We have noticed people across different age groups have booked services with us both on mobile and desktop, though mobile bookings have been more as geo-tagging is more accurate in that. Our target audiences are more of working singles and couples; they prefer to book services on the go.
What is the kind of opportunity this highly unorganised market presents? Besides speed of delivery what are the key ingredients for the success of an on-demand home service?
We have already broken-even across categories in Bengaluru, Delhi and Mumbai. Our best city in terms of revenue is Bengaluru, closely followed by Delhi and Mumbai. Laundry is the most high-frequency category in our portfolio. We focus on unit economics and our margins get better with improving demand and operation cost optimisation. Besides speed of delivery, the key ingredients for the success of on-demand home service will be reaching out to focused markets, right messaging for categories, digital marketing, on-ground tie-ups and top-down branding.
The entry-level barrier for this market is not high so it appears easy when you start but as time progresses you might find it difficult to attract new customers. A handful of players in your segment have shut shop. But you say you have broken even in some markets, in some categories. What has Housejoy done right so far?
Various reports show home service segment is growing rapidly in India despite the downturn. And it is expected to sustain growth for the next few years. Venture capital and private equity communities are showing keen interest in this segment. While a few players are finding it difficult to sustain, Housejoy has managed to attract new customers with its application catering to regional languages like Bengali, Kannada, Telugu and Odia. Initiatives like Christmas trees installation also received a huge response.
