It is a case of the classic chicken-and-egg problem where one cannot happen without the other.Users on one side of the business model find the platform useful only if the other side also exists.
This problem could mean make-or-break when you start an online business in the on demand economy, but there are ways to work your way through it and emerge successful, as has been exemplified by companies like Uber, Lyft, Instacart, Task Rabbit, Munchery etc.Following in the footsteps of success stories like Uber and Instacart, it is natural if you want to enter the on demand economy by starting an online business that instantaneously matches producers and consumers.To give your business a successful start, you need to first figure out a way to overcome the main problem posed by building a platform in the on demand economy.The core challenge that any business faces in the on demand economy is customer acquisition – both on the consumer and producer side.Consumers won’t come on a platform until they see value provided by producers, and producers would not create that value until they see consumers on a platform.There are broadly five ways in which you can overcome this problem – 1.
Start Small When you start small, it is easier to get both sides of customers to accept your offering.
Focusing on a single city, area or even a neighborhood first can help you prove the model to both suppliers and consumers.
Once that happens, you can expand gradually, building the two sides in tandem, one area at a time.
When Uber started its operations, it was restricted to San Francisco and once it met with success there, they decided to expand to other cities.
Starting small could also mean starting in a small segment like Flipkart, which sold books for a long time before it branched out to other areas of e-commerce. Bring High Value Users on Board first Users whose participation brings in extra value on the platform will attract other users to interact with them.
Giving monetary subsidies to encourage participation of high value producers is an important tactic to bring in more customers.