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Saturday, May 9

The Concierge Economy: "Now there's an Uber for everything"

A Wall Street Journal editor's top pick for comments on Greg Fowler's investigative report about on-demand app services:
I disapprove. (note: written by S. Rajagopal's reading and commenting concierge he hired through Commentr)
By Sriram Rajagopal
I don't think such an app exists, but Rajagopal has probably given some entrepreneur an idea. Looking back, it was inevitable that smart phone apps would generate their own services but the surprise is how many routine, time-consuming chores the on-demand concierge apps already cover.

The "big idea" driving them, as Fowler reports, is that app companies "can take advantage of previously underused resources, including both temporary workers and things like empty parking spots. This can make an on-demand concierge economy both convenient and efficient."

But can Uberizing every bothersome chore for the busy middle- to upper-income person really work on a large enough scale to make the service apps anything more than a cottage industry?

Fowler, who turned himself into a guinea pig to write the article for WSJ, was on the whole pleased with the variety of concierge app services he road tested, although he mentions hearing horror stories about laundry and shipping service app concierges. Quality control is still a problem, and lot of the startups quickly crash and burn.  But in the big American cities it's already working, although there are still kinks to be worked out:  
There are big questions about whether these apps will be allowed to call their workers contractors, instead of employees who get benefits and overtime pay. Many of them offer basically minimum-wage work and a lot of risk, which might make it hard to keep a stable staff."
Bottom line:  if an app concierge can bring in a service for the same cost or cheaper than doing it yourself, there will be enough customers to sustain the apps -- unless the competition gets so saturated that only the Big Box approach can make a profit.  So then we could see just a few companies offering a wide range of app concierge services.

And they would probably focus on the biggest cities. As Fowler notes, most of the on-demand services wouldn't make sense in regions with broad streets and plentiful parking.

Except in two striking instances. The concierge apps are a boon for the elderly no matter where they live, and for anyone who needs a doctor and can afford to pay cash for the house call:
The Heal app sent an excellent Stanford-trained doctor to my door to check out an injury in under an hour, but I paid $99 for the convenience. (My insurance wasn’t accepted.)
It's more than convenience. The medical industry in the USA is out of control and a casualty of the situation is doctors themselves.  Fowler's bill would have been a lot higher than 99 bucks if he'd had to go through an insurance company, but the expense of processing the mountains of insurance claims is breaking many MDs and skyrocketing the treatment fees just so they can break even.  

The doctor apps are a way to connect MDs with patients who will pay cash (or via credit card) for treatment, allowing the MDs to reduce their fee.  In time, the approach would greatly benefit both doctors and patients.

Finally, I note from Fowler's article that a big promoter of the concierge apps is an Indian.
... Venky Ganesan, managing director at venture-capital firm Menlo Ventures, which has invested in Uber, Munchery (food delivery), UrbanSitter (baby sitting) and Rover (dog sitting), among others. ... 
I wonder if Ganesan is from Mumbai.  The business model of the city's famous tiffin wallahs is the forerunner of the on-demand app, and the wallahs have been delivering home-cooked lunches on demand to office workers for a lot longer than the Internet has existed  The wallahs now do a brisk business in American big cities, especially New York, but here we see that as with so many bright ideas, old is new again.


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