Aaliyah Amin, a senior banker, needs to balance her busy schedule with her passion for travel and depends on on-demand services, be it fuel delivery or hair salon. Driven by the ease of accessibility and the changing behavior of consumers, the region’s home services industry is seeing rapid growth – the market for on-demand home services is forecasted to grow by over 10% until 2026, surpassing the global average growth rate projections of 8%.
The Middle East’s on-demand delivery economy took shape a few years ago with Deliveroo, Careem, Talabat, CAFU, JustLife, and many others. Takeaways, parking, haircuts, cleaners, wellness – think of a service, and someone had a tech platform. But the pandemic was a catalyst for the industry.
Seemingly overnight, they expanded beyond convenience to essential services. As more people went online for services, app downloads and orders skyrocketed.
“The pandemic gave a powerful impetus to the development of businesses on the internet and the rise of on-demand delivery,” says Leo Dovbenko, CEO and co-founder of YallaMarket and YallaHub.
“During the e-grocery boom, companies began to develop 15-30 minute delivery services, and investors were willing to invest in quick commerce models. Today, quick delivery is standard,” he adds.
EVOLVE BEFORE CUSTOMERS SWITCH
However, the market for on-demand home services is highly competitive, with many players vying for a piece of the pie.
And, consumers often switch brands with the slightest inconvenience. “They are so well-connected and informed; more than 65% of consumers will sever ties with a brand over a single lousy service experience,” says Nitesh Agarwal, regional head for the middle east at Urban Company.
Consumers today want quality experiences; therefore, brands must provide easy-to-use interfaces and payment channels. They also look for personalization and quality.
“The attention span of today’s consumer is just around eight seconds, so payment gateways and the user interface must be easy to use,” says Agarwal.
“There are 9.9 million internet users and businesses offering hyper-personalized and localized services that will generate more engagement and long-standing relationships,” he adds.
According to a study, around 52% of consumers would pay more for a good experience, and 52% of consumers also prefer telling their friends and peers about a delightful brand experience of a product they have bought.
Hence, experts say evolving is better than waiting for customers to fall out of love.
BUILD LONG-LASTING RELATIONSHIPS
Trust is crucial, and it can be difficult for on-demand service providers to earn the trust of their clients.
“Building long-lasting relationships with customers with a short attention span is the biggest problem,” says Dovbenko.
People in the region, according to experts, frequently turn to their social networks for recommendations and referrals. As a result, on-demand home services businesses find it challenging to win new clients’ trust and forge lasting connections.
The frequent churn of service providers is another challenge. Several local on-demand home service businesses use a pool of independent contractors. These freelancers collaborate with multiple businesses concurrently and may not feel particularly loyal to any particular one of them. This can make it challenging for on-demand service providers to deliver consistent service quality, harming their reputation and making it difficult to establish enduring connections with clients.
FINDING THE RIGHT PRICE POINT
Another challenge is inflation – investing in labor and technology while keeping pricing down. All the on-demand brands have pickers and riders as full-time employees.
“Finding the right price point is an important factor in the success or failure of any new service that customers aren’t familiar with. We need them to be open to trying the service without feeling like they have a high risk in terms of financial investment,” says a Justlife spokesperson.
Since it is a quality-driven segment, having consistency in service delivery is critical, say experts.
“Having a strong training and incentive program along with a vigilant rating and review measures are key to quality control,” adds the spokesperson of the home services platform.
According to Aggarwal, a highly professional and skilled workforce is integral, especially in the evolving on-demand marketplace. Innovation is important as well to stay ahead. For example, he says, “introducing scrubbing machines in the cleaning category helped us to get more customers. We are currently in talks to expand into services such as babysitting, daily cleaning, and pet care.”
Similarly, the demand for house maintenance and repair professionals, including carpenters, plumbers, and electricians, is also growing.
As more new players enter the market, success and growth depend on service quality, affordability, convenience, and, most importantly, innovation.
However, there is no one-size-fits-all solution. “Every business has to approach its journey as an evolving one and be flexible in adapting to change,” says Justlife spokesperson.
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