SmallBusiness.com Guide to the On-demand Economy – SmallBusiness.com https://smallbusiness.com Small business information, insight and resources | SmallBusiness.com Mon, 19 Feb 2018 17:09:16 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.4 Two Small Business Trends That Contributed to Ikea’s Decision to Buy TaskRabbit | 2017 https://smallbusiness.com/trends/taskrabbit-gig-economy-trends/ Mon, 02 Oct 2017 15:40:52 +0000 https://smallbusiness.com/?p=29386

As we have reported extensively, the marketplace of talent called the “on-demand” or “gig” economy is tapping unmet needs that many economists, analysts, and even participants, aren’t yet fully grasping. However, yesterday’s news that Ikea has acquired TaskRabbit could help a mainstream audience learn what’s going on — and perhaps even convince them to participate. (Note: At SmallBusiness.com, we have a big-tent definition of “small business” that includes participants in the gig economy. We also have shared how small businesses are emerging from the on-demand economy. In other words, we believe the 60,000 independent contractors who get jobs via TaskRabbit represent a major wave of small businesses that we will continue to follow for the users of SmallBusiness.com.


Two trends that led Ikea to buy TaskRabbit?

Trend #1 | The Do It For Me (DIFM) customer

Ikea is not only a furniture and home furnishings juggernaut, it is a cultural icon and lifestyle business  (to some) that is so pervasive, stand-up comics can get chuckles just by mentioning its name. It has spawned websites like IkeaHackers.net, communities of Ikea lovers who are devoted to the endless ways that its products can be reconfigured (or “hacked”) into creative uses.

However, for some, the directions for putting together something purchased at Ikea, while creative and easier than similar instructions from other companies, is still somewhat daunting for those who don’t care to be do-it-yourselfers. Many, if not most, customers want someone else to put the “flat box” product together.

Many companies have recognized there is a massive “Do it for me” (DIFM) group that prefers spending a little extra money instead of spending an afternoon spreading out nuts and bolts across the kitchen floor and making a couple of trips to a hardware store. Established companies and startups have stepped in to create an on-demand marketplace for “DIFMers” and those who can do it. One of the earliest and most successful, at least at raising venture capital and reaching more cities, has been TaskRabbit.

Among the many other DIFM players are the merged HomeAdvisor-Angie’s List and Amazon Home Services.

Trend #2 |The on-demand economy is going mainstream

As you are reading this in a section of SmallBusiness.com called, “The SmallBusiness.com Guide to the On-Demand Economy,” you can look on the right side of the screen (or bottom of this article if you’re reading this on a phone) and note several years of articles about the on-demand economy (or jig economy). As we’ve observed, there’s an Uber for everything. You can find startup companies that will do your laundrybring you boozewalk your dog, and give you a massage.

If the growth of the number of Americans working in the on-demand economy continues its predicted growth, by 2021 it will represent a 23 percent compounded annual growth rate, according to our regular contributor, Steve King. And, as Steve recently wrote, two-thirds of the on-demand economy participants say they are satisfied with their work.

On the downside, however

As we have noted, there are threats to the gig economy. The most obvious one is the legal question regarding the definition of “employee.” With the growth of the on-demand economy, there also could be a talent war. For example, we there already being a high demand for talent in the construction field, the fees that can be charged for certain home services talent are increasing.

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Gallup: Most Employees Who Work Varying Hours Like Their Schedules | 2017 https://smallbusiness.com/employees/variable-working-hours/ Thu, 14 Sep 2017 18:39:48 +0000 https://smallbusiness.com/?p=29108

Most American employees work a fixed number of hours each week, according to a report recently released by Gallup.

82% | Percentage of all U.S. workers who say the number of hours they work each week is fixed
18% | Percentage of all U.S. workers who say the number of hours they work varies from week to week

According to the survey, the majority of workers in the “varying hours” group do not consider the variability of hours a problem or a financial hardship. 

