State of the home service aggregators in India — Part II — The Road Ahead
Continued from Part I here— https://medium.com/@raghavkopalle/state-of-the-online-service-aggregators-in-india-part-i-54667a38cc83
The success of Uber inspired startups to Uberify every sector they could lay their hands on. While Uber had a truly on-demand model where the variables in a driver-rider relationship were limited, could be standardized and the fleet was mobile, other Uberified models were not so lucky. Take the on-demand home service aggregators for example.
Homejoy, a hyper funded early mover in this space, eventually shut shop due to multiple reasons, the key ones being platform leakage, lack of stickiness and quality of service. Fast followers like Thumbtack(which is backed by Google Capital) quickly learned from Homejoy’s mistakes and took a more cautious approach to address the same market.
Our homegrown UrbanClap & Housejoy closely replicate Thumbtack’s model, while UrbanClap charges their service providers for every lead, Housejoy takes a cut in every order. Both have their standardized procedures and training for vendors with the necessary quality checks, customer ratings and blacklisting for violations. These measures can curb the issues that plagued the pioneers like Homejoy but the path to profitability is still an evolving game. Riding on discounts and ad blitzkrieg, the UC, HJ duo along with Zimmber, Timesaverz are not leaving any stone unturned to bring new customers on-board. The result? — UC claims 300,000 bookings each month (source — https://goo.gl/NGmbYf) which is still scratching the surface compared to the estimated future market size.
Quest for profitability
If we plot the various services offered by these online aggregators as a function of variables involved vs the profitability, we get a picture of what might be their path ahead. Services like Events & Weddings are highly tailormade and cannot be standardized, similarly Business Services like CA or Legal. These are areas where aggregators best charge per lead and platform leakage is inevitable in these segments. Services like plumbing, electrical, etc., are more trouble as the ticket size is small and variables are high. Most customer complaints are in this space pertaining to use of unbranded spares, poor quality of work, etc., hence these companies would prefer selling leads in this space as well.
Asset light no more?
All the startups which followed the Uber for X had a common thread, they were all asset light models with focus on technology and marketing to connect supply with demand in largely unorganized markets. But being a pure technology player has it’s limitations, at best you end up an evolved directory service, worse your end up with negative valuations in aggressive segments.
Being an asset light, tech focused startup has one big advantage — you get to know the demand and supply picture, geographically, seasonally, etc. This data would help leverage companies like Zimmber(a Quikr group company), UrbanClap & HouseJoy, into profitability and scale.
The sectors of Home Cleaning, Pest Control, Laundry & Beauty Services are ideal for a company like Housejoy or Urbanclap to skill in-house personnel, provide quality services ensuring customer stickiness and thereby profitability. Whatever is the maximum, guaranteed volume of business in these sectors can be delivered by their respective in-house teams, whatever is the variable, fluctuating demand, the risk can be passed on to vendors. This would be the common strategy followed by Uber, Swiggy or HouseJoy. It would be interesting to see how the likes of Helpr, HiCare, McLean would counter in the Home Cleaning & Pest Control segments.
Now that we could analyse the path ahead for these startups, in the next part, we can analyze why and how this matters to India — with our demographic dividend & humongous employment needs.
I leave you with this tweet from our Skill Development & Entrepreneurship minister, Mr Rajiv Pratap Rudy.
And why does it matter for Amazon & Google to bet on the right horses in this race? Share your thoughts below.
