It's hard out there for an on-demand service startup (Just look at Homejoy). We're seeing sharing economy or service-on-demand companies launch all the time, but will they be around next year? Before I dive into that, I'll first define what the difference is between the on-demand economy and the sharing economy.

  • The sharing economy refers to the sharing of latent resources (I have a shovel and can charge my neighbor $5/hour for it).
  • The on-demand economy is focused on the efficiency with which a service or product can be obtained, delivered, or rendered (I have a shovel and for $X/hour I'll dig you a hole today).

Companies that want to succeed in this new world need to remember that people are so used to the speed and ease of buying products online that they are now expecting the same from services purchased online. To gain some insight on the topic, I spoke with Ken Davis, CEO of TaskEasy, about the industry and what it takes for a service-on-demand company to survive in today's digital world.

"That's the challenge for service companies that want to thrive in digital world," said Davis. "The first step after the customer says 'dig me a hole' is to determine how big and how deep and how deep the hole will be and how much time it will take. Services often are too customized for easy 'productization,' which can make digital purchasing difficult."

Uber is the classic example--I need a ride and four minutes later a driver picks me up. Even better, I can see exactly how close the driver is getting to my location the entire time I'm waiting, which improves the actual experience of a well-designed service. Customers are expecting the same seamless delivery of every kind of service from finding a place to sleep to food delivery. The list of services people want to be able to quickly order online will keep growing.

For optimized online purchasing and guaranteed consistency, companies should consider the nuances within the market and become the expert in each industry of interest. And according to Davis, the key to becoming an industry expert is having a smooth path to purchase. This includes transparent pricing, easy estimates, and a simple way to purchase the service online.

His company, TaskEasy, has a pricing tool that lets customers trace their yard on a Google Maps satellite image to enable accurate, consistent pricing anywhere in the U.S. without on-site bidding. Customers can purchase lawn mowing in just a few clicks, like buying pet food and fertilizer on Amazon. Companies can't just focus on on-demand generation for their service; they actually have to design a service experience that is tuned to on-demand ordering. Additionally, TaskEasy improves service delivery process by creating tools that allow service providers to be more efficient and profitable.

"It might sound obvious but there are a number of lead generation providers only focusing on delivering customers to service providers while ignoring how important it is to improve on existing processes," Davis noted.

TaskEasy provides insurance to service providers on a per job basis in addition to routing them on the most efficient routes possible so they can make more money in the same amount of time.

Rover is another company that has improved on the service delivery portion of its business by making it easy for dog sitters to find clients online while providing insurance and 24/7 emergency support.

So will the majority of service-on-demand companies survive? Who knows. What I've learned is that services ordered online must behave like a product purchased online. It isn't easy, but for all the companies who fail to adapt to the realities of the digital world - adios. You won't be missed.