67% | Percentage of variable-hour workers who say their hours don’t cause hardship
52% | Prefer their hours to vary
44% | Prefer a consistent number of hours


Regardless of whether or not they prefer it, the majority (57%) of those who work variable hours have little choice in the matter: They report that their employer determines the number of hours they work each week.

Workers who have variable hours tend to be younger, with lower education levels and lower income, when compared with the overall U.S. employed population.


Implications

According to Gallup, here are some implications and possible reasons for the results of the survey.

  • It is possible that participants in “gig” employment (or, the “on-demand economy”) are growing the number of variable-hour workers
  • Varying, unpredictable work hours does not appear to be a major problem in the U.S. today
  • Variable working hours could provide flexibility for students or those who have retired from their primary career.
  • Gallup data show that a majority who work in this particular framework are satisfied with the consistency of their weekly schedule.
  • In general, despite some media reports to the contrary, those who are involved in this work lifestyle appear to be content with at least some aspects of their irregular schedule.

VIA | Gallup.com

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GM Drives into the On-Demand ‘Gig’ Economy https://smallbusiness.com/economy/gm-electric-car-aims-for-on-demand-drivers/ Fri, 12 May 2017 16:55:35 +0000 https://smallbusiness.com/?p=27067

General Motors recently announced a program called “Gig” that rents their all-electric car, the Bolt, to freelance drivers for $229 per week. Part of GM’s Maven set of car sharing options, this offering is aimed at independent drivers working for the various ride-hailing and delivery services. (Article by Steve King, a partner at Emergent Research and a regular contributor to SmallBusiness.com.)


The $229 rate includes maintenance, insurance, and free electric charging at EVgo stations and is designed to make it cheaper and easier for drivers to work for multiple services.

Key quote Car&Driver’s GM Launches New Program to Capitalize on Growth in Freelance Economy:

GM’s research shows demand is greatest for ride-hailing services at different times of day than it is for delivery services, so the company believes Gig can be a way for drivers to maximize their earnings and stay busy throughout their desired work period. Further, the program’s weekly rates can help drivers schedule vacations or other time off without having to commit to a rental vehicle for an extended period of time.

Gig launched last week in San Diego and will soon be available in San Francisco and Los Angeles. GM expects it will be in many more markets by year end.

The $229 price per week is quite aggressive, especially since it only requires a week by week commitment and includes maintenance, unlimited mileage and access to free fuel via electric charging stations. This will no doubt be attractive to people who drive full- or near full time, especially if they work for multiple services.

GM’s Maven division is charged with exploring how car sharing is changing car ownership and usage. Gig is a natural extension of their efforts. Ford, BMW and other auto companies are also experimenting with car sharing and on-demand car services.

This service illustrates the growing range of services and products designed to support independent workers. This is a clear signal that the gig economy is both growing and maturing.

VIA | The Small Business Lab


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HomeAdvisor Buys Angie’s List to Grow its Home Services On-Demand Marketplace https://smallbusiness.com/make-sell/on-demand-angies-list-homeadvisor/ Tue, 02 May 2017 16:27:32 +0000 http://smallbusiness.com/?p=26876

The parent company of HomeAdvisor, the home services on-demand marketplace, has announced the acquisition of Angie’s List, the early internet-based home services directory and review service. After the acquisition is completed by HomeAdvisor’s parent company, IAC/InteractiveCorp, the companies will be combined into a new publicly traded company called ANGI Homeservices.


As we’ve reported before, many Goliaths of the internet, including Google and Amazon, are pursuing home services marketplace strategies. Amazon’s is a pure play “uber model” while Google is focusing more on selling Google Ads and marketing support to service providers.

Yelp is testing a “Request a Quote” service. Other companies that have created home services marketplaces include TaskRabbit and ThumbTack. The category has even seen its first heavily backed startup fold: HomeJoy.com (dead link and no joy).

(For an excellent list of home services on-demand market places, see the one created by CB Insights.)

