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Why On-demand Startups Fail and How Yours Can Succeed?

on-demand app development

The huge success of several on-demand businesses such as Uber, Airbnb, Zomato, and others has inspired many people to follow their model and make their move into the on-demand industry. This is when they think of approaching a professional on demand app development company to build an on-demand app that’s going to touch the pain points of people in the market.

With the entire world going digital, a mere click through your mobile phone can do wonders for you. This is what has accelerated the growth of on-demand services. The internet has trained us to multiple tasks at our fingertips. App-based services such as ordering online groceries, cab booking, e-commerce have become a huge success in the global market. While some startups have become superhits, others didn’t have a happy ending.

Some On-demand Companies that Failed in the Market:

  • Happy Home Company
  • Pronto
  • Workers on Call
  • Homejoy
  • Take Eat Easy
  • AUTOnCAb
  • BlackJet, and more.

Main Reasons Behind the Collapse of On-demand Businesses

1. Cut-throat Market Competition

The rising demand for on-demand local services has led to an increase of on-demand businesses addressing the complete needs of their customers. One way startups are struggling to survive in the market is by reducing their service costs. Besides this, the high operational costs of transportation, labor, and infrastructure have kept these on-demand startups from thriving in the market.

2. Not Able to Acquire Enough Funds

With so many failure stories of on-demand services, investors have become more cautious about investing money in these businesses. As a result, acquiring funds for your on-demand applications has become a difficult process. Moreover, when you add in the uncertainties in the sector, there are fewer chances of getting funds. Investors are likely to spend money on businesses that are promising a long-term vision backed by continuous cash flow.

3. Incompetent App

Entrepreneurs are likely to face huge competition soon after they launch their business in the market. The value that your business offered once will soon be challenged and improved by the competitors. This in turn will cause your product to become incompetent and eventually fade away in the market with time. Therefore, to ensure the longevity of your app, you must approach a reliable on-demand app development company for extended support and maintenance to tweak your app with the latest features and technologies.

4. Lack of Efficient Resource Set

Having an inefficient resource set can ultimately lead to the failure of on-demand businesses. The same applies to the on-demand industry. Whether it is grocery app development, taxi app development, or any other mobile application development, companies with a skilled and competent workforce will definitely succeed and survive for long years in the market. Therefore, every on-demand business must be backed by a reputed on-demand app development company with a strong team of experienced professionals.

5. Inability to Solve Real Problems

Various on-demand companies that do not succeed in the market deal with the bandaid type of problems rather than emergency room type problems. This makes their services irrelevant to the end-users. For instance, in the case of an on-demand car wash service, just think about how often users would demand the service. However, the business has to constantly spend money to keep their business running. In short, these on-demand businesses neither are cost-efficient nor effective.

6. Under or Over Valuation of Demand and Supply

The last, but not the least, the under or over valuation of demand and supply that your on-demand business would garner that will lead directly to your business failure. Many times, businesses undervalue the consumers’ demands they would attract and hence, plan low on supply. On the other hand, businesses are overconfident of acquiring too much demand and end up with an underutilized supply of resources.

How Can You Prevent Your Business from Fading Away?

Your business idea is the key to your success. There are hundreds of on-demand startup ideas in the market. So how are you going to validate your app idea? Be watchful and validate the market keeping all the aspects in mind. At first, you need to do rigorous market research. You need to track and optimize the data from reliable sources and study the numbers in detail to make a well-informed decision. On-demand entrepreneurs have the advantage of establishing long-term trust of customers. If you’re a founder of one among these startups, the following points can help you in launching a successful on-demand business.

  • Approach a reputed on-demand development company that will help you create a robust, user-friendly, and sustainable on-demand app using the latest technology to deliver the best services suited to the needs of customers.
  • Try to deliver a delightful experience through your app.
  • Focus on the revenue that is driven by your startup’s performance.
  • Increase the current number of vendors to offer more options for your customers.
  • Consider automating your on-demand services by leveraging the latest technology and solutions.
  • Measure your business performance using analytical tools to get a clear picture of where your business is standing and how will it grow in the future.
  • Last, but most importantly, cut-off overhead expenses to build an effective solution for both your customers and service providers.

Final Thought

On-demand startups can take inspiration from the business models of successful on-demand businesses. Learn and understand how they have been so successful, and then start creating a viable product that suits the market requirements. One main reason for the success of these businesses is that they moved slowly and steadily. The more you haste to achieve success, the more will be the chances of committing mistakes. Hence, you should consider building a sustainable business model to create a scalable and adaptive solution for your customers.

Orange Mantra is a leading on-demand app development company that is committed to delivering highly scalable, feature-rich, and intuitive on-demand apps for entrepreneurs who aspire to achieve greater heights in the on-demand industry. If you’re planning to create an incredibly designed mobile app for your on-demand business, we can help you build an app that will help you flourish for many years.


Q.1. I have an app idea, where do I start?

Ans. At first, pen down your app idea on paper as clearly as possible. Search for prototyping tools on the internet and then create a comprehensive, screen-by-screen wireframe or visual mockup of your app. Once you are clear about your business app requirements and goals, look for a professional mobile application development company that can design and develop app for you. If you’re planning to build an e-commerce app, you should approach a specialized e-commerce app development company. If you’re planning to create on-demand business app, consider seeking out a professional on-demand app development company. However, it’s best to approach a multi-faceted mobile application development company that specializes in every field. Orange Mantra is a reputed mobile application development company that specializes in every field of app development for clients of all industry verticals.

Q.2. What are the business benefits of an on-demand application?

Ans. The business benefits of building an on-demand app include:

  • Mobile-first user experience
  • Fast service
  • Cheaper rates than other traditional service providers or sellers
  • Employee satisfaction and efficiency
  • Unlimited business opportunities
  • Easy payment
  • Actionable rating systems
  • Security and scalability

Q.3. What are the features of an on-demand application?

Ans. The features typical to an on-demand app include:

  • Service Provider’s Account
  • Booking Delivery
  • Contact Customers
  • Accepting/Rejecting Orders
  • Price/Fare Calculation
  • List of Orders/ Requests
  • Real-time Tracking
  • Track Earnings
  • Maps and Navigation
  • Payment Gateway Integration
  • Start/End Service
  • Delivery Confirmation
  • Review and Rating, and more.