The On-Demand Economy: Necessities vs. Nice-to-Haves

Author: Krista Garcia

July 3, 2018

Commonplace services like same-day delivery and ride-hailing apps weren’t so common just a few years ago, and almost unthinkable a decade ago. But some on-demand services still aren’t mainstream, and maybe they never will be. What are the factors driving consumer adoption?

Toluna surveyed US internet users in May 2018 about “digital disruptors,” i.e., companies that have changed a traditional way of doing things using online or mobile means. This includes a wide range of companies—from Uber to Slack to Shutterfly.

Most had used fast-shipping retailers like Amazon or Walmart, cited by 70% of respondents. Streaming entertainment services like Netflix and Hulu were next in popularity (61%), followed by transportation services like Lyft (35%). Meal kits (19%) and wardrobe subscriptions (13%) had the lowest levels of usage, though only 10% had never tried any of these companies.

When asked which services they would be very or extremely concerned if they ceased to exist, the same rough order played out. Consumers would care more about the loss of fast-shipping retailers (66%) and streaming entertainment (55%) and least about meal kits (26%) and clothing subscriptions (23%).

It appears that consumers prioritize these services based on whether they are necessities or nice-to-haves. The ability to use speedy delivery and over-the-top (OTT) media practically seems like a right in 2018, while getting a curated box of clothing or ingredients for a week's worth of dinners—while convenient—could be viewed as more of a luxury.

Price was the greatest factor (64%) when deciding to try a new digital disruptor brand. Accessibility (48%) and a free trial (40%) were also important. Price also ranked first among reasons to discontinue most of these services. A majority said they would stop using fast-shipping retailers (54%) or a transportation service (51%) if companies raised prices.

We expect the number of US Amazon Prime users will reach 109.5 million in 2018 and grow to nearly half of the population (49.2%) by 2020. This figure continues to increase despite the company raising the annual price of a Prime membership by $20 this year, in a case of convenience trumping cost.

And despite slow uptake of subscription services, Amazon is investing in wardrobe services and multiple grocers are betting big on meal kits