The On-Demand Economy: With Big Aspirations Comes Big Challenges
August 14, 2019

Stephen Blum
PubNub

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The on-demand economy has transformed the way we move around, eat, learn, travel and connect at a massive scale. It's here, and there's no sign of it slowing down. There's a number of market trends and technological progress that has gotten us to this point. However, with disruption and big aspirations comes big, complex challenges, especially as we continue to rely on the on-demand economy.

To take these challenges head-on, on-demand economy companies are finding new ways to deliver their services and products to an audience with ever-increasing expectations, and that's what we'll look at in this article.

What's Driving the On-Demand Economy?

There are 3 major drivers of the on-demand economy — instant gratification, accessibility to smart devices and plummeting costs of mobile data.

The Desire for Instant Gratification

Consumers want services, goods, data, and they want it now. They definitely don't want to wait for it. And it's the fulfillment of that desire for instant gratification that is a major driver of the on-demand economy. The emotion that comes from getting an update or confirmation is what brings users back to apps. We want to know our Airbnb reservation went through and be able to chat with the host. We want to see our Uber on a live map. We want to be able to virtually get in line for a busy restaurant. And we want it instantaneously.

Beyond the individual and into the world we live in, two major technological trends have brought the on-demand economy to the mainstream and caused it to skyrocket.

Smartphone Accessibility Rises While Mobile Data Cost Plummets

To understand just how accessible smartphones and how cheap data plans are getting, take a look at India, who are currently experiencing a smartphone revolution. Experts say that India's 300 million smartphone users could grow by 50% in the next couple years. What's driving it? A drastic drop in the price of mobile data. High-speed data plans available for as low as $2.30 USD a month, and stripped-down, low-end, and basic smartphones are available for just over $20 USD.

Mobile data is cheap and smartphones are cheap, and it's leading to a massive number of new users coming online year over year. And with that, it's given these users access to the many on-demand economy services available across the world.

But with all the always-on, always-connected users armed with smartphones out there, it's important to recognize the technology powering it as well. Reliable, secure, fast and globally scaled networks are the lifeblood of the on-demand economy and the connected shared experiences they deliver — and is the key to solving the many challenges that arise, which we will look at next.

Scale is the Biggest Challenge

Massive audiences, high expectations and global coverage present big challenges for on-demand companies.

The biggest challenge is ensuring scale. The big question is, how do you deliver a reliable and seamless user experience to every user, no matter where they are, and maintain that experience as the number of connected users grow and new features are deployed?

Scale is tough because on-demand apps continue to grow in data intensity — they're adding more and more interactivity. The connected experience of an on-demand app now includes chat, both with the service provider and support, pinpoint progress updates, geo-tracking, dashboards, live notifications, and more. This blending together a variety of features and capabilities into a comprehensive whole means leads to large scale challenges.

How are Companies Doing It?

With more success and market penetration comes scale challenges. The good news? The building blocks and underlying infrastructure is there, it's accessible, it's affordable, and it's incredibly powerful.

To meet the ever-increasing demands, companies are harnessing the power of pre-built components, the right set of APIs and infrastructure to get them from POC to MVP to full-on growth. That means faster time to market and future-proofing the app as requirements and expectations grow.

There are 4 major elements from a technology standpoint that companies use to deliver on-demand applications today, and solve the challenges they face:

High-speed messaging and signaling APIs: Powers live chat, realtime location streaming, pricing updates, dispatch requests, live notifications, etc.

Presence detection APIs: Identifies who is online and recognizes when they go online or offline.

Cloud gateways and integrations: Crucial for launching features like language translation, mobile push notifications, and chatbots (mission-critical for massive-scale customer support).

Serverless compute: Allows computation to take place at the edge, or as close to the individual user as possible.

Combining these interactive APIs with a trusted infrastructure is how companies can effectively solve the big challenges faced for a large scale on-demand product. That underlying network must deliver messages quickly enough for real time, regardless of geography; provide high reliability (preferably at least 99.999% uptime guarantee); and scale to trillions of messages transported, quelling the risk of outages when your app takes off in the marketplace.

Looking Forward

It's safe to say the on-demand economy is here to stay. It's reinvented the ways we live our lives, and more and more businesses will be disrupted by on-demand services. It's the reason that other industries are taking on-demand functionality and delivering new experiences across the board. With more and more devices coming online each day, the on-demand economy is showing no signs of slowing down. The big question is: Will on-demand services make the right design and architectural decisions to keep up?

Stephen Blum is Founder and CTO of PubNub
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