First of all, you cannot build the second Uber as it will be a complete failure – Uber App is successful and customers will not go with your solution, having the original one. But you can develop an Uber-like app that is not necessarily targeted for taxi clients. It can be any app for the on-demand market.
The main questions are how to choose the right area of operation (domain) for your startup and how to build the solution that satisfies market needs in this area. For the answers, read the below article.
Choosing the Target Audience and Validating Your Business Idea
Before starting to build your Uber-like app, you need first to determine who its main customers and users will be. It is because the on-demand market is big, and continues and will continue to grow bigger. On-demand services are so popular because they eliminate intermediaries – customers get what they need directly from service providers, in a fast and safe manner. In 2020, there are at least 6 (six) industries where on-demand services are key drivers of the growth:
Ecommerce (Online Marketplaces)
Shopping or buying things without leaving the house? Check. You need only a relevant ecommerce or online marketplace app installed on your laptop or phone, and you are ready to buy. Amazon and Alibaba apps do the trick. Having them as successful examples, ecommerce app development has rocketed in recent time due to a high level of forecasted profits.
This industry is certainly the leader of all ratings. Taxi booking, ridesharing, carpooling and car rent, valet parking can all now be asked for and obtained by a couple of clicks on a smartphone.
According to multiple analyses, on-demand transportation market will grow up to USD 340 bln by 2025, and that’s just a great opportunity to bite a nice piece of this pie.
Food Delivery Services
With Covid-19 that has affected virtually all countries and industries of the world and caused billions of people to stay at home in order to not be infected or infect somebody, food delivery services experience a tremendous growth in terms of the number of customers and the level of revenues. Applications like Glovo are extremely popular and provide a great monetization opportunity for their producers.
Statista.com has found that online food delivery service revenues totaled more than USD 100 billion in 2020, and the year is not yet over…
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In 2020, telehealth and telemedicine is of extreme demand due to the Coronavirus and the resulting (self)isolation of people at home. Though people cannot go to clinics due to the risks, they anyway need help from medical professionals, be it simply consultation or more or less detailed medical examination. Telehealth apps help solve this issue by connecting doctors with patients. Some of such apps even allow to conduct the surgeries via the Internet.
The above graph shows how on-demand healthcare and medical services have been growing with time.
Another industry where on-demand services drive growth, variety, and revenues. Customers can book any means of transport to deliver their freights, online, and track the freight along the entire delivery route, making sure the deadlines are met and the customers are happy. Additional benefits for on-demand logistics are provided by IoT, AI, ML, Big Data and other critical modern IT technologies.
Forbes’s research revealed that almost 70% of manufacturing companies trust their transportations to external vendors… And development of an on-demand logistic app will certainly help your startup become known and your investors get paid back.
Software platforms like marketplaces have eased our life a lot. We can use them not only buy groceries, clothes, shoes, car parts or any other merchandise. We can use these solutions to order some special services like home repair or gardening from specialized professionals, such as plumbers, electricians or gardeners. The report published by Technavio shows that the size of the on-demand home service market will exceed 1500 billion US dollars by 2024. These figures are the main cause for a remarkable increase of the number of various mobile applications for on-demand home services.
The above industries are a great choice of potentially successful business ideas for your startup company, as they are fully in trend and show the highest revenues with as low initial budgets as possible.
After you have picked up the industry and elaborated the idea, you need to validate it, i.e. check it for viability and usability. We have recently published a post in our blog – How to Validate Your Startup Business Idea – which explains how exactly you can validate your startup business idea and what you need to have for it.
Building the App
After you have validated your business idea and shaping out the budget for its implementation, you are now free to start building your app. Let’s consider the case with an on-demand transportation app for car delivery.
Car delivery is the service of delivering cars from A points to B points, i.e. between various destinations. For example, you are hurrying to the meeting and have no time to park your car near the office, business center or restaurant. You launch the carpooling app and order the service. A professional freelance driver arrives at your location, takes your car and delivers it to the parking slot, and after you are done with the meeting, delivers your car back to your location. Or if you need to transport your car to another city while you go there by plane. Or if your car is broken and needs to be repaired and you cannot take it to the repair station at a scheduled time because you are on a business trip. A good example of such an app is Parkopoly, which is sort of Uber but for the car delivery industry.
Hence, first of all, it is not a single app. There are two apps – one for those who purchase the service – customers, and one for those who deliver it – drivers. All orders and acceptances/cancellations are executed in the apps. The customer creates a car delivery mission, the driver accepts it and executes, and afterwards is paid for the successful mission. That simple.
Appointing the App Development Vendor
Building these two apps is not a piece of pie, so if you don’t have a fully manned software development unit – and you most likely do not have because you are a startup and have no budget for that – you will need to address an external software development vendor. We wouldn’t tell in this article how and where to look for such firms as there are tons of recommendations on this choice. Just google and you will find at least ten to choose from. Another option is to purchase the dedicated book on IT outsourcing and outstaffing that has all these issues addressed, considered, and analyzed. There are great recommendations in the book about where to look for a software development vendor, how to choose the right one, how to control the project status and progress, and which tools to use to ensure efficient project management.
Cost of the App Development
So, you have found the vendor and you both are ready to start. The critical point is the price now. How much does it cost to develop an Uber-like app? How much do you need to pay your vendor and will this price be fair?
The important fact is that nobody will tell you the exact cost of building Uber from scratch as it is the commercial secret. But the cost of an app depends on its features.
Our recommendation for startups is always “Start not with a fully functional application. Start with an MVP (minimum viable product)”. MVP offers the basic functionality of the app but lacks certain features to be added after MVP testing and validation. If MVP is well received by the public and after a certain period of tests no major bugs or errors pop up, then you can scale it up to a fully functional application and augment it with new features and functions.
In the light of the selected app, its MVP must contain the following functions and features:
This feature is needed both for the customer and the driver apps.
<> Mission creation/Booking (customer app)
All car delivery orders are placed in the form of missions created by customers.
<> Mission acceptance/cancellation (driver app)
After the customer places a car delivery order, it must be either accepted or cancelled by the relevant drivers for the mission to start. This feature is a must for the driver app.
This functionality is also needed for both apps as both drivers and customers must know and see on the map the mission details and destinations.
<> In-app payments
This functionality simplifies the users’ life, enhances their security, and improves their overall app usage experience.
<> Push notifications
Drivers need this feature to learn about new car delivery orders and customers want it to know their cars are delivered to needed locations.
But the cost of the app’s MVP development is not limited to only implementing the above features. It also includes creation of at least a basic backend, i.e. server component, that ensures proper interactions between the driver and the customer apps.
Each feature of the app can cost around 100 hours of developer’s time, with the backend development calculated separately. Therefore, considering the average hourly rates for software development, which we take as equal $50/hour, we can show the following calculation:
As we see from the table, building a car delivery app ecosystem is not very cheap, but it can pay back with much higher revenues. Of course, on condition of the proper validation of your startup idea and choice of an appropriate vendor.
To wrap up our assumptions and considerations, we would recommend not to opt for building any app on your own, be it an Uber-like or Postmates-like app. It is because you, no matter how great you feel your idea is, have no sufficient software development experience. The products are always better if they are made by experienced producers, not by amateurs.
DIGIS can help you either with the whole cycle of building your on-demand service app or can link you with the entire community of software development experts. At the same time, we can perform the audit of other vendor’s cost estimates for you if you need to understand whether the vendor offered you a fair price for building your app. Feel free to talk to our experts to get a high quality, and in most cases, free consultation on any software development matter.