Angie’s List is one of the oldest and best-known internet brands. The company has used TV and radio marketing to push their service beyond the internet.cUnfortunately for the company, as more consumers became familiar with review services like Yelp and Google Business Pages, fewer consumers felt the need to pay for an Angie’s List’s membership. The company scrapped the membership fee, in favor of a freemium model: Members can access reviews for free but pay for subscriptions to services like a personal assistant to gather estimates, hire contractors and schedule jobs.

Even together, the two companies face a challenge: Currently, the businesses to be combined only have 4 percent of the market for home services.

VIA: Bloomberg | HT: Techmeme


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The On-Demand Economy Workforce Continues to Expand | 2017 https://smallbusiness.com/on-demand-economy/on-demand-economy-work-satisfaction-research-2017/ Tue, 28 Feb 2017 12:38:17 +0000 http://smallbusiness.com/?p=25882

Steve King, a partner at Emergent Research and a regular contributor to SmallBusiness.com, recently completed work on Inuit’s 2016 Dispatches From the New Economy: The On-Demand Workforce Study. This is the second annual study and as like last year, Emergent partnered with Intuit on the research. Here is Steve’s overview of this year’s study.


Growth of the on-demand workforce

3.2 million | 2016 | Americans working in the on-demand economy
3.9 million | 2017 | Americans working in the on-demand economy
9.2 million | 2021 | Estimated growth of Americans working in the on-demand economy

If the growth of Americans working in the on-demand economy continues its predicted growth, by 2021 it will represent a 23 percent compounded annual growth rate.

Click to see study

Key findings of the research*

On-demand work is used to supplement existing income

  • 11 Hours | Average time per week spent by person who participates in on-demand economy
  • 24% | Percentage of household income from on-demand work
  • 41% | Percentage of on-demand economy participants who also have a traditional full- or part-time job

On-demand work fills near-term financial needs

  • 66% | Percentage of on-demand economy participants who have variable monthly income
  • 41% | Say variable monthly income is due to a financial hardship like a job loss, medical problem, or unexpected major expense during the prior year. By comparison, just 18 percent of all Americans in a recent U.S. Federal Reserve survey reported encountering a financial emergency.

On-demand work is used to build a sustainable future

Many people are using their on-demand economy work to either develop a new business or to supplement and expand an existing business.

  • 37% | On-demand economy participants who already own a business
  • 21% | On-demand economy participants who want to build a business

There is general satisfaction with on-demand work

  • 38% | On-demand economy participants who feel they are better off
  • 14% | On-demand economy participants who feel they are worse off
  • 81% | On-demand economy participants who plan to continue working an on-demand job over the next 12 months
  • 67% | On-demand economy participants who are satisfied with their work

*The study defined workers in the on-demand economy as those who find work via online marketplaces, apps and websites that connect buyers and sellers of talent. This year, we surveyed 6,247 such independent workers.

VIA | Small Business Labs: 2016 Dispatches From the New Economy: The On-Demand Workforce Study

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Employers Prefer Full Time Workers, But Agree That On-Demand Economy is Here to Stay | 2016 https://smallbusiness.com/employees/on-demand-economy-good-bad/ Thu, 07 Jul 2016 18:16:50 +0000 http://smallbusiness.com/?p=21605

Employers face a dilemma when it comes to a future in which a workforce of independent, contract on-demand workers becomes the norm and not the exception, according to a major survey of employers conducted by Time magazine, the Aspen Institute, the Markle Foundation and Burson-Marsteller.

This pair of findings demonstrates the dilemma:

56% | Percentage of employers who say full-time employees make it easier to accommodate the ebbs and flows in work volume and who believe that contract workers are less loyal or invested in the success of the company.

60% | Employers who hire contract workers.


As explored in the SmallBusiness.com Guide to the On-Demand Economy, for reasons of choice, possibility or necessity, a growing number of individuals are becoming part of the on-demand economy; adapting to a form of freelancing that once was limited to certain trades or seasonal work. Many on-demand workers view their participation as part-time work, or as a flexible second job. Other people, however, are reluctant participants in the on-demand economy and prefer full-time employment.

