10 Things That Startups Should Avoid While Developing On-Demand Apps

The coronavirus pandemic has caused a massive disruption in the world of business, and a lot of industries have taken a hit because of its effect.

But even in a market that has to deal with the effects of the recent outbreak of coronavirus, on-demand app services have emerged at the forefront of the app-based industries. They have ensured a timely supply of all essential items to the users of the applications.

This phenomenon has led to a digital revolution in the sphere of business. When other industries lost their footing in the world markets, the on-demand industry is still surviving and thriving in local as well as global markets.

These on-demand economies now form the backbone of the economy, and the startup sector will be a witness to a lot of companies venturing into on-demand businesses in the future.

During this outbreak of coronavirus, the industry has been witness to a lot of businesses shutting down. This closure of businesses is due to several stringent measures adopted by the government, the foremost of which is to curb retail sales in every sphere apart from household necessity items.

This move has been made to flatten the coronavirus contamination curve, which has been increasing exponentially. State and central governments have ensured the supply of only essential goods and food items but restricted the operation of all other businesses.

The on-demand services which remain in business are on-demand grocery app services, medical supply services as well as food delivery services. The scenario for these app services are changing very fast, and companies need to adapt and modify their systems accordingly to merge with the new business scenario.

After the lockdown period started, people started panic buying and hoarding goods that they thought might run out of stock in future periods. Even though retail stores selling necessary items are supposed to remain operational in the present scenario, this initial reaction created a situation of scarcity.

At times like these, an artificial inflation bubble might be created, which might hike up the prices in the economy. At this point, these on-demand startups that operate in the sphere of grocery, food delivery, and medical supply services help to meet the increased demand without fuelling a rise in prices.

Companies such as Amazon and Flipkart are also keeping a check on fraudulent behavior in these online marketplaces. This action was taken because some sellers on the platforms have been selling fake products, and some have also started raising their prices above the maximum retail price at which these goods are sold in the markets.

On-demand delivery applications such as Dunzo are reigning in the markets right now, with companies such as Zomato and Swiggy venturing into the business to deliver necessary goods. Other on-demand services such as transportation applications have had to suspend their operations during this time to avoid contamination.

But to adapt their business to the changing scenario, some of these companies, such as Uber and Rapido, have resorted to partnering with retail chains such as Nature’s Basket and Big Bazaar. This partnership will allow them to deliver the essential goods to the people during the lockdown period, thereby keeping their operations running during this time.

Experts state that even after the lockdown period gets over, the demand for on-demand applications will still tend to grow, especially over the next eight months to a year. During this period, the people will be more reluctant to leave their homes due to the fear of contracting the germs.

During this time, they will be more inclined to order though on-demand applications, which provide them the facility of having the goods delivered to their doorsteps. Once this dependency starts, there is no limit to the kind of growth that the sphere of on-demand services will witness.

Experts have concluded that a digital economy is the only way for markets to survive such a slump. Thus, this period will witness a lot of companies entering the market for on-demand applications since it is now the only viable business model through which companies can still survive in this market.

This phenomenon has led to several businesses approaching on-demand app development companies to get apps designed according to their specifications. These applications have to be customized according to the demands of the customers to provide a feature-rich application platform, which is also easy for the consumers to navigate through.

Hence, the competition also exists among the different mobile app development companies to provide the customers with the best possible application, which has all the requisite features incurring a reasonable cost of development.

Most businesses around this time would concentrate on reducing the costs and increasing the benefits that it gains. A lot of these on-demand businesses outsource the delivery services to a last-mile delivery service provider. So all the businesses in these industries are interlinked with each other in a way that allows them to support each other.

As the competition in this sector grows, the number of choices that a user has also increased. These choices mean that if a customer wants something at a particular point in time when it is not available on one app, they will not hesitate to purchase it from another app where the specific thing might be in stock.

This facility has led to limited customer loyalty in the market of on-demand applications. Customers will always opt for products or services that would provide them a superior quality of service within a limited period and at a lower cost.

This kind of behavior has forced the startups to charge lower for their products, offer more discounts and thus, generate a lower profit margin. But an opportunity like the coronavirus outbreak might create an opportunity that might be beneficial for the different online platforms.

