Gig Economy: Industries Embracing Mobile-Enabled Business Models
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1 January January 2017 Mobile Follow on Technology s head on Master Influence page on A the Gig Economy Gig Economy: Industries Embracing Mobile-Enabled Business Models By Madeline Hurley Developments in mobile commerce have allowed manufacturers, wholesalers and retailers to connect to consumers at the click of a button The growing dominance of technology in serviceproviding industries has created intense price competition Technology has always been a crucial component of industry development and efficiency. While innovations in alternative energy and automation have improved processes in manufacturing and utilities industries, the rise of the internet and mobile technology has transformed dynamics within the retail, wholesale and service sectors. Developments in mobile commerce have allowed manufacturers, wholesalers and retailers to connect to consumers at the click of a button and add efficiency to the supply chain. For service industries, the steady adoption of mobile technology has not only connected more consumers to service providers, but has fostered the creation of new types of business models. Over the past five years, the gig economy, sharing economy, collaborative economy and on-demand economy have emerged as new ways to connect consumers with traditional and nontraditional service providers. Although these models operate differently, they have collectively affected the services sector by adding a virtual intermediary between the service provider and consumer. The growing dominance of technology in serviceproviding industries has also created more intense price competition and issues surrounding regulation. The % change Wage vs. Enterprise Growth: Ride Sharing Year Wages Enterprises SOURCE: following is a list of industries that have been influenced by the implementation of these mobile-enabled business models. Ride-sharing Services The Taxi and Limousine Services industry has arguably been at the forefront of the shifting mobile service economy. Early in the five years to 2017, e-hailing services such as Uber and Lyft surged in ridership and have ultimately changed the size and scope of the industry. While revenue from traditional taxis has increased substantially during the five-year period, most of the $19.1 billion industry s 6.3% annualized growth has been a result of the explosive info@ibisworld.com
2 January popularity of these mobile apps. Prior to the inception of these apps, the majority of industry operators were highly regulated, unionized and operated with a registered medallion, which used to be required for all ride-sharing services. As more transactions have been brokered through e-hailing apps, fewer drivers have set hours, medallions or formalized industry registration, which has led to a less regulated industry. For a cut of the fare, e-hailing apps connect virtually any aspiring driver with an approved car and clean driving record to ride-seeking consumers. Although the convenience and value of these apps have elevated industry revenue and connected more drivers with riders, the lack of regulation has presented a number of issues. With no formal governing body, ride-sharing apps have been able to price their services with less restrictions. Most major ride-sharing apps use surge pricing, which boosts the price of rides during times of high demand. On the other hand, because e-hailing services are relatively new and unregulated, predatory pricing and promotions have also become a common way for companies to gain market share. These pricing strategies have impacted both the competitive nature of the industry and the level of compensation. Over the five years to 2017, the number of industry operators has increased at an annualized rate of 11.2%, while wages have increased at a slower annualized rate of 8.2%. This has led to a lower average wage, even with drivers working typically longer hours. Barring stricter regulations and more standardized pricing policies, this trend is expected to continue over the next five years. Room-sharing services The adoption of technology has also changed the landscape of accommodation services. Although most operators in the $3.0 billion Bed and Breakfasts industry have online booking systems, room-sharing apps like Airbnb and price-comparison applications have added a higher level of competition to the industry over the past five years. Like ride-hailing apps, roomsharing companies act as a broker between accommodation seekers and everyday consumers looking to rent out their home or apartment. The popularity of subletting a spare room to short-term tourists and travelers has allowed those unwilling to comply with the regulatory hurdles of a certified bed and breakfast establishment to offer their spare rooms to the public. While the industry is not highly regulated overall, traditional operators have to conform to general local and state planning (including fire safety) laws, general public health (including food safety and handling) laws, occupational health and safety regulations and liquor licensing laws (if licensed), while peer-topeer hosts comply with policies outlined by the company brokering the transaction. The lax regulatory environment has brought over 173,000 peer-to-peer hosts into the market between 2010 and 2016, compared with a sluggish 0.1% annualized growth of traditional bed and breakfasts over the five years to The influx of competing room-sharing transactions has also added to the competitive landscape of the $173.3 billion Hotels and Motels industry. Traditionally, hotels and motels have not been direct competitors, due to the variability between service and location. Especially in urban areas, peer-to-peer accommodation services have somewhat bridged the gap between hotels and bed and breakfasts, which has led to a higher level of price competition and service offering. Food services Low unemployment levels and rising incomes have enabled more consumers to order meals outside the home, causing restaurant operators to flourish over the five years to The steady adoption of
