How COVID-19 has Affected the On-Demand Economy


The efforts made to stop the spread of Covid-19 have dismantled the economical equilibrium in most parts of the world. India, one of the largest economies, will face a GDP shrinkage by 3.2% during the 2020-21 period.


In the 21-day nationwide lockdown, the country estimated incurred a loss of 32,000 crores daily. With fewer people on the streets and decreased mobility, all industries are crumbling with lower demand. The fairly new On-demand industry, which relies the most on mobility has been struggling the most. 

What is the on-demand economy?

The on-demand economy is built upon services and products that can be fulfilled quickly, and as in when required. It shares its definition with the Gig Economy and the Sharing Economy.

From receiving freshly made food at your doorstep to hailing a cab minutes after booking it, the services that are “fulfilled on-demand’, refer to this on-demand economy.

The industry has risen unprecedentedly in the past few years and is one of the major disruptors. Onwards of Q2 2014, the economy has shot to fame in funding trends – a 9X jump from Q1 2014.

financial trend

On-demand Economy empowered businesses to expand their reach by partnering with on-demand platforms. Within 5 years of presence, these platforms have completely transformed mobility, food ordering and shopping for the urban population. Even on-demand delivery app development has significantly increased.

The most common examples of On-demand Economy are Zomato (Food Ordering), Uber (mobility), Healthtap (Telemedicine), etc. All of these businesses provide a glance of a futuristic way of doing business. 64% of those engaged in the on-demand service fulfillment anticipate improving their financial situation in the upcoming year.

4 Major On-Demand business models and Impacts

On-demand Food Delivery  

In 2019, the on-demand Food Delivery industry valued at $107.44 billion globally. It’s expected to exhibit a slow growth rate of 3.61% in 2020, due to Covid-19 restrictions on mobility, and food safety concerns faced by the users.

Zomato Case Study

Zomato was one of the very first companies to lay off more than 500 employees as the outbreak took place. The company’s operations took a nosedive as Covid-19 lockdown barred any sort of freshly cooked food delivery. With most restaurants also closed during the lockdown, Zomato had no other option but to take a step back.

Despite all the lockdown, Zomato claimed a $5 million funding from a UK-based Investment Company, which will come handy in reviving the business. This is a sign that the on-demand food economy will find a way to survive after all. 

Key impacts

  • The industry will undergo a moratorium period as public confidence in the safety of food is reinstated.
  • The government restrictions on restaurants will keep the food delivery prospects limited for some time.

On-demand Cab

The app-based on-demand cab services form 40% of the global cab business, which has a CAGR of 9.22% for 2019-24. The industry in India has been reviving slowly and still struggling due to Covid-19 safety SOPs.

Uber Case Study

Uber reduced its Indian direct employee workforce by 33%, laying off some 600 employees due to plummeting demand for cab services. Even after resuming services, drivers are facing issues getting ride safety equipment.

Despite Uber’s constant efforts to provide the same, only a few drivers are able to ensure Covid-19 safe rides without hurting their profit margins.  

Key impacts

  • A dip in valuation for upcoming funding rounds for on-demand cab companies is expected.
  • In the lieu of virus contamination, the users may consider going back to personal vehicles, as confidence in on-demand cabs fluctuates

On-demand Healthcare

The mobile healthcare market is expected to generate $90.49 billion in revenue in 2020, with a CAGR of 33% for 2018-20. Telemedicine, which refers to the delivery of healthcare over the internet, is the major disruptor in the global healthcare industry.

Teladoc Case Study

Teladoc which provides virtual availability of doctors over telecommunication platforms 24X7 made market gains while the healthcare industry itself struggled.

The key factor for Teladoc’s growth is the increasing dependence on virtual platforms for the delivery of healthcare. As social distancing norms solidify in the masses, the public would want to shift towards a remote doctor, rather than visiting a clinic. 

Key impacts

  • On-demand delivery app development for healthcare is experiencing huge growth as new telehealth providers enter the market.
  • Virtual healthcare visits jumped 4345% between March and April 2020, due to social distancing SOPs.


The $4.5 trillion eCommerce industry is experiencing mixed-effects due to Covid-19 as the supply of some items has reduced but essential goods are being readily ordered by consumers. 42% of eCommerce retailers believe there will be a shift in consumer confidence.

Amazon Case Study

Amazon has been facing lower sales volume due to delivery restrictions and overall consumer skepticism for online products. The business has been operating primarily on essential items.

Other market competitors such as Zomato and Swiggy have pivoted to on-demand grocery delivery, in the contest with Amazon. The company also launched the “Local Shops on Amazon” programme which is designed to aid local businesses, hoping to increase sales amid Covid-19 impacts.

Key Impacts

  • After fluctuations, the eCommerce market is expected to grow as remote buying gains popularity over Brick-and-mortar stores.  
  • 18% growth in eCommerce is on the charts, with innovative contact-less delivery methods, and curbside pickup techniques.


The future of on-demand economy is dicey. The segments that require the consumers to physically interact with services will experience slow growth, such as mobility and food ordering. But remotely accessible services such as Telemedicine and eCommerce will continue to show strong growth. 

Overall, the market has created opportunities for new Covid-19 proof ideas to be implemented. Consumers will look for new ways to dodge travelling and visiting Brick-and-mortar sites. New solutions that focus on remote enablement of services have a wide window of growth, as vetted by the rise of on-demand delivery app development.

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