In this time, with less competition emerging from the other players in the retail markets, these e-commerce platforms might be able to use the situation to the best of their advantage.

But there are still a lot of avenues which might render these businesses a complete failure and, in turn, cause them to collapse. According to Forbes, 90% of the startups end up failing. The risk of failure is something that every startup owner needs to deal with.

10 Things That Startups Should Avoid While Developing On-Demand Apps

Although the market for on-demand services might be booming in the present scenario, entrepreneurs need to steer clear of the common mistakes that people usually make when they are operating in the on-demand industry. These red flags need to be identified and addressed at the preliminary stage of planning. Otherwise, they might inflate and ultimately lead to the demise of the business.

Thus, if you are looking to develop an app that provides on-demand services, here are a few fundamental problems you might want to look into and mistakes you might want to avoid. The best way to understand this is to look at the models implemented by the startups, which succeeded in the business.

1. Understand the demands of the market

The market for on-demand applications is becoming increasingly complex due to a large number of players in the industry. For the companies to survive in such a market, they need to continually innovate and introduce apps that provide something new in terms of service delivery to the customers.

In such a situation, sometimes the idea that some entrepreneurs have might not be feasible, or there might not exist a demand for the same under the current scenario.

Innovators are risk-takers. By introducing a new product in the market, which is entirely new, they are always taking a chance on whether the idea might work out or not. Sometimes, the app users, after using the app, understand the importance of having such an app, and become loyal users on the app platforms.

But most often than not, they fail. This failure can arise for two broad reasons.

Firstly, the customer might not gain a lot of utility from using the app. This outcome can be because of its lack of functionality or lack of trust for the brand behind the development of the app. Another possible contributing factor for this outcome might be due to the social and cultural barriers that might restrict the user from using the app.

Secondly, the app might be ahead of its time; it might emerge at a time when there does not exist a very high demand for the services provided by the apps. This situation might result in the consumers being reluctant when it comes to them trying out the app and adopting it.

Therefore, the timing of the launch of the app is a critical factor in determining its popularity. If the timing of the launch of the app is wrong, then there are high chances that the app, no matter how useful, would gain the same response as it would have generated in a scenario where the demand for the app would have been high.

For example, Meru cab service was founded much earlier (2007) as compared to Ola, which was founded in 2010. Although it had a three-year head start, its business, Meru could not match up with its rivals such as Ola and Uber in terms of the volume of business. This phenomenon came about at a time when the world was still skeptical of hiring cabs through portals and calls and mostly relied on local garages for availing these facilities.

The development of payment portals through which people could carry out online transactions expedited the process of online payment. This development meant that companies that emerged in the app business after these developments had more to offer its customers than companies that were there before that time.

One can always argue that any app idea that exists will ultimately materialize sooner rather than later. Hence it is better to venture into the market for the same at the very beginning. But the cost of developing and maintaining an app without customer interaction is much higher as compared to an app that tries to involve the customers from the pre-development stages.

In the latter scenario, conducting business is more convenient as the customer determines the direction of the company. For firms to avoid such mistakes, one method would be to spend the initial few weeks collecting customer insights through conducting interviews.

The next step would be to build an advisory board that keeps track of the company’s pain points, its market opportunities, competitors’ activities, user experiences, product features, and more.

2. Making the app interface extremely complex

Some app developers make the mistake of thinking that having a lot of features adds more to the user experience that one gets from using the app. Hence, they keep on adding many features as they think that those might deliver the value proposition of the app in a better way to its target audience.

This situation is another one of the main reasons behind the failure of startups, as well as the drying up of their funds. The race to launch a viable first version of an app that is complete with several different kinds of toggles quickly drains the resources of the founders.

Building a feature-rich app is not only a cumbersome process, but it is also one that incurs very high costs. One of the downsides of creating such an app is that the users might get overwhelmed by a large number of options available to them. This complexity might lead them to opt for apps that provide an interface that is more easily navigable.

Contrary to popular belief, the idea behind the first version of the app should not be to become a market leader. This belief would mean that they would have to cater to the demands of a more massive chunk of the audience, which, more often than not, does not coincide with the requirements of the first users.

