The ‘handyman’ in your mobile: On Demand Home Services
After groceries, food, laundry it’s time for on demand home services. Now here is a product for which I can clearly see value. If I have a leaking faucet or a broken piece of furniture I really have no idea how to get a plumber or carpenter. Of course, I could ask around, check the yellow pages and get a reference, but then it’s a headache… following up with them, getting them to come down at a convenient time, actually complete the repairs etc. Workhorse, Ok Sir,Goodservice, Timesaverz all have a wide range of services, not just repairs. The services range from drivers, maids, baby sitters, nurses, lock smiths, AC repairs, electricians, etc. Having stayed in the same location for close to 10 years now, I still don’t know how to find some of these services in my locality. Maybe I am pampered ! Nevertheless..
The market is estimated to be huge and there is room for a lot of players. Today a lot of these services are ordered based on references from friends or people we know. The dynamics here are slightly different from other on demand services. From a user perspective, I would gladly use these services, but the prime concern would be trust. I wouldn’t want a complete stranger coming to my house. I wouldn’t want a low or unskilled contractor coming to my house and instead of fixing things, make it worse. So here is actually a marketplace model, where a user will pay a premium for quality and not just go for discounts. I wouldn’t trust just anybody to baby sit my child nor would I be comfortable letting a stranger in my house; so what if it is just to do the dishes. So to win in this space what is needed in my opinion is screened, qualified, background checked service providers. Which means you may have to deviate from a pure marketplace model. Some sort of screening would be required. Do you have these service providers as employees or keep them as contractors but have stringent screening criteria? Maintaining quality with an independent contractor is more difficult than with an employee. With the recent emphasis from the Indian government on skill building and given the huge population, I don’t think getting providers is going to be a challenge.
The biggest risk for these plays though is dis-inter-mediation. Some of these services are recurring. So what is to stop the service provider and the customer to directly contact each other the next time they need the service (and thus save on the platform fees. Which by the way, if you keep too low, you don’t make money, too high and both sides of the market have a higher incentive to avoid the platform fees). If the service provider is good and provides quality service, the customer will have no qualms about directly contacting him / her the next time around instead of initiating a fresh search on the site. The problem that the platform will then face is high provider churn and lower repeat transactions (as the service providers get direct customers). What this might also result in is a lemons problem, where only either new or inexperienced or not so great providers would register for tasks on the site, in effect jeopardizing the very reason why a customer would actually come to your site (quality service). Not to mention other allied costs in terms of screening, warranties etc.
So while, providing insurance on services (should the provider break something) or having a dispute resolution mechanism or money back guarantees, free replacement services etc. would all be useful to entice first use and build trust, the winner will have to solve for maintaining the high quality service while preventing dis-inter-mediation and still make money on it. Not to forget that users still have the yellow pages and classifieds. Angieslist has chosen to charge a membership fee with specific benefits. Reviews are accessible to members, plus discounts for highly rated service providers, call center support are somethings you get if you become a member. While I don’t know if this is the best way to go, it seems to have found a model that works. Homejoy on the other hand missed the bus. It is still just the start for these services in India… a lot needs to be figured out, but the basis for a user to adopt these services in addition to convenience would be quality and trust.