(Note: In this article, the term “contingent” or “independent workers” refers to those who work for an organization on a non-permanent basis and handle their federal tax payments using a form 1099. Contract or non-employee contingent workers are also known as freelancers, independent contractors, or temporary contract workers. Full-time employees include workers, part time or full time, who are issued a Form W2. Learn more about the difference between  in this article that is a part of the SmallBusiness.com WIKI)


Why employers use independent workers

90% | Flexibility of hiring workers with specific skills as the need arises
86% | Cost-saving purposes such as taxes and benefits

When given the choice, employers prefer full-time workers

58% | Employers who say full-time hires are better for their company because they provide more value over the long-term
67% | Employers who say their companies try to limit the number of contingent workers in favor of full-time employees

Employers expect the on-demand economy will grow

57% | Employers who use contingent workers who expect to use more in the future
70% | Percent of all employers (who’ve used contingent workers or not) who believe more organizations will move toward an on-demand labor model

Employers are satisfied with the performance of contingent workers

97% | Employers who use independent contractors who say they are satisfied with their performance
98% |  Employers who use independent contractors who say they will use more independent contractors

Employers are looking for loyal, engaged employees but believe independent contractors don’t meet that expectation

58% | Employers who hire independent contractors who believe “non-employee contingent workers are not as loyal as full-time employee.”
54% | Employers who believe that non-employee contingent workers are “not always available when I need them,”
52 % | Employers who think contingent workers are “not as invested in their product.”

Benefits offered to full-time workers vs. independent contractors

79% | Employers who believe offering benefits to employees is a critical component of attracting talent
66% | Employers who feel they should NOT be responsible for providing benefits to independent contractors

50% |  Employers who don’t think they should be responsible for providing training or education to independent contractors.
22% | Employers who believe workers themselves should be responsible for providing benefits

80% |
Employers who hire independent contractors offering healthcare benefits to full-time employees
17 % | Employers who offer healthcare benefits to independent contractors

80% |
Employers who offer paid vacation to full-time employees
13% | Employers who  offer paid vacation to independent contractors


(HT to Steve King, Small Business Labs)

Photo: ThinkStock

 

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Voters’ Decision Keeps Austin Too Weird For Uber, Lyft https://smallbusiness.com/on-demand-economy/voters-decision-keeps-austin-weird-say-uber-lyft/ Mon, 09 May 2016 12:38:19 +0000 http://smallbusiness.com/?p=20617

In a special election held last Saturday (5/7/2016) in Austin, Texas, voters rejected a proposition (Proposition 1) that would have prevented the city from requiring the ride-sharing, on-demand economy companies Uber and Lyft to do background checks on their drivers. Immediately, both companies announced they would carry out their pre-election promises and cease operations in Austin today (5/9/2016). According to observers of the race, the ride-sharing companies lost the proposition vote because they spent too much money pushing the wrong messages while avoiding mention of their main cause: a nationwide effort to prevent the definition of a driver to be characterized as an employee, a definition that will (as we’ve shared before) threaten a foundational assumption of the app-enabled on-demand economy.


The ride-sharing companies, their drivers and other supporters poured more than $8 million into the efforts to pass Proposition 1. The successful opponents spent less than $200,000, to according to the Austin American-Statesman.

Austin voters, who pride themselves on a type of self-labeled “weirdness” that embraces the uniqueness of local Austin businesses and the city’s music and “hip” personality, rejected the “carpet-bombing” approach the California-based ride-sharing companies used to campaign for Proposition 1.

Why did Uber and Lyft lose?

Ironically (and admittedly, from an outsider’s perspective) the “Keep Austin Weird” culture of Austin should have worked in Proposition 1’s favor. However, the commercials run by its backers did not focus on the 10,000 Austin residents who have signed up to become Uber drivers, but focused rather on attacking the motives of those who were against the proposition.

According to the Statesman’s Ben Wear, the ubiquitous advertising run by backers of the proposition seemed more like bullying than campaigning.

