The on-demand business model has made things more convenient. These services that we enjoy having may not be around much longer. Some of the most popular companies will continue to survive, as many of them will die off quickly. This business model is likely to suffer if workers ask for more protections or the government steps in. Despite the fact that mobile commerce is on the rise, and shared economy is hailed as the savior of the society plagued with hyper-consumerism, things are not all rosy. Here are some of the most common downsides to the on-demand business model.
The on-demand business model is very difficult to regulate. There needs to be a balance with this industry’s hands-off approach to providing services and individuals who argue there are many disadvantages to these platforms. Since the on-demand business model requires the Internet to deliver services, they often depend on customers and their trust in the platform. Ultimately, it should come down to government regulations.
There also have been arguments that these regulations could hurt these companies. There needs to be a form of fair regulation that promotes the safety and liability of its workers as well as its customers. Most of these workers use these platforms to make an honest living. Because of this, there won’t be any government crackdown on these businesses anytime soon.
No Worker Protection
Worker protection has become a global issue. The on-demand business model provides no benefits or protection for its workers. While it makes it easy for individuals to work and make money whenever they want, they still have little options when it comes to their safety. The disadvantages of the on-demand business model have been noticed by the UK government.
This can lead to costly legal matters. When it comes to liability, their workers operate as independent contractors. There’s often not enough protection for the customer or the worker in the event of an illness, injury or other unforeseen problems, so if you plan on suing Uber if you ever get injured, it might be more difficult than you think. Even though a personal injury lawyer might make a big difference, it’s a fact that this business model inherently tries to minimize responsibility of the company. This could eventually cause a large number of workers to create a union to demand higher wages and health insurance benefits, among other things.
Though these services have gotten popular with consumers, they’re having a negative impact on entrepreneurship. No thanks to the gig economy, an interest in entrepreneurship has been on the decline. In places where services like Uber and Lyft have become increasingly popular, aspiring entrepreneurs were likely to fail. That’s because their ideas fail to reach the audience.
This has made it difficult for individuals who provide a similar service. Some researchers have argued that the on-demand business model has reduced the number of startups in the crowdfunding marketplace. This can help people focus on donating to high-quality campaigns.
There is a lack of customer loyalty in the on-demand business model. Customers have the freedom to choose which ride-sharing platform or which delivery food service they want to use. Many workers have jumped between platforms in an effort to get more work or better pay.
There are so many service apps to go around. Experts warn the gig economy has gotten so big that it could burst soon. New companies launch almost daily, offering free services or other sign-up incentives. Since the on-demand business model is dependant upon 1099 independent contractors, they don’t receive the same benefits that full-time workers do.
These services have quickly become expensive. Even the most popular ride-sharing services are having a hard time keeping customers due to their high costs. Customers typically jump from app to app, trying to find the cheapest deal. While customers are grateful that this service is available, they can’t use it on a regular basis because it’s so expensive.
The popularity of the on-demand business model has led to privacy and safety concerns. This type of gig economy requires both parties to provide their personal information. For example, if you request a ride through Lyft or Uber, you’re basically asking to get a ride from a complete stranger. There is little to no protection for the customer in the event of a car accident. When you rent out your place through Airbnb or another service, you are inviting complete strangers into your home.
One big complaint is the on-demand business model promotes a new form of capitalism. The businesses are making most of the profits. That’s because these apps require the use of a third-party to provide the services. The business reaps most of the benefits, leaving little money for the workers.
An on-demand business model has become a platform for workers to promote services and customers to access those services via a mobile application. The companies are the ones who profit the most from these services because they take a huge percentage of the workers’ pay. The individuals who provide these services walk away with little money.
Increases Fraud and Scams
When you purchase any of these services through an app, both the workers and customers are not protected from fraud. This can lead to a rise in misleading customers or workers. It often happens when drivers request cash up-front or charge additional fees to the customer’s credit card. Drivers can also get scammed by customers who use fraudulent credit cards and cancel the trip half-way.
There have been times where a driver would spend time looking for a customer who requested a ride and is nowhere to be found. This can also happen with food delivery apps such as DoorDash, GrubHub, and UberEats. There have been reports of delivery drivers not showing up with the customer’s order. On the flip side, customers would either not show up or not tip the delivery drivers.