Sunday, March 29, 2015

I am increasingly worried about the on-demand economy

Back in the elevator in the 37-story tower, the messengers do talk, one tells me. They end up asking each other which apps they work for: Postmates. Seamless. EAT24. GrubHub.
Welcome to the on-demand, app, world.  If this is the future, then I don't want any part of it.  Because, as the writer notes:
And that’s when I realized: the on-demand world isn’t about sharing at all. It’s about being served. This is an economy of shut-ins.

There is something strange happening.  Back when I started teaching in California, which seems like eons ago, the business school faculty were getting all excited to offer courses with "e-commerce" somewhere in the title.  It seemed all novel at that time, when Netscape was the dominant web browser!  We were all toying with phrases like "click and order" will wipe out "brick and mortar."  Alan Greenspan thought it was all irrational exuberance; remember that?

All that was before the iPhone revolution. Before Android. Before "apps" that work on smartphones.  Now, there seems to be a new app every day that people are gushing about.  I read the other day that messages via WhatsApp and other apps, plus the good old SMS, means that the phone, apparently, is not for calling people anymore!
In total, Americans spend about 26 minutes a day texting. That compares to spending about six minutes a day on voice calls.
 What the heck are we texting about?  It could be even for things like this:
A woman hauling two Whole Foods sacks reads the concierge an apartment number off her smartphone, along with the resident’s directions: “Please deliver to my door.”
That woman is a worker bee in this on-demand economy.  Yes, this is not the first time I blogged my concerns about this trend.  
Last year the venture capital firm SherpaVentures — whose offices are just down the street from that apartment building full of Ubers and Squares and Twitters— released a sunny study on the future of our on-demand world. They have a stake in making it go big , of course: they’re seed investors in Shyp and Munchery and have $154 million to invest in on-demand businesses. As the desire for more instant, app-based services expands up the economic chain, the report argued, entrepreneurial freelancers — everyone from grocery deliverers to cleaners to accountants to lawyers — will have flexibility to monetize their time when they want to and pursue their passions. Brick-and-mortar stores die out, and so do their low-wage retail jobs, which it suggested would personalize the world, away from the sterile anonymity of big-box stores to a “21st-century village economy,” in which we’re “united” by cellphones.
So who are we uniting with in this scenario? 
Meanwhile, in the crowded less developed economies:
grocery delivery has taken off massively in hyper-dense developing countries, where huge income disparities allow upper-middle-class citizens to turn the rest of the workforce into their personal delivery network.
The WSJ has a story about India on that point:
One morning, Ashok Kumar hoisted a huge, 110-pound pack jammed with books, cellphones, bluejeans and other items onto his back and cinched the shoulder straps.
Then he donned a helmet, climbed onto a motorcycle and, balancing precariously, headed out into the traffic-clogged streets of the Indian capital for his daily rounds.
Mr. Kumar and thousands of men like him fan out across the crowded cities of the world’s second-most-populous nation every day—foot soldiers on the front lines of India’s e-commerce revolution.
This low-tech army of urban sherpas hauls bags of online purchases down narrow alleys and up flights of stairs, lugging everything from laser printers and kitchen appliances to cans of Coca-Cola for their country’s burgeoning consumer class.
So, what exactly is my worry here?
In the new world of on-demand everything, you’re either pampered, isolated royalty — or you’re a 21st century servant.
We aren't thinking this through.  It certainly has the feel of "share-the-scraps economy."


Ramesh said...

So , what exactly is your worry here ?

Products still have to be made. Brands still have to be created. They have to be distributed, they have to be marketed. They have to be improved. They have to compete.

In the past you went to a box store to get it. Today somebody comes home to deliver it. So what's the big deal ?

It is in the field of services that there has been a revolution because of connectivity. IT & BPO industries, for example. Or the way you can deliver a service globally competing from anywhere. There there is certainly a problem for high cost guys like you because of low cost guys like me :)

Sriram Khé said...

It is not the high/low cost producers that worries me. I couldn't care about that.
But, what I am worried about is the very idea that I have explored in many ways in different posts--the digital economy is not generating jobs that pay well. It generates a few remarkably high-paying jobs, and then all the way at the other end where people seemingly have to compete for scraps.
As for the box store of the years past, that was a "regular" job, which even provided career pathways for the productive ones. Now, the delivery men and women are often considered to be "independent contractors" who are managed by apps--any moment they could be tossed away from the jobs that doesn't pay much to begin with.

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