The goal of the first version of an app should be to test out the riskiest assumptions made during the development of the apps. Thus, the first version of an app should always have only the necessary features to understand if the essential functions are sufficient for the users or not.

The launch of the first version also allows the businesses to identify the other features that should be incorporated during the subsequent periods of app development. Taking feedback from the customers would help to reveal the elements that might provide an added value to the app users.

These factors, which are also known as the ‘Wow’ factors, will provide the reasons for the customers to shift to the app interface. This shift is because these features would add more value to the users as compared to its competitors in the market.

.This process, also known as beta testing of the apps is quite essential in the app development process since it provides the company with the necessary insights about the target customer’s demands.

In this way, the company can make a realistic assessment of the risk factors that it would want to hedge itself from and incorporate those features instead of the ones that might be redundant.

3. Lack of efficient planning

Most startup owners presume that their primary work is to focus on delivering feature-rich apps, providing all the necessary solutions to the customers. Once that is done, their work is over. But this is quite far away from the truth since the crucial times start after the development process gets over.

One of the biggest mistakes that companies operating in this field make is that they lack proper planning about the future course of business when it comes to the apps that they develop. Most of these startup companies treat these entrepreneurial ventures as business experiments. This attitude means that they are not clear about the path ahead.

Such a situation might arise out of the companies not being able to forecast the demand accurately or due to the absence of long-term expansionary goals. This situation leads to the lack of having a properly planned strategy for the present scenario and also the lack of having a framework for business expansion in the future.

As a result of the absence of a business framework, such an approach results in a poorly-planned business model being developed and implemented in a way that might prove to be profitable in the short term. But these models would fail to sustain themselves in the long run, thereby facing several obstacles.

A process of trial and error should not be used to create and market the apps to avoid such a bottleneck. Hence, thorough research on the conditions prevailing in the market needs to be done before entering them. Such R&D measures are crucial to gauge the demand for a particular product or service offering in a specific geographic market.

The world of startups is shrinking day by day. The development of hyperlocal economies in the on-demand services industry has emphasized the importance of having both a global and a local strategy for any firm. Taking blind chances in a growing industry would only be a recipe for disaster in such a scenario.

Therefore, there exists a need for the implementation of proper planning and strategizing methods before a company tries to venture into the market for on-demand apps. This strategy entails understanding the utility of the product from the user’s perspective, as well as analyzing your competitors to understand whether there is scope for future improvement.

4. Not having a proper marketing strategy

Marketing is so essential to any business that any startup should be willing to invest in marketing methods even when they might not have an idea about the app they want to build. The lack of implementation of proper marketing methods is one of the biggest problems which cripples the industry for on-demand applications.

Most app developers fail to tap into the correct demographic of people that the app should be catering to. Thus, as a direct consequence of it, they also fail to implement the right methods of marketing that would allow them to provide the services to this target demographic.

The buyers usually go through several psychological stages before becoming users who generate revenue. These are the stages covered by the buyer when they go through the stages of awareness, consideration, conversion, loyalty, and advocacy. These steps constitute the marketing funnel, where the number of consumers at each stage is a fraction of the users in the strata preceding it.

In the first stage of awareness, consumers are made aware of the existence of the services that are available to them. A certain fraction of people who realize the utility of using such a solution go from the awareness stage to the consideration stage. At this point, people consider purchasing the products or services that are on offer.

Out of the people who consider the purchase, only a fraction of it goes into the conversion stage, where marketing methods get converted into actual sales figures. At this point, the post-purchase strategy comes into play as the users are converted into loyal customers based on the superiority of the solutions that they have on offer.

Finally, the funnel ends at the advocacy stage, where the loyal customers publicize the app through word-of-mouth marketing and also become loyal advocates of the products.

Therefore, it is necessary to ensure that the customer is guided through all the stages of the marketing funnel with necessary marketing campaigns and promotional offers being provided at each stage.

While the pre-sales stages should concentrate on promotion, the post-sales stage should give more importance to maintaining the product quality as well as providing efficient customer support services.

Entrepreneurs who succeed at building awareness for a product even before they set a definite date for the launch of the app can invite constructive feedback from the users. This strategy can guide the app developers towards designing the perfect app, which can fulfill all the demands of the users.