Quote:

“Lyft and Uber told Austin, essentially, “pass our regulations or we’ll kill your dog.” (Evoking the famous National Lampoon cover image of 1973). The dog, in this case, was both the drivers and the customers. The companies claimed to have 10,000 to 15,000 drivers here and to have given 2.5 million rides in their first year here. Surely that would translate into more than enough terrified terriers and petrified poodles to win an election in which just 87,000 people turned out to vote. Prop 1 got 38,539 “for” votes versus 48,673 saying, “Go ahead — fire away.”

What do Uber and Lyft do now?

Austin voters won. However, next Saturday night, some hard-partying Austin voters out enjoying the city’s music scene may be wondering if the proposition’s outcome was just a little too weird. Perhaps that will lead to a compromise at the city level.

Some analysts and political pundits have predicted that the free-market leanings of the state legislature, along with the size of Uber and Lyft’s lobbying war chests, could see this battle head down the street to the state capitol of Texas.

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Uber Didn’t Create the On-Demand Economy, The On-Demand Economy Created Uber https://smallbusiness.com/economy/uber-on-demand-economy/ Wed, 04 May 2016 14:45:53 +0000 http://smallbusiness.com/?p=20548

This SmallBusiness.com “explainer” is shared by Steve King, a partner at Emergent Research and a frequent contributor to SmallBusiness.com. An earlier version of this article can be found on the Emergent Research blog, Small Business Labs. We appreciate his willingness to share with the users of SmallBusiness.com his unique insight into the future of work.

(Note: As we explain in the Small Business Introduction to the On-Demand Economy, there are several terms used to describe the on-demand economy or facets of it, including the “sharing economy,” the “access economy,” the “gig economy,” the “1099 economy” and others.)


I’ve been in a lot of meetings lately where people talk about the “Uberization of Work.”

These discussions tend to go the same way. The claim is made that Uber is creating the on-demand economy by hiring independent contractors instead of traditional employees.

I don’t agree.

In fact, at Emergent Research, we believe the opposite: Uber exists because of the growing need for highly flexible part-time work to supplement incomes. In other words, Uber didn’t invent the on-demand economy—they tapped into it.

Service providers who participate in the on-demand economy are continuing a long-practiced tradition

Before Uber, Airbnb was one of the first companies to recognize and tap into the growing need for highly flexible, supplemental income. They recognized this in part because the founders of Airbnb themselves needed supplemental income. But Airbnb didn’t create the practice of people renting out their homes, or rooms in the home, to supplement their income. From boarding houses to the “Bed and Breakfast” model that inspired Airbnb’s brand, the tradition of monetizing one’s home—even one’s stable—dates back to biblical days.

Airbnb, Uber and hundreds of other companies have recognized the ubiquity of smartphones and have integrated technology into the transactional facets of on-demand marketplaces.

The economy (especially “income volatility”) is fueling the on-demand economy

The on-demand economy isn’t responsible for the “jobless recovery” or wage stagnation. Nor is the on-demand economy responsible for the high degree of income volatility many Americans are experiencing. Recent research from the JP Morgan Chase Institute confirms the high degree of income volatility many Americans have experienced. And in some regions, and among some demographics, this volatility has been especially severe. According to the JP Morgan Chase research, the following groups have experienced, on average, more than a 30 percent month-to-month change in total income over the past year.

74% | Lowest income individuals

70% | Ages 18-25

60% | People who live in the west

55% | National average

Supplementing one’s income is an attempt to stabilize it

Today’s on-demand companies like Uber have created simple, highly flexible ways for people to supplement their income. Because of this, they are able to tap into a growing pool of people who, due to wage stagnation, the decline of middle-class jobs, and greater levels of income volatility, are looking for highly flexible part-time work.

In previous generations, there were other responses. The multilevel marketing industry has long tapped into this pool of workers, but they only offered work to people who enjoyed or were at least willing to do sales.

