6 Reasons Why On-Demand Services Fail And What No One Tells You

6 Reasons Why On-Demand Services Fail And What No One Tells You

On-demand services have become increasingly popular over the past few years due to the rise of technology and the Internet. However, not all on-demand services app are successful. In fact, many have failed for various reasons. 

This can be better explained if you understand the economic condition when Covid started and peaked. For instance, 2020-2022 has been a testing period for startups all across the world, especially the ones operating in developing economies. The world anticipated strong market growth with a surge of people ordering online, during Covid 19. To give you an example, the eCommerce industry jumped 43% from $571.2 billion in 2019 to $815.4 billion in 2020.

While many on-demand startups tried their fortunes following the trend, only to falter, and eventually, fall out of the competition altogether. But that’s just one reason. There are many more!

on-demand app development

Entrepreneurs Focused Only On Their Existing Markets

They came, they saw, and they forgot their objectives. This has been the fate of many startups that haven’t been keen on expanding their existing markets. For how long can your enterprise cater to a single city, county, or even country without driving growth in their profits? 

Many startups fail because they do not focus on acquiring new customers and keep themselves confined to their existing customer base. The problem with such an approach arises when the existing user base finds a better option in a newly launched contemporary, thus leaving the enterprise high and dry with a sudden decline in profits or surging losses.

Not Creating What the Market Needs

If Edison created the electric bulb in 2022, he too would have been on the list of failed startups. As an enterprise, your focus should be on creating what the market needs and not what you can offer. Often, a good product has a bad end because the market is not ready for it. Don’t be the enterprise that thought wireless earpods would be cool because they are the future.

If you want your idea of the future to be accepted, ensure that the product is affordable, has sustained use, and stands firm on user expectations. Innovation needs ideas and investments, both, to last, and without either of them, it’s just a theory no one pays for.

Inadequate Market Research

Yes, the eagerness to make quick money in an on-demand economy is unparalleled among enterprises, and yet, most of them tend to discard the importance of thorough research. The money you raise would depend upon the market you are looking to cater to, and if you get that wrong, you would either miss your goal or end up with massive investments locked in an otherwise dead market. 

Spend according to your market trends, potential customer needs, and most importantly, how the economic situation warrants. In a period of recession, like the one going on, how well would the idea of on-demand services app like Dog-sitter perform?

Ill-Timed Service Launch

When it comes to the on-demand economy, the timing of service launch is integral to the fate of the enterprise. It won’t be a great idea for meal-delivery services to be launched during the season of frost, just like it won’t be a great idea for college supplies and textbooks service during the holiday season. 

When you should launch and the marketing strategies you use for your app are going to heavily depend upon the factors that drive the timing of the market. Not only should your users be there to spend on your services, but they should also be present in the first place. Also, ensure that your marketing strategy and promotional offers cater to a market that is active.

Unable To Scale Revenue

You can’t deal in kilometers with a scale that works for centimeters. Scaling is an important phase for any enterprise, and as a leader, your focus should be to improvise and improve your business operations as these have a direct impact on your revenue. 

Without any scalability prospects, you are merely subjecting your enterprise to doom. To keep up with the competition in the market and in order to expand the existing user base, increased revenues would also be important which would only come from a carefully thought-out plan of business operation and eventual expansion.

Lack of Trust

Your credibility is a crucial factor for customers who would want to put their money into your services. On-demand services often require customers to share sensitive information such as their credit card details and personal information. So, if the customers do not trust your service, they are unlikely to share their sensitive information as well. 

This can be a significant barrier for new entrants that do not have a proven track record. For example, a new ride-hailing service might struggle to attract customers if it does not have a reputation for safety and reliability. However, this is something that can be achieved by responding to customers’ queries on time, providing 24/7 customer support, and engaging the UX/UI of the app among other factors. 

To give your customer a good experience, you will need an expert on-demand marketplace app development company with years of experience in this industry – like Code Brew. It is a top on-demand app development company Dubai with a track record of creating 7000+ innovative solutions.


In a nutshell, there is no one specific reason for the failure of on-demand service apps. Therefore, both startup owners and business entrepreneurs need to carefully consider these factors before on-demand app development and launching their services for mass consumption. 

They need to conduct thorough market research, differentiate their services, invest in technology and infrastructure, build trust with customers, and ensure regulatory compliance. By doing so, they can increase the chances of success for their on-demand services.

November 30, 2016



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