In the early days of the app development process, it is essential to advertise the growth of the company by publishing different articles every week. This process can be facilitated through sharing tips and speaking about the lessons learned.

At this point, the main goal of the company should be to use these online and in-person channels to establish a network of potential supporters. Thus, it is vital to invest in marketing channels which directly forms a connection with the target group of customers.

This strategy helps to gather more data about the buyers who are more likely to purchase from the business and later use paid forms of advertisements to target this particular demographic of people.

5. Raising funds at an early phase

At times, an idea that sounds promising might raise proper funding from the investors. But once the investors have put their money into their businesses, they will start evaluating the business critically by using some key performance indicators to check how the company is performing.

These key performance metrics include sales revenue, customer lifetime value, customer acquisition costs, as well as churn rate. Even then, investors are more likely to invest in startups, which have a robust framework in place with relevant projections made through gathering extensive market data as compared to a pitch, which is just an idea.

How an investor might choose to invest also depends on several variables such as target groups, products, business models, the experience of the entrepreneur, and many other factors. Generally, it is easier to sell a pitch better if it has the relevant figures to show for it, rather than selling an idea at the very early stage.

Without enough marketing research in place, the company is at the risk of potentially short-selling itself to the investors. This situation can happen in a scenario where the entrepreneur undervalues its worth in the market. Then within a few months of its entry into the market, it realizes its actual value.

Usually, in most of the startups, the entrepreneurs go for bootstrap funding in its early years without needing financing. This situation leads the founders to scrutinize each opportunity with caution, select the most basic course of action, and spend just the amount that they require to take the business forward.

6. Hiring Inefficient or Unnecessary Resource Personnel

Several startups that operate in the sector for on-demand businesses fail because the company ends up hiring personnel that is ill-suited to understand the demand of the organization. This phenomenon can also occur due to the over-hiring of resources, which are not essential to the functioning of the organization.

Sometimes this can be a direct result of hiring personnel who do not have sufficient industry experience. Sometimes, this can also be a result of hiring people having too much experience in the industry, which can often lead them to be resistant to the kind of change that the businesses demand.

Usually, the startups which fail have been plagued by problems such as a lack of highly-skilled industry experts who can guide them in such ventures. Sometimes when the funding dries up in these startups, it is usually followed by the resignation of some high-profile members on the board of management. This situation creates negative publicity for the business and hampers their growth.

These startups sometimes employ professionals who are experts in their respective fields by going by their reputation in the industry, without considering whether they would be a good fit for the company. Working under a leadership which is not in sync with the tempo of the organization can impact the growth of the company in a negative way.

At the initial phases of the company’s growth, the organizations need to employ only the personnel necessary to build the app and market it. Such a move can help to cut down the costs and give a fair idea about the value each of these members adds to the workings of the organization.

On the contrary, in a startup that does not have a proper business model or a framework, having more members on the team does not necessarily translate to higher growth figures. In the case of most startups, more resources are usually required in the later stages as compared to the primary stages.

Sometimes startups base their hiring strategies on projections of future growth while planning an expansion in their business. Ideally, these projections should be mapped out according to the demand that the company faces instead of just basing them on future expansionary plans.

7. The incapability of the entrepreneur as the head of the business

A good idea, along with a strong technical team are necessary, but not sufficient conditions for the growth of the business. Once a company gains its tempo, it is the responsibility of the entrepreneur to keep an eye on all the steps that are involved in the business process as well as address the issues that might crop up.

All these tasks are a part of an entrepreneur’s duties as the leader of the organization. Despite having a strong team and a successful business model, ignoring any of these tasks can lead to them being deprived of any future that they might have in the organization.

In the traditional business models, the responsibilities of the different strata of the personnel in business are well-defined, and there exists little-to-no interlinking between the various job roles. On the other hand, an entrepreneur in a startup cannot segment his or her responsibilities in the same way.

In most startups, the roles and responsibilities of the personnel will coincide, and sometimes something that starts as a small thing can be scalable. The entrepreneur has to work in close coordination with the different departments to ensure that these departments work in a perfectly synchronized manner.

