The Demand and The Idea
With the home services market slowly invading the on-demand space, many entrepreneurs now turn their heads into various subsections: home repair, interior revamp, walking your dog and taking care of your babies.
Many of these home services are aimed at twenty-something professionals who have an active working life and cannot concentrate on home-making as an activity – laziness may play a part, of course. However, the key commodity this intends to save is time – time that these professionals would rather spend elsewhere whenever they do get a break.
Laundry is yet another one of these chores that have to be undertaken, regardless of how busy you are. Can’t have dirty laundry piling up, much like you cannot have your house not look spic and span. The laundry and dry cleaning sector has seen significant revolutions in this regard, from publicly operated machines to the latest range of on-demand services that you can ring for.
Laundry owners have woken up to the fact that a highly personalized home service is definitely the way to go. On-demand laundry mollycoddles the consumer, arranging for everything from the pick-up, to highly specialized cleaning instructions and then timely delivery.
The on-demand services here seek to eliminate the hassles of standing in lines for your load to get washed, or the pains of selectively washing clothes in case some of them happen to bleed colour, or even physically going to the dry-cleaners to pick up and drop their clothes. Everything now can be done by a few deft motions of your app, and why not?
According to an IBISWorld report, the laundry and dry cleaning sector is also facing stagnation in the US. The revenue per annum may be a staggering $9 billion, but even that is not subject to aggressive growth. FranchiseHelp paints a slightly different picture, portraying the revenue to be as high as $11 billion in 2015 – with the Bureau of Labour Statistics showcasing a growth of 6% in the coming year or two. While the statistics may be conflicting, there is not overarching, dominant player in the market – thus, the industry looks ripe for disruption.
The Players and Their Model
Silicon Valley is very eager to get its tenterhooks into almost every industry, and the laundry sector is no exception to its technologically savvy entrepreneurs.
As with all on-demand concerns, these companies do not own any assets – they merely connect dry-cleaning and laundry services to their customer base via a smartphone app that they design. There are a few differences, though, in terms of models that may work with this sector.
Firstly, there is the on-site model, which involves asset ownership. This also includes on-boarding a possessing a well-trained staff that can cater to specialized cleaning requests, so capital invested is considerably more than the other model. The app handles other scheduling and automation concerns – registering customers, scheduling pickups and drops, phone notifications for the customers, bill payments via online methods and the logistics of delivery. Tech platforms have evolved significantly to cater to these needs over time, and can be a boon when it comes to making things efficient. The mobile workforce and its tracking has enabled work-based delivery like no other.
The other model is the store model, which also involves asset ownership. Here, logistics is eliminated for the consumers getting a quality experience whilst at the store. However, expansion is key here as outlets need to be conveniently accessible, or you just cannot beat the at-home model in terms of what is coveted.
Lastly, the marketplace model, or the quintessential on-demand model, where your app is simply the platform connecting buyers and sellers. As the owner, you get a cut out of every transaction made and can indulge in database creation, in addition to creating an analytics oriented database that can help your suppliers optimize their business further.
Washio and Lessons
Washio was a leading contender for this market up until this August (the 30th, in fact) – on that day, it had to shut down with a message on the lines of ‘it sometimes works, it sometimes doesn’t’. Washio raised a total of $16.82 million in funding from investors like Canaan Partners, AME Venture Partners, and even had celebrity funding from actor Ashton Kutcher.
Washio also had quite a cutting edge addition called WashioNow that specialized in 24-hour oriented, time-bound pickups and deliveries. They also expanded to Boston, Los Angeles, Chicago, San Francisco, Oakland, New York, and Washington D.C. – a steady case of scaling up with hyperlocal beginnings. The company’s charges were pretty lucrative – a $5.99 delivery fee and $2.15 per pound of clothes, plus fees for additional services.
So it does partly come as a surprise, but then again, perhaps not.
The laundry sector, like all on-demand sectors, is subject to the new economy’s volatile laws. While asset ownership and other things may not be strictly necessary, continuous innovation is. This sector needs companies to adapt very rapidly, especially scaling appropriately when they experience exponential growth.
Moreover, many companies are shutting down due to unjust employee treatment, which is really a call to entrepreneurs to start taking care of their employees better.
So while Washio grew fast, perhaps it wasn’t fast enough – 7 cities in three years. By on-demand standards, expansion needs to be faster.
The next big factor is competition. Washio wasn’t obviously the only player on the market. Flycleaners, Cleanly and Rinse are just a few names in this race, and Washio was besieged on all sides because they could not differentiate from all of these other services. Sure, they did send cookies with their deliveries and later, as a healthy alternative they began sending flax crostini’s – but that’s just more gimmicky than it is serious, in terms of having the edge over other players.
The only area where Washio used differentiation was between their employees who handled clothes, and their front runner deliverymen who they termed ‘ninjas’. Smart, agile, young and handsome, these people got more perks than those who did all the dirty work behind the scenes, and that is definitely not the right kind of work culture to endorse. All employees are important – if pending lawsuits against all sorts of on-demand enterprises are any indication, it would be stupid not to learn from these mistakes.
Lastly, understanding the industry and its needs is key. While WashioNow is definitely a lucrative idea, does it really need to be implemented at any cost in the laundry sector? Perhaps not. Speed and instantaneous gratification may apply to food deliveries and other such, but fronting costs for the same when doling out laundry loads may not be the best idea.
It stands to reason that this industry is slightly different – owning assets may actually be more beneficial than simply being a marketplace, since delivery promises means outsourcing a lot of the labour, thereby increasing costs and thinning profit margins. Washio contracted out washing, sourcing and drying, which are quite integral to the whole process, paying up for these services when it may be counterproductive.
Thus, when entrepreneurs do decide to venture into this field, do keep an eye out. The industry is volatile and ripe for the picking, but weighing your odds before going into the fray may just save you from a similar fate.