Giving a tech massage: This start-up helps salons take the online plunge

Given the changing times and preferences, salons and spas will look to leverage technology to enhance consumer experience
The ‘Dilli’ salon in New Delhi’s Pitampura area is said to be the oldest in the region. Its owner Mohammad Abdullah, a third-generation businessman, claims it was “not just the oldest but also the most popular until 6-7 years back”.

The shop was rebranded a couple of years ago, with the latest accessories and high-end furniture. However, Abdullah says, he continues losing customers. The reason, he states, is his inability to adopt technology. Like in every other business, technology has had a transformation effect on the salon and spa industry, too. Not just in developed nations, but even in India, salons are increasingly investing in technology.

There are a slew of start-ups providing the technology boost to salons and spas through SaaS (software as a service) offerings. One such firm, Zenoti, recently raised $50 million in a Series C funding, led by New York-based Tiger Global Management. The start-up, formerly known as ManageMySpa, has raised $71 million so far.

(From top left) Zenoti CEO Sudheer Koneru and co-founders Dheeraj Koneru, Saritha Katikaneni and Anand Arvind
How it works

The company primarily provides cloud-based back-end services to run salons and spas. It leases artificial intelligence (AI) software to help them take bookings online, manage appointments, increase customer engagement, and enhance online visibility. The software also provides automated check-in and payment services.

“The industry is still running on antiquated technology, which limits them from meeting consumer needs. Zenoti helps them become technology-forward,” says co-founder and Chief Executive Sudheer Koneru.

Koneru founded the company in 2010 along with Dheeraj Koneru, Anand Arvind and Saritha Katikaneni.

Opportunity

Given the changing times and preferences, salons and spas will look to leverage technology to enhance consumer experience. This spells a great opportunity for the likes of Zenoti, coupled with the fact that in India, most salons are yet to be digitised. Zenoti estimates the global beauty software market at $10 billion.

“In India there are no other material players and Zenoti owns the market for the medium- to large-sized businesses,” says the CEO.

Zenoti aims to become a unicorn and is working to cross the $150-million revenue mark. The industry has been slow in leveraging technology, says Koneru, adding they have “had to educate clients on what the new paradigm for their businesses can be”.  

The CEO says the firm is taking a strategic approach to capture the market. The key aspect, according to him, will be “hiring amazing talent in multiple regions as we scale our operations — particularly in Seattle, London, Brisbane and Hyderabad”.

Business model

The Seattle- and Hyderabad-based firm follows a subscription-based model. The monthly charges, says Koneru, vary from customer to customer, based on the number of outlets they have and the modules they subscribe to.

The company is focused on large- and medium-sized businesses, with the biggest share of its revenue coming from the US. The start-up claims its revenue has grown 100 per cent year-on-year in the last two years. Koneru declined to disclose exact figures but said the company is on course to doubling revenues this year as well. “At this point, profitability is not our focus. We expect to break even first, over the next 12-18 months,” he says.

Zenoti competes with over 20 established vendors, including MindBody, Booker and SimpleSpa. It counts Kaya, Lakme and Enrich salons among its customers in India.
EXPERT TAKE

 
‘Zenoti serves end-to-end needs of a spa’

Aneesh Reddy, Co-founder and CEO, Capillary Technologies
Sudheer and the team at Zenoti have done a great job in building a global best in class product. They have picked a niche vertical in spa/salons and build a product which is perfect for the vertical and serves the end-to-end technology needs of a spa or salon.

 

This focus has meant that they are able to get a premium in terms of pricing even compared to their other competitors globally – a thing very few Indian product companies have been able to do – win on sheer product and not just on price.

 

Zenoti is addressing a large market – spas and salons globally spend over $5 billion every year on technology. In India, they have won a large share of the mid-to-large spa or salon chains. With a great product, their success is dependent on how will they scale and execute in international markets. I believe they have a good shot at building a world-beating company and product in their vertical.   

 


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