An able entrepreneur should not restrict themselves to working in their business; rather, they should concentrate on working on their business. Sometimes, getting caught up in the flurry of phone calls, meetings, presentations, and emails can lead an entrepreneur away from the heart of the business.

8. Knowing when to seek funding during the growth process

In most technology-based startups, especially in the case of on-demand apps, designing the perfect app means being aware of the customer’s demands. To assume that these demands will remain constant and that the app can meet every one of the consumer’s requirements from the very beginning is one mistake that startups make.

When a company exhibits exponential growth in a small period, this leads to concern because people are of the notion that fast growth is unsustainable. But in the sphere of on-demand startups, rapid growth is what is necessary to drive the businesses forward.

A lot of startups failed because they did not exhibit enough growth that is needed to secure venture capital in the later stages. Such companies required funding to boost their growth, but in the absence of a high growth trajectory, they failed to secure the necessary funding. That marked the start of their downfall.

Growth is a cyclical process – where growth in one period leads to more growth in the subsequent periods. Hence, a company venturing into this business should not be content with marginal growth rates after operating for a considerable period. If growth does not happen in the initial phases, then the chances are that it will cease to grow in the future as well.

9. Having a team that cannot adapt or react to changing situations

Startups are usually backed up by a team of people who work at its core. The less versatile the team is, the more likely a startup is to fail.

Versatility does not merely refer to having a set of skills or talents and being able to apply them as and when required. In the on-demand startup environment, it also refers to the mindset of the people on the team.

These teams must be ready to take the initiative to change products, shift from one industry to another, adapt to different compensation packages, go for re-branding and even shut down a business and start from scratch.

The ability to recover from adverse market conditions is the attribute of every great team. The teams who can improve together are also able to work together in harmony, even during trying times.

In the sphere of startups, the ones who have co-founders are more likely to succeed than the ones with one founder. This situation leads to increased accountability among the founders, which helps to avoid some of the drawbacks of having a single leader. Additionally, having a co-founder helps to bridge the gap between the skills that one leader might not have.

10. Not enhancing the product or service offerings

In terms of on-demand businesses, if the quality of the product or services offered is not of a superior level, then the idea is doomed from the very start. With so many competitors in the industry, a startup cannot afford to be complacent about the products or services it offers.

This market, in general, is very erratic and prone to fluctuations. This factor, combined with the presence of a large number of competitors operating in the same market, has saturated the markets for these on-demand services.

The only way to survive in such a market is to keep innovating. The user will only opt for the on-demand solutions if it has a unique selling point (USP), which differentiates it from the other competitors in the same market. As competing companies keep changing their strategies, to survive, the app has to update itself with the latest features using the most recent technology available in the market.

Hyperlocal economies are very prone to such business conditions. These startups mainly focus on building a large customer base and thereby monetizing their businesses through these customers. But only concentrating on getting customers will not help these businesses.

The shifting loyalty of the customers has made it very crucial for these on-demand applications to not lose out on even a single customer. The presence of this competition has also meant that in the presence of market entrants that provide better solutions at lower prices, the consumer would not hesitate to avail of their services instead.

The Android and iOS platforms always have to introduce newer versions with updated features to ensure a faster processing power, as well as fix the bugs. Hence, apps that are present on such platforms also have to make their versions compatible with the updated versions of the platforms.

Conclusion:

Although it is easy to point out the commonly made on-demand mistakes to avoid and discuss how those can be avoided, it is not always possible to have the required amount of foresight to make such decisions. Decisions about building too soon, not hiring too fast, promoting too late, raising money too early, and so on can only be made on projections about the future.

The future scenario can be completely different as compared to what has been predicted by the numbers due to some adverse situations that had not been anticipated by the developers. This phenomenon has been best observed in the case of the coronavirus outbreak.

The present scenario has completely thrown aside the previously-made planning and projections by the companies in this sector. Several companies have had to stop their operations entirely because it was no longer possible for them to continue the deliveries in the present scenario.

Although completely unanticipated, this scenario has rung the death knell for many very young industries operating in the same market. Hence, in reality, it is difficult to come up with the perfect time to make decisions towards hiring, marketing, and fundraising operations. The only solution to this is to seek advice and guidance from experts and never cease to evaluate the position of the company concerning others in the industry.