sales could rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion [in 2018].” With food delivery in the Asia Pacific region expected to grow by a 14% CAGR (compound annual growth rate) to 2020, it is “by far the market with the most potential for food-delivery services to expand to meet the intense demand,” reports Euromonitor International.

Food delivery is growing faster than ever before in the region

Food delivery businesses like Go-Food from Go-Jek, and Grab’s Grab Food have been successful in converting customers from their transportation platform to their food delivery services. Go-Food claims to be the second-busiest on-demand food-delivery service in the world outside of China.

General Goods Logistics

Across Southeast Asia, getting general goods purchased online was, at first, very complicated due to the difficulties of the “last mile delivery” problem. Operators, drivers, and small-trucking firms would struggle to provide destination-specific deliveries in an efficient and cost-effective manner. As a result, many tech-based on-demand providers have emerged providing logistical solutions.

man in brown jacket beside car

Lalamove and GoGoVan, two Hong Kong-based companies, are expanding into the Southeast Asian territory, offering a range of services from rapid small-items delivery (B2C), courier services, truck rental, and business to business transport. Van and truck drivers working on a gig-style basis (part-time contractors) are dispatched by mobile app closing the last-mile gap and delivering to more doors across the region.

Who are the top logistics startups in the region

Cross-border transportation is another emerging market with increasing demand for “transnational movement of cargo” within the 10 countries that comprise the Southeast Asian region. So expect this sector to grow in the coming years.

Home Services

Home service is a veritable “catch-all” marketplace, accommodating people with their everyday needs. On-demand services include appliance repairs, cleaning, moving, photography, personal training, and laundry (just to name a few), all via the convenience of your mobile phone and the right app. On-demand apps connect local providers with customers. The growing number of on-demand options is fueling competition and competitive pricing.

Singapore-based startup PageAdvisor, for example, offers laundry, babysitting, courier services, cleaning, air-con repairs, plumbing, electrical, and locksmith services. It partners with several merchants and provides transparent pricing.

Another Singapore-based startup Kluje provides renovation and home improvement services by connecting homeowners with qualified and reliable screened contractors. Whether a small fix-it, or a major construction project, simply post the job on the site, and a contractor will contact you.

Companies like Kaodim, founded in Malaysia in 2014 and now available in The Philippines, Singapore, and Indonesia, provide a quick, dependable way of accessing an array of services from house cleaning to moving.

Another Malaysian-based company, ServisHero, boasts over 50,000 downloads of its app that provides local services on demand from over 3,000 service providers. Home services like repairs or cleaning are offered, but also fitness (personal trainers), drivers, accounting services, massage, and beauty services.

person holding silver adjustable wrench

Go-Jek, the Indonesian ride-hailing firm, launched a super app in November which offers on-demand services such as massages, housekeeping, beauty, courier, and food delivery. And their multifunctional app has expanded to the FinTech industry with its payment services.

Customers’ preferences and business practices have changed markedly in the past few years. Businesses will need to provide quick and flexible services that are easily accessible with competitive and transparent pricing. With the immense competition in the internet economy, more businesses throughout Southeast Asia will need to let go of their traditional mindset and start adapting to the evolving and burgeoning on-demand economy.