There’s no doubt that COVID19 has impacted the way that we live, be it what we do (less), where we go (not far), and perhaps, most apparent, how we do things (differently). Although there’s been a shift in how consumers procure goods and services that has been evolving for some time, the days of COVID19 have left many looking for solutions, some of which are not entirely new.
Consider shopping. The rise of companies like Amazon and improved online shopping and delivery services from a range of retailers have changed how consumers interact with the retail experience. We’ve come a long way from the nostalgic home delivery services of mid-last century, evolving through a time where mobility was all the rage (think malls, super malls, and the ultimate retail lifestyle experience) to arrive at a period when convenience is perhaps the most important consumer driver, closely followed by selection. Online and mobile technologies have made a lot of this possible, but improvements in the area of logistics might be an even more important piece, something that is still very much in progress.
Fast forward to a range of upstart companies seeking their space in this lucrative market; fueled by the gig economy of those who have capacity to sell, as we’ve seen in areas such as ride sharing and short term home rentals. I discussed one of these shopping/errand companies in a recent interview, where consumers can receive groceries and other items from various stores in their area, delivered in one convenient order
Although these services might bring important convenience in times of COVID19, will they last? The impact of demographics might allow at least some of these companies to survive into the future, with evident trends including aging Baby Boomers, older seniors living in their homes for longer, and some geographic areas where the availability of younger family members to help is limited.
Market opportunity, however, is only one side of the equation; consider the following keys to success:
- Capacity. Delivery companies are only in business if they can attract and retain a sufficient number of drivers/contractors to provide services. In a competitive world with a limited pool of potential “gig” contractors, which companies will be in the best position to attract them? As a side note, beware of the potential for these workers to be deemed as employees for income tax and other purposes, which could represent a costly impact and need for business model revision.
- Know the market/area where success is possible. As this type of service offering is local, the geographic area must be sufficient to draw contractors, customers, and be competitive. Those who do the math will realize that this isn’t so easy, especially on a sustainable basis.
- Implementation. Some might say that the devil is in the details; those who have been business operators know that the devil is in implementation. Young companies can plan their service offering, but success is only realized by way of strong implementation on a sustainable basis, and with this type of logistical, “transaction heavy” business that utilizes a casual workforce, lots can go wrong.
- Keeping up with the future. Recognize that these companies will have to evolve in order to be sustainable, in areas such as enhanced logistics (think autonomous vehicles) and providing a competitive offering, where customers see value over the service cost. This includes understanding costs, down to the last detail, as well managed and better capitalized companies will be in a stronger position to compete over the long term.
There’s no doubt that we will continue to see changes in how we live, including over what is expected to be another challenging season of COVID19 into the Fall and Winter. Companies considering their next steps would benefit from the advice of those who have experience in building and managing businesses; it’s an advantage to have strength in your corner.