3 January mobile-based technology has also changed dynamics within the food services industry. Conventionally associated with Chinese restaurants and the Pizza Restaurants industry (OD4320), delivery services have grown in size and scope in line with the shifting mobile on-demand economy. Mobile food delivery apps from providers such as GrubHub, Postmates and Doordash have enabled more restaurants to reach a wider range of hungry consumers through pick-up and delivery services. For the $183.5 billion Single Location Full Service Restaurants (72211b) industry, the rise in demand from such delivery services has helped many small operators maintain business in the highly competitive market. Even so, the rise in sales generated from these third-party services comes at a price. In addition to the commission allotted to the service provider, restaurants often have to compete based on price due to the ease of price and menu comparison these apps provide consumers. While food delivery services have allowed restaurants to boost sales through online orders, mobile apps have also connected food-service providers to consumers in a variety of other ways. Although not a direct service broker, reservation booking apps like OpenTable and crowdsourcing review sites such as Yelp have connected hungry patrons with restaurants at the click of a button. These services allow consumers to find, compare and book tables based on price range, location and overall service and menu rating. In previous decades, restaurants relied heavily on word-of-mouth marketing as well as a variety of third-party rating publications like the Zagat guide and newspaper print reviews to draw in new customers. As more consumers use these services, many small operators have had to invest more time and resources into maintaining positive reviews and visibility on these mobile platforms. As a result, competition has increased, while Average Wage Per Employee in 2017* Personal Trainers Pet Grooming & Boarding Dog Walking Tutoring & Driving Schools Graphic Designers Maids, Nannies & Gardeners Party & Event Planners Photography $ Thousands *Estimates SOURCE: IBISWORLD.COM
4 January About IBISWorld Inc. Recognized as the nation s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call continued investment in marketing has kept average industry profit low. Other Services From baby sitting and lawn mowing to wedding singing and personal training, the gig economy has been a crucial component of the service sector and the daily lives of consumers. The economy is based on demand from households and individuals who require assistance with short-term tasks or jobs. Industries that generate a large portion of revenue from gigs (i.e. nonemployers) include Online Tutoring (OD6038), Dog Walking (OD4350), Nannies and Gardeners (81411), Personal Trainers (OD4189), Graphic Designers (54143), Party and Event Planners (OD4414) and Photographers (54192). Although many gig performing employees operate as registered businesses, many transactions are completed under the table by using cash and verbal agreements rather than formal contracts, payroll and taxes. Just as with e-hailing, room-sharing and online food delivery services, industries primarily dominated by gigs have been influenced by the rapid adoption and use of mobile technology. Traditionally, gigs have been booked through personal referrals, agencies and newspaper and internet listings. However, more gig-specific apps and websites have been created in recent years, enabling consumers to quickly and easily find and book the desired service, while comparing prices and consulting reviews from previous clientele. Sites like Care.com and Urbansitter have connected millions of families and individuals with care providers while enabling them to screen potential candidates and compare hourly rates. Similarly, apps like TaskRabbit and Amazon Flex allow everyday individuals to complete everyday tasks, such as home cleaning services and small repairs, at a set price. Not only have these apps connected more service providers with consumers, but they have altered the transaction process. Mobile booking and billing capabilities have created more formal and traceable exchanges previously handled through under the table transactions without payroll tax. While the regulatory environment of industries such as taxis and bed and breakfasts have become murkier due peer-to-peer transactions, the use of mobile apps and payment has made previously under the table transactions typical of the gig economy more formalized and traceable. Contact: Media Relations media@ibisworld.com IBISWorld Sales & Subscriptions Phone:
5 At IBISWorld we know that industry intelligence is more than assembling facts. It is combining data with analysis to answer the questions that successful businesses ask. Identify high growth, emerging and shrinking markets Arm yourself with the latest industry intelligence Assess competitive threats from existing and new entrants Benchmark your performance against the competition Make speedy market-ready, profit-maximizing decisions Who is IBISWorld? We are strategists, analysts, researchers and marketers. We provide answers to information-hungry, time-poor businesses. Our goal is to give you the real-world answers that matter to your business in our 700 US industry reports. When tough strategic, budget, sales and marketing decisions need to be made, our suite of Industry and Risk intelligence products give you deeply researched answers quickly. IBISWorld Membership IBISWorld offers tailored membership packages to meet your needs. Join and become an industry expert! Disclaimer This product has been supplied by IBISWorld Inc. ( IBISWorld ) solely for use by its authorized licensees strictly in accordance with their license agreements with IBISWorld. IBISWorld makes no representation to any other person with regard to the completeness or accuracy of the data or information contained herein, and it accepts no responsibility and disclaims all liability (save for liability which cannot be lawfully disclaimed) for loss or damage whatsoever suffered or incurred by any other person resulting from the use of, or reliance upon, the data or information contained herein. Copyright in this publication is owned by IBISWorld Inc. The publication is sold on the basis that the purchaser agrees not to copy the material contained within it for other than the purchasers own purposes. In the event that the purchaser uses or quotes from the material in this publication in papers, reports, or opinions prepared for any other person it is agreed that it will be sourced to: IBISWorld Inc. Copyright IBISWorld Inc.
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