Rise of the On-Demand Economy
As a HBS student, my most valuable commodity is my time. In the precious, fleeting moments of spare time, the last thing I want to do is chores. Enter TaskRabbit: an app that connects you with a personal assistant in a matter of minutes to do basically any chore you don’t want to. Founded in 2008, TaskRabbit has been a pioneer in the on-demand economy that includes apps such as Uber, Airbnb, and Instacart. The cornerstone of the on demand economy Is the rise of peer-to-peer marketplaces, in which people rent or buy goods and services from others through mobile technology. [i] The on-demand economy is attracting more than 22.4 million consumers annually and $57.6 billion in spending, with the market for on-demand home services at $8.1 billion. [ii] Unsurprisingly, almost half (49%) of on-demand consumers are millennials (age 18-34), but this is a growing trend of older consumers. Clearly, this represents a huge opportunity for companies like TaskRabbit.
TaskRabbit Business Model
TaskRabbit is an online peer to peer marketplace that connects consumers with local help. Users can connect with help in a matter of minutes. First, a user logs onto their mobile device and selects from a list of common chores. The user can then select same day service or set up an appointment at a convenient time. TaskRabbit then matches the user with a local tasker. Within the app, users can communicate and pay taskers within the app. The company generates revenue by taking a cut of each transaction. Task Rabbit’s value proposition is to save users time and increase productivity, by providing cost effective solutions for chores and tasks.
TaskRabbit supports its customer promise in the following ways:
- Sleekly designed mobile app, preset with common tasks
- Tasks can be booked within minutes using the mobile app
- Users can communicate with and track taskers in app
- All payments are made within the app, after the task has been completed
- Transparent pricing that is clearly displayed before booking
- 24-hour free cancellation policy
- Taskers undergo extensive background checks and in-person on boarding
- TaskRabbit Elite allows user to book the highest rated taskers
I believe TaskRabbit is poised to win and here’s why:
- Strategic growth: TaskRabbit CEO Stacey Brown-Philpot says the company is already generating operating income in each of the 19 cities it operates in and is close to overall profitability.[iii] This is rare for an industry in which companies typically prioritize growth over profits.
- Generates Value & Productivity for consumers: Millennials value work/life balance, wellness, and convenience because we are busy! We are willing to pay for services that make our lives easier. Users can hire a maid or a handyman, but finding a trustworthy one takes time and effort. TaskRabbit solves this problem by vetting for you. TaskRabbit also allows users to find help for random one off tasks. Cleaning your house to host a party or preparing for a cross-country move is stressful and time consuming. TaskRabbit helps normal people solve every day problems and frees up their time for more important things.
- Strategic Partnerships: TaskRabbit has partnered with Amazon’s home services offering and Brown-Philpot has hinted at additional partnerships. I could definitely see TaskRabbit partnering with Ikea to help customers set up their new furniture.
- Taskers are Independent Contractors: One of the key elements of on-demand services is that taskers are independent contractors. This provides flexible part-time work for employees and it is also cheaper for employers since they do not have to pay benefits. These models are particular beneficial to people who are under or unemployed. TaskRabbit has been one of several on-demand companies talking to policy makers about the idea of “portable benefits” for contract workers in this emerging industry. [iv] Many executives feel that Obamacare has helped grow the industry, though the future of the Affordable Care Act remains to be seen.
- Willingness to innovate: TaskRabbit originally started with an auction model in which users posted jobs and taskers bid on them. After declining use and frustration from both sides, the company shifted to a standard pricing model. The highest rated taskers are available for a premium.
TaskRabbit is an interesting business concept that has the potential become a big player in the on demand economy, but there are still a few risks. Changing consumer behavior is difficult. Their service is something that consumers can do themselves. Convincing consumers of their value and positioning themselves appropriately to key target customers will be key in driving TaskRabbit’s future success.
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