How to Build an On-Demand Platform Like Uber or Airbnb
Tuesday December 11, 2018,
11 min Read
When we talk about building an on demand delivery app clone, we’re often talking about building an app like Uber or Airbnb. Two major decacorns (companies worth $10 billion or more), Uber and Airbnb are worth billions of dollars. To be more precise, Uber was valued at $72 billion and Airbnb at $29.3 billion as of August 2018. Uber is available in more than 65 countries and over 600 cities. Every day, nearly two million people rent accommodation through Airbnb. What’s so great about these two companies that makes so many people regularly use their applications and makes entrepreneurs want to copy them?
We’re here to talk about the philosophy behind an Uber- or Airbnb-like on-demand delivery service app.
What do on-demand platforms offer?
On-demand delivery apps are of great benefit to all users:
- Customers can request goods and services anywhere they are, track order delivery via GPS, and make in-app payments.
- Producers can approve or decline requests and easily run their businesses within one application.
- Both consumers and producers can rate their experiences.
NOTE: Producers are those who create value (offer goods or services) for customers to consume. For Airbnb, producers are hosts; for Uber, they’re drivers.
What made Uber and Airbnb so successful?
To understand how to start on demand business, see how the world’s top companies have made it big.
Each of these platforms found gaps in the market and offered solutions. Here’s the formula for success: define market problems and offer true value to address these problems.
What matters when it comes to crafting an Uber-like platform
It would be a mistake to think that developing a platform only involves coding. Knowing how to code an app for delivery isn’t enough for successful on-demand delivery app development. There are still several things you need to take into consideration before getting started.
One of the most important steps to success is finding your niche and establishing yourself as a key player in this niche. Here are a few tips on how to ensure your platform will reach your target customers effectively.
Know your audience inside out.
Before jumping into developing your platform, you need to know who you’re going to offer it to. Be fully aware of the demographics of your target audience and the problems they face so you can find unique solutions to their problems. But analyzing your target audience doesn’t stop at the pre-building stage. To succeed, you should also heed your user’s needs and desires throughout the entire lifecycle of your platform. This is where you may need to use behavioral segmentation, which includes learning about users from their online behavior such as likes, dislikes, follows, comments, and shares. "Customers are speaking to you implicitly via their behavior, captured in the footprints they leave behind in your systems." - Robert G. Thompson.
Your users may take your platform in new directions, and you might need to reorganize your platform a little to help users move in those new directions. AirBed & Breakfast, which we now know as Airbnb, used to let users find and book accommodation only for events. When a lot of customers asked whether they could use the service not only for events but also for other purposes, the co-founders came up with a new idea 一 a marketplace offering lodging for any occasion.
Don’t offer similar solutions.
Let’s be honest. Who will want to use your application if they already have one that offers the same functionality? Only providing fresh solutions to problems can lead to success. Hipstamatic used to be the most widely used photo application with four million active users before Instagram broke in. Instagram beat its predecessor because it offered users not only tools for taking great pictures but also access to a network.
Don’t try to be everything for everyone.
It’s impossible to please everyone. At launch, nobody can conquer the world, and few can offer value that serves everyone. Facebook started off as a small network solely for students at Harvard. Only when Facebook reached a certain number of users on the platform did it extend to the other Ivies and to many more colleges and universities afterward. Today, we know Facebook as a global social network that serves a broad demographic.
Software development team: size and location
If you’ve defined your niche and core value, you can switch to searching for a software development team to make your idea a reality. You can hire either an in-house team or a remote team. Let’s see what’s best for you.
An in-house software development team is reasonable for medium-sized or large companies that have sufficient resources and the necessary infrastructure. With an in-house team, you have full control over the software you create. You can speak to developers at any time, maintain and improve your software whenever you want, and always be aware of where you are in the software development process.
Some businesses decide to outsource mobile delivery app development to dedicated software engineering teams. This is a good choice for companies that are engaged in activities other than software development and for whom creating an app is secondary. Remote teams are cheaper than in-house teams since you don’t have to pay for office maintenance, insurance, taxes, vacations, and sick leaves. You pay only for work done, usually on an hourly basis.
You’ve chosen a software development team, so what’s next? It’s time to design your project! Design is a milestone in developing a delivery service app. The design development process includes creating wireframes (schematic pages of the platform), text blocks, and the design itsel
Platforms for your app: iOS, Android, web, or cross-platform
To choose which operating system or systems to build for 一 iOS, Android, web, or cross-platform 一 you should do some research on what’s popular in your market and take into account some technical details.
Progressive web applications are applications that run in a web browser. With web apps, users can benefit from all the functionality of an app without downloading it. Building a web app is a perfect solution for companies that want to improve their mobile user experience and don’t need to have separate applications for each operating system or simply lack the resources to do so. Web apps are also good for countries with a spotty internet connection since web applications perform okay with slow loading speeds. In terms of their disadvantages, not all browsers and software support progressive web apps. Also, these apps may have a limited ability to access GPS, fingerprint scanners, cameras, and other hardware.
