Let’s Learn From Some on-Demand Marketplace Failures, Biggest Example ‘Homejoy’
After the failure of Homejoy, on demand marketplace and economy has been challenged by the consumers, investors as well as media. There are several questions about the fundamentals of on demand marketplace and its future. Homejoy faced the failure on several platforms including workplace, contractors and clients. This is the biggest example of on demand marketplace failure in past few years. Trends were making on demand marketplace and economy more attractive for the consumers and investors. Huge investments are being made in this sector. UBER got an investment of $8 billion just because of the on demand economy and modern business models. Businessmen and companies interested to move with this new trend were looking for the success stories as well as failures. Homejoy appeared as a reasonable phenomenon in this matter.
Why Homejoy failed?
Homejoy used a clear and attractive mission statement. Efforts made by this company are not objectionable but what happened with it. According to the professionals, homejoy failed because of the “Worker misclassification lawsuits.” No doubt, it sounds strange but it happened and it caused severe financial losses to the company. Workers always prefer to get same wages, benefits and incentives as other companies offering to their employees. Comparisons are always made in this matter. This is why most of the companies tried to keep HR policies hidden from their workers. This is a big mistake a company makes because it forces the workers to contact with Court. This case has questioned the future of on demand marketplace.
Enormous and unique market:
Home service is among the most profitable businesses nowadays. This industry is growing and there is no chance of downfall in it. Most of the companies using OD TAP Solutions to continue with on demand economy are now feeling fear after the failure of Homejoy. The real estate and home service industry is making $400 to $800 billion and it is a main focus on investors and capitalists in USA, UK and other developed countries.
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Homejoy’s platform or structure:
Nowadays, on demand economic approaches are commonly used by the contractors and home service companies. Homejoy acted as a platform where contractors or labors can find work opportunities. Homejoy also acted as a Commission Taker because it was taking 25 % of the total transactions. This is why inexperienced and untrained workers started to use this platform and they reduced the quality of service. The homeowners always want to have good quality work even if it is expensive but Homejoy failed to maintain quality work.
Homejoy employee models:
Successful OD TAP business models recommend hiring of professionals with experience and knowledge. If a company hires fresh graduates or technical persons then training is used as an option. Homejoy made a business model for employees without training. People working with this platform were not required to take training in order to improve the work quality. Homejoy failed to meet with modern on demand challenges due to this reason.
Leaks and churns:
This is another reason of Homejoy failure. Companies, organizations and capitalists always prefer to maintain the privacy of their activities. Financial ups and downs are also kept secret in order to avoid disturbance in the markets. Homejoy faced regular leaks about the financial statements, inexperienced workers and misclassification lawsuits. These three factors caused severe damage to the company’s profile and reputation. Venture Capitalists and Investors are now very important for the success of on demand economies. Companies utilizing on demand economy and platform struggle to get investments. They make efforts, show financial stability and make successful business models in order to get attention. Homejoy was unlucky to utilize these things positively.
Competition is increasing so it is very important to maintain the quality of product, service or brand. On demand platforms and economies are required to maintain the business models. It would be helpful to use OD TAP on demand platforms in order to face the current challenges.