There's an app for that: How the on-demand economy won over AsiaBy Andrew Chung
The on-demand economy—built around cheap and easy services we can use from the convenience of our smartphones—is enjoying fresh success across Asia. One of the best examples to look at is the Didi Chuxing-Uber deal just weeks ago, where the companies branched off from one another to build up their markets in the East and West respectively. Uber sold its shares to Didi and now Didi is valued at US$35 billion while Uber is valued at US$68 billion. If anything, this shows that the on-demand economy is here to stay in Asia.
PWC estimates that the on-demand economy will reach a whopping US$335 billion by 2025—and there’s a bright outlook that Asia will be a huge part of the global pie. As we can see, on-demand apps are proliferating across the region: there’s Gojek in Indonesia for on-demand services, and PandaBed in Singapore, an alternative to Airbnb, just to name a couple.
With the rise of cheaper technology and also the middle class in Asia, customers are demanding more flexibility and instant gratification. People want things easily and they want it now—the name of the game is convenience. The World Bank in a recent report finds that services like China’s Didi and Indonesia’s Gojek are so successful because they’re not only convenient, but they let users rate the drivers—which creates trust among the apps’ users.
There has also been an important shift in customers’ mindsets. Gone are the days where people showed less respect for people who do not own a car or a property. A Nielsen survey found that 78 percent of Asians are willing to share either their property or personal assets, which is 10 percent higher than the global average. The same Nielsen survey found that 81 percent of customers in Asia would engage in the on-demand economy, well ahead of the global average, at 66 percent.
Singapore is a shining example of this shift—just look at the success of homegrown apps GrabTaxi and Redmart. Ride-hailing app Grab has raised US$680 million in funding and is one of the leading on-demand services in the city. Meanwhile, Redmart, which has raised about US$60 million in funding, has seen wild success using the idea of delivering groceries right to the customer’s doorstep. It’s also grown by introducing food and shopping deliveries.
The progress of Singapore leading digital economy in the region is promising with the foundation of the Sharing Economy Association Singapore, to help promote the on-demand economy. Many startup companies are joining the organisation, as demand in Singapore for on-demand services rises. PandaBed and Airbnb have joined the organisation—along with carpooling apps CarPal and icarsclub. One of the biggest benefits this association is expected to bring to Singapore isn’t only ease and cheaper prices to customers, but sustainability that has become one of the country’s focuses.
Despite the obvious change of customers’ behaviour and preferences, businesses might not always be willing to adapt. When change is being introduced to a company, it might disrupt organisational equilibrium, take away from costs, or even result in unwanted consequences from employees. Sometimes, change is too far from comfort, especially if the business has been in the industry for more than 10 to 20 years.
However, in today’s competitive environment, the only option is to adapt or to lose. Businesses throughout Asia will need to let go of their traditional mindsets towards customers and start adapting to the new sharing economy. They’ll need to deliver it fast, while also staying transparent and flexible.
Being flexible not only on products and services—but also the way a business is operated—should be a challenge that’s embraced, not feared. Businesses these days should be able to adjust their growth to any economic dynamic, and today, that’s undeniably shifting towards the sharing and on-demand economy. One doesn’t need to look far past the region’s smartphone-hungry rising middle class, discovering new apps and services seemingly every day.