Marketing | 30.01.2016

The Rise of the ODE

If you think back to just five years ago, could you have predicted that the way we transact today would be so drastically different? That at the touch of a button, you could order and pay for a taxi, get your car washed or order your favorite meal – all without having to speak to an individual? The pathway to purchase and delivery has radically shrunk over recent years. The ease and convenience of the latest e-commerce offerings has brought forth a complete paradigm shift to the way we interact and transact.

This ease of access has altered behaviors for good. Today, we increasingly demand that more and more things are available immediately. This has translated to the rise of different business models, creating what is referred to the on-demand economy (ODE), a ‘sector’ that is currently seeing hyper growth around the world. Simply put, it is the economic activity created by companies to fulfill consumer demand via the immediate provisioning of products and services.  Last year, an industry leader, Uber, projected that it would see a revenue run rate of US$10 billion by the end of 2015. For a company that was founded only six years ago, this growth is exceptional (they’re currently in 58 countries and counting). Uber isn’t the only one. We are witnessing many local homegrown versions of these services, such as Careem, SugarMoo, Zomato, and Green Steam, to name but a few. What’s more, they’re not showing any signs of slowing down. Careem recently raised US$10 million in investments last year and has moved into Morocco, with ambitions to expand into more Middle Eastern markets in the near future.

Given these exciting developments, there is an abundance of opportunities for brands to bypass physical retail outlets and deliver products directly to consumers. This may be via e-commerce partnerships or via owned platforms supported with an extensive logistics operation. In either case, it will be fueled by the regional mobile Internet penetration, which is set to grow to 50% by 2020 in the MENA region. This in itself presents numerous e-, m- and s-commerce avenues that brands will need to explore and test if they are to build capabilities. In 2015, the estimated global size of the on-demand economy is estimated to hit US$2.3 trillion, with the Middle East and North Africa accounting for around US$48 billion (eMarketer and Omnicom Media Group MENA estimates). What we’re seeing is the rapid rise of the e-consumer (globally there are around 874 million online shoppers and 519 million mobile shoppers), and as these consumers become more technologically savvy and expect products and services to be delivered immediately, marketers must work towards making that demand a reality. Brands will need to adapt their marketing and business models in order to thrive in this new virtual retail environment. Because when it comes to the on-demand economy, the future is already here.

So what do the next few years look like? Like consumers, businesses too are increasingly placing importance on speed, personalization and convenience. ODE businesses have flourished thanks to their ability to turn existing business models on their heads and adapt quickly to an evolving consumer demand. However, people will continue to expect even more from brands in the future. How will this fundamentally alter the way we operate in the future? We may be looking at the end of mass production and the rise of mass personalization; no longer will you have to go to the store to pick up shoes when you can simply print customized ones right at home. We will all certainly increasingly depend upon on-demand services for all manner of needs in our busy lives. Only time will tell what future consumers will expect and be able to enjoy.

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Dimitri Metaxas
RED – Specialist Companies at OMG