Insights

COVID-19: Impact on the On-demand Industry

  • Ashish Sangar
  • By  Ashish Sangar
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  • 87D32530-FD6E-468E-BB24-045278513D21 Created with sketchtool. 4 MIN READ
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  • 6BCC25D0-42B3-420B-8C28-C5D7EF3F6856 Created with sketchtool. Updated: May 5, 2020

COVID-19 continues to devastate the economy and bring most industries to a grinding halt. Businesses all around the world have scurried to shut down their factories and corporate offices in the hope of containing the spread of Coronavirus. In the U.S., 24% of the small companies have already temporarily shut down, and nearly half of small businesses (46%) believe it will take the U.S. economy six months to a year to return to normal. One of the many industries that have suffered a major jolt has been the on-demand industry. An on-demand company is any company that caters to their customer as and when needed, according to the demand.

The global online on-demand home services market has the potential to grow by $ 1,574.86 billion during 2020-2024, and the market’s growth momentum will accelerate throughout the forecast period because of the steady increase in year-over-year growth.

Current Situation of On-demand Service

In light of the recent events, on-demand services have been severely impacted by the pandemic. As the coronavirus continues to keep us locked inside our homes, many on-demand companies have lost large amounts of customers. The highly contagious nature of the virus has scared people to avoid direct human contact with those they are unacquainted with. Here is a list of industries that are most affected by the distancing.

Ride Sharing

The considerable decrease in the number of people leaving their houses has significantly reduced the customer base of ride-booking companies. Whether they have self-isolated themselves or are following a forced-lockdown, fewer people are out on the streets now, leading to a diminished customer size for ride-sharing companies. Post Covid-19, the year-on-year projection of the market size of ride-sharing companies is predicted to fall by 2% of the original projection for 2021.

Many companies are taking precautionary measures to cushion the coronavirus blow. DiDi, the largest ride-sharing company in China, has invested $14.3 million by creating disinfection stations for vehicles and installing protective plastic sheets. Other strategies include an expansion or merging into areas that are still functional.

Top Rideshare Apps in China

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Uber has paused the service in already affected countries and is implementing safety measures by providing drivers with cleaning material to keep their vehicles germ-free. They have also helped their drivers find new jobs during the pandemic using their Work Hub app. The Uber Direct initiation follows Uber Eats’ shift to grocery delivery services. Retailers and manufacturers can deliver products to their customers with this tool. Uber has also designed an app to enable friends and family to send packages to one another during this pandemic.

Food Delivery

While online food delivery services have seen a substantial demand due to the home deliveries, the alternate sit-in version is a no show during the quarantine. Ordering in has also been seen to be risky considering how contagious coronavirus is. This has made customers extremely careful of the source and the food they consume, many of them preferring to prepare their own food.

COVID-19 and Food Safety FAQ

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Furthermore, delivery personnel too, have become cautious of delivering to crowded regions with subpar sanitary situations. This has pushed food delivery companies to cancel orders due to the unavailability of staff and delivery delays.

Though ‘contactless’ delivery systems have been implemented, wherein the customer pays for their food online, and the delivery executive leaves it by the door, consumers are still afraid of infected germs being laid on the surface of the packaging or the food.

Parcel Delivery

The fear of coming into contact with an infected individual has led to optional mail, parcels, and items almost coming to a halt. Due to the lengthy and multi-step process of delivery, employees have been refraining from delivering in the fear that the package may have somewhere along the delivery chain, been handled by an infected individual. Senders have also avoided mailing their packages since they are apprehensive about them getting accepted.

Airlines all across the world have reduced their passenger flights by 90%. This has inherently reduced the air freight capacity drastically, resulting in an ultimate loss of delivery rates. Cross-country shipping has also been at an all-time low, further declining the scope and capacity of international delivery.

Parcel Delivery

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Online Streaming Industry

The online streaming industry has definitely seen an incredible rise in viewers. Since people are being forced to stay at home, they are turning to online entertainment options. Online streaming is one such preference. But as the shooting of these live shows is stalled, producers are facing a massive recession in content. They fear that this may lead to mass unsubscriptions, which can result in job losses and a plummeting of revenue.

Sports was a major streaming content that brought in multi-billion dollars in advertising profits. But as sporting events have been either suspended or postponed, this ad revenue has been null and void.

Coronavirus Impact Index by Industry

Many content creators have resorted to reusing old content to keep generating income during the pandemic. Disney and HBO are two major companies that have been trying to use this technique to hold on to their giant subscriber bases.

Retail Industry

Just before the lockdown, people started bulk buying their daily sanitary necessities. This created a great swelling in the profits of stores and retailers. But as soon as quarantine was issued, a dramatic decrease in shoppers was observed. Pre-coronavirus, many people would visit stores and malls as a recreational activity and impulse-buy. Almost 16% of a store’s profit came from impulse buying. Today, impulsive buying has completely died out.

The retail industry also suffered stock losses due to a halt in shipment. In recent times, since brick-and-mortar shopping is out of the question, retail stores have gone into a frenzy to digitize their transaction and delivery processes.

State of Digital Commerce Apparel and Fashion 2020 Covid - 19 Update_v1

Net Solutions has recently released its industry report on Digital Commerce – Fashion and Apparel 2020. It features some of the top fashion brands and offers detailed data and insights on the factors affecting the industry especially in the digital transformation space. A special section in the report also features an update on COVID-19 – get the report to find out what the industry thinks about the effect of the pandemic on its sales.

Conclusion

As countries are desperately trying to prevent any further spread and impact of COVID-19, companies are being greatly affected. The on-demand industry, in particular, has been facing immediate and intense effects. Some services, like the online streaming companies, are seeing a surge in users, but are unable to cater to their viewers due to a deficiency of content. Others, like food delivery service, are unable to live up to their customers’ health code. A major chunk of businesses is witnessing a significant drop in customers due to the prevailing uncertainties, and it seems to be a very long wait before things can finally fall in place.

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Ashish Sangar

About the Author

Ashish is a thorough marketing professional, currently working with Net solutions as an Enterprise Account Manager. He plays a critical role in helping enterprises to improve their business performance and re-strategizing customer experience gaps, and understand the implications of new technologies and strategies to adopt them. He loves to utilize his time by delivering value to his customers by identifying different revenue streams and value propositions for them.

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