The on-demand economy provides an opportunity for pretty much anyone to generate supplemental income in a highly flexible way.

This income volatility means even those with the annual income needed to pay their bills often hit bumps in the road that lead to financial stress.

Is the rise of the on-demand economy a good thing or a bad thing?

We’re often asked if we think on-demand economy jobs are good or bad. The quick answer is they are both, depending on the job, person and situation.

But the reality is they are a necessary source of income for a growing number of people.

Our work with Intuit shows the majority of those working in the on-demand economy are doing just that—working part-time to generate supplemental income.


By Pkg203 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

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Shopify’s Ecommerce Merchants Can Now Offer Local, Same-Day Delivery in 200+ U.S. Locations https://smallbusiness.com/digital-marketing/small-business-shopify-same-day-delivery/ Tue, 03 May 2016 23:14:34 +0000 http://smallbusiness.com/?p=20540  


In the past, we’ve predicted that the on-demand local delivery services powering same-day delivery for big-box retailers would extend their service to small business retailers. That day has come. Shopify, an e-commerce software company used by thousands of small business online merchants, today(5.3.2016) announced its e-commerce merchants in 200+ cities can immediately offer same-day delivery to customers. By comparison, Amazon offers same day delivery in 27 markets.


Shopify is providing local same-day delivery by integrating the on-demand delivery service Postmates into the Shopify administrative dashboard. According to Shopify, the option will be available immediately in the over 200 cities across the U.S. where Postmates operates.

After the Shopify merchant enables Postmates, anytime a local customer checks out from that online store, they’ll be able to select Postmates as a delivery option. When they choose that option, the merchant will pack the order and request a pickup from Postmates. According to Shopify, “a Postmates courier will show up at the merchant’s door to take the order wherever it needs to go. No post office, no lines, no delays.”


10% | The percentage (on average) of local business conducted by Shopify merchants
$5-$20 | The amount customers will pay for same-day delivery
100% | The percentage of the fee kept by Postmates

(According to re/code)


According to the website re/code, on average, online shops that use Shopify software do about 10 percent of their business locally. Also, according to re/code, Customers shopping on these small business websites will pay anywhere from $5 to $20 for the same-day delivery option. Postmates keeps all of that fee.

The merchant can monitor the delivery from the Shopify dashboard and customers will be emailed a link to Postmates live map to keep track.


Photo: ThinkStock

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Uber Settlement Defines Drivers as Independent Small Businesses, Not Employees https://smallbusiness.com/legal/uber-settlement-independent-business/ Fri, 22 Apr 2016 16:06:42 +0000 http://smallbusiness.com/?p=20246

In our coverage of the on-demand economy, we’ve focused on the importance of lawsuits that could determine that service providers are employees rather than self-employed, single-person-owned small businesses.


Yesterday (4/21/2016), the poster-child for the on-demand economy, Uber, announced that it has agreed to a major class-action lawsuit settlement with drivers in California and Massachusetts. If approved by the courts in those states, the agreement could serve as a model for similar lawsuits in other states.


On the SmallBusiness.com/WIKI | How to determine if a worker is an independent contractor or an employee

Also on SmallBusiness.com | “Are Uber Drivers Employees of Uber?” and Why The Answer is Important


While most of the coverage of the Uber settlement is focused on the financial agreement with drivers and specific actions that the company will take to make it clear to riders that drivers are not employees, the key victory for Uber—and other on-demand economy startups—is that drivers will remain classified as independent contractors, not employees.

The IRS has long used (long, long before the app-enabled on-demand economy existed) the nebulous gray-areas of defining employees vs. contractors issue in tax-related negotiations.

As Steve King of Emergent Research (and a contributor to SmallBusiness.com) has pointed out, Uber and other on-demand economy companies all have business models built on the use of independent contractors as service providers. “Most of these companies are trying to attract independent contractors from roughly the same pool—people looking for flexible, independent work in the service sector,” says King. “A lot of these types of workers are only interested in part time work.”


Photo: Uber.com

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