On Demand Economy Primer
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The on-demand economy has attracted over $10 billion in investments, with Uber accounting for $7 billion. Key trends include a shift towards convenience, consumer experience, and supply chain optimization, with significant opportunities in untapped sectors like B2B and healthcare. Successful models are characterized by limited competition, favorable unit economics, and network effects, with an emphasis on consumer data exchange and engagement.
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On Demand Economy Primer
- 1. On-Demand Economy Wan Li Zhu Principal, Fairhaven Capital 1
- 2. $10B+ invested in the space (Uber is $7B of that) 2
- 3. 3 Consumer Spending by Category 12.4% 17.6%
- 4. 4
- 5. Case Study: Food Delivery 5
- 7. Funding per city 7 Median = $16.5M
- 8. User acquisition cost for apps 8 $1.5 June 2013 July 2015 $3.0 2x Jun 2013
- 9. What I look for • Major customer spending category = big market • Limited to no well-funded competition • Favorable unit economics relative to frequency of purchase • Capital efficient model (i.e. no warehouses) • Network effect, barrier to entry once at scale 9
- 10. Major Drivers 22% Average Open Rates 88% Hyperlocal Geolocation 50-80% Email Push notification Text Msg 10 Generational Behavioral Change
- 11. Trends • Premium for convenience • Consumer experience • Customer relationship • Curation of product choice • Supply chain optimization • Task-based labor 11
- 12. Opportunities / Challenges • Consumer data – Consumers willing to trade data for value (“value exchange”) – Demographics (younger generation of consumers) – Behavioral – Preferences • Brand engagement – Awareness, advocacy – Conversion • Untapped sectors – B2B – Healthcare 12