When speaking of native applications, we usually mean apps built for iOS and Android. Native apps have lots of advantages. iOS and Android apps show strong performance, since they directly access mobile device hardware including cameras, GPS, microphones, and memory. These apps have a great user experience, high performance, and intuitive user interfaces. With native applications, you aren’t limited in the functionality you can implement. You can add new features and implement new APIs. In addition, native applications can work offline, whereas web apps work only when users are connected to the internet. But there are a few drawbacks to building native apps. First, these applications are costly, as they require software maintenance, updates, and support. Web apps also require updates but they have to do mainly with creating new content, whereas native applications need updating related to operating system and hardware upgrades. Second, you might need to build two apps, one for iOS and one for Android.
Today, cross-platform applications are becoming more and more popular since they save time and effort. With cross-platform development, almost the entire codebase can be shared across multiple platforms, which considerably reduces costs. But as there are still some parts of the code that won’t work on multiple operating systems, there’s a need to write those parts in native languages. There are also some restrictions on hardware functionality. Some cross-platform frameworks, such as React Native, don’t support complex animations and certain platform-specific functionality.
The technology stack behind Uber-like solutions
A particularly important step is deciding on the technology stack, as it shapes the future of your project and its scalability. To succeed, any on-demand delivery app should have the following features.
Geolocation is one of the most important features. It works perfectly for tracking deliveries or cabs or finding a place to stay by checking a location on the map. For different platforms, GPS is implemented differently. The location feature for Android devices is implemented through Google’s Location APIs and through the Core Location framework for iOS devices. For navigation, you’ll need Google Maps Android API for Android devices and MapKit for iOS devices.
This feature is especially crucial when creating an app for food. GrubHub 一 the best food delivery app according to user reviews 一 lets users track the location of food deliveries through live mapping.
SOURCE: DRIBBBLE.COM BY BRYANT JOW
Push and SMS notifications
Once a user has requested an on-demand service or ordered goods, they should be informed whether their request has been approved or declined, receive payment details, and get updates concerning the delivery. Implementing push notifications on different platforms requires different technologies. To enable push notifications for Android, developers use Google Cloud Messaging and Apple Push Notification Service for iOS devices.
SMS notifications are no less important than push notifications. They’re quite useful in cases when a user’s phone goes offline. Instacart, a grocery delivery app, integrated the Twilio API, an interface that helps Instacart customers get in touch with shoppers through SMS-based in-app chats. Customers can confirm orders and estimated times of delivery, and employees can be informed of their scheduled shifts.
Once a service has been requested, users need to be able to pay for it. You should choose payment methods depending on your target audience. If your application is focused on the US market, you might consider integrating Braintree or Stripe, which is used by Lyft, Postmates, Instacart, TaskRabbit, and other on-demand services. But note that cashless payments are still very much in their infancy in some countries. That’s why you might need to provide the opportunity to pay by cash on delivery. Uber Eats, a fast food delivery app, lets users pay either by card or cash. Airbnb, on the other hand, provides only cashless payment methods. Another popular feature that both Uber and Airbnb provide is splitting payments. If your idea allows for it, this feature can provide your customers much convenience.
SOURCE: DRIBBBLE.COM BY UBER DESIGN
How do platforms like Airbnb and Uber make money?
As suggested in the book Platform Revolution, there are four ways to monetize marketplaces: charging for access to value creation, charging for access to the market, charging for access to tools, and charging for enhanced curation. Let’s have a closer look at each of them.
As some marketplaces enable not only the exchange of data but also the exchange of currency, one meaningful way to make money on a platform is by charging a transaction fee for value created by the platform. Because marketplaces don’t charge users unless actual transactions are carried out, users aren’t discouraged to participate on the platform. Airbnb, for example, charges a transaction fee to hosts (generally 3%) and guests (6% to 12%) for every booking.
Access to the market
Some platforms charge users, mainly producers, for joining the platform. This usually includes either subscription or membership fees. At launch, a marketplace shouldn’t charge all users for access, but only one side if needed. Dribbble doesn’t charge all users but charges companies that are looking for professionals by posting listings on the Dribbble job board.
Access to tools
Some platforms charge producers and consumers for premium tools and services. The beauty of charging for enhanced access is that the platform doesn’t discourage users from interacting on it, since anyone is allowed to participate. But those who want to have additional handy tools have to pay for them. LinkedIn charges users for LinkedIn Recruiter memberships, which provide recruiters advanced search filters, smart suggestions and prioritization for finding, connecting with, and managing potential employees.
A marketplace is an open ecosystem. This means that anyone can create value. Because of this, many platforms suffer from content overload and some users may find it difficult to find what they want. Some marketplaces therefore decide to charge users for access to high-quality content, or in other words for enhanced curation. On Medium, users can pay for a Medium membership and get easy access to highly ranked writers and their great ideas.
Build your Uber for services app today
On-demand delivery applications are already helping users to make the delivery process smoother. You can enter the on-demand industry too and create delivery app that provides true value to your audience.
If you have any questions regarding how to make delivery applications or want to know the cost to start an app, feel free to get in touch with us. We also suggest taking a look at our portfolio of on-demand delivery solutions.