Guest author Pablo Orlando is a serial entrepreneur and the cofounder and COO of Gone, an on-demand selling service that helps users rid unwanted items.
New on-demand services are springing up everywhere and changing business in nearly every possible way. But as legion as they might seem to be, getting them off the ground is no easy task.
Managing operations for a growing on-demand startup and launching services in new regions are extremely challenging feats. More often than not, the complexities can make for a total nightmare without proper planning.
There’s no easy route to becoming successful. But for entrepreneurs who are on a mission to become the next “Uber for X [insert some unrelated industry],” the following advice is for you. Here’s how you can expand your on-demand service, one city at a time.
Go With What You Know
As a new on-demand service, consider the specific opportunities that each new city provides for your business. This could also be partnerships you have already established in a city, or how fast you think you can establish a presence before competitors can catch up.
For MeUndies, a premium underwear and basics startup, partnering with Postmates allowed them to offer on-demand delivery of shorts, briefs, T-shirts and more in Los Angeles within an hour or less. Postmates’ newly released API allowed third-party companies to offer local delivery via its on-demand service. For MeUndies, the partnership was a perfect opportunity to test a new distribution model in a popular city.
Another crucial matter: choosing the right region for your services’ expansion. In the selection process, you need to consider factors beyond market size.
When we launched Gone, our on-demand app to help people sell unwanted items in their homes, such as electronics or furniture, we first launched in just two cities: Austin and San Francisco. These were markets we were familiar with, thanks to our time at TechStars Austin and Bay Area team members.
Launching in just two cities allowed us to analyze safety and prove our concept on our home turf prior to broader expansion. Admirable companies pursuing similar strategies are Instacart (on-demand groceries) and Wag (on-demand dog walking), both of which solidified their home markets before expanding to nearby markets.
“If you haven’t unlocked the core market you’re in and really made your experience amazing, your chances of success declines with every city you expand into. Being first to the market isn’t winning. Being right is winning. It’s a race to liquidity; it is not a race to geography.” noted Simon Rothman of Greylock Partners in a recent conference on what’s happening with on-demand startups.
One Size Does Not Fit All
When the time comes to validate the success of your on-demand company, the quality of your service in each city should always exceed the quantity of cities in which your service is available.
However, though you should capitalize on the knowledge you’ve gained from your first launch, don’t assume a one-size-fits-all strategy will work everywhere. Take a lesson from the pioneer of the on-demand economy, Uber: The company credits the success of its city-by-city expansion to acknowledging early on that its strategy needs to be tailored to each new location.
Our company also knew it needed to understand the unique challenges and traits of each location. We kept some key frameworks in place, but also modified them according to the unique demands of each market.
For instance, with an extremely dense city like New York, we couldn’t necessarily apply the same logistics flow as our concierge pickup service in Austin. In Boston, which has a large student-oriented demographic, we needed to schedule our efforts to handle an increase in selling activity during the academic calendar year.
Take Quality Control Seriously
An excellent way to maintain consistent quality of your on-demand service is by noting repetitive processes and optimizing them. When you discover processes that work, keep an eye out for patterns and automate the repetitive actions. You want produce consistent results and fewer issues, regardless of location.
With on-demand services becoming more mainstream, consumers’ expectations for these services are also on the rise. Consumers now expect an increasingly higher level of timely, quality delivery service. This has led to the creation of a new slew of offerings designed specifically to help on-demand businesses successfully meet demand.
Quality control also applies to the expansion of your team. If city expansion requires you to hire an operations manager, pay thorough attention to that first hire. You want someone who not only has the expertise, but also the commitment to the same standard of quality you’ve achieved in other cities. Most on-demand startups require quite an undertaking on the operations and logistics side, so the proper domain knowledge on the ground will help you understand your audience and increase your chances of success.
Speed and Adaptability are Key
Finally, speed and adaptability are crucial for city-by-city expansion. You need to be able to establish your presence while also being able to move quickly based on market changes.
Following a drop in task-completion rate, errands marketplace TaskRabbit realized it was not being efficient in effectively matching supply and demand with the auction business model, where contractors would bid for tasks posted by users. The growing number of on-demand and one-day delivery services from companies like Uber and Amazon had altered consumer expectations and increased the demand for push-button offerings.
TaskRabbit quickly changed its model to match users with potential contractors, allowing users to book the contractor of their choice with just one click.
The company applied its new on-demand concept to a new city, London. After comparing the numbers, it decided to bring the model to its other established markets, even though it had already attained critical mass with its original approach.
Because market demands change all the time, balancing the needs of your customers—while guiding them through any service changes—will be a challenge. Customer relationship management plays a big role here, so allocate the proper resources.
Ultimately, you need to be open to altering your service—or prepare to be left behind. Focus on developing your own playbook filled with the right balance of replicable processes and tailored efforts, and you can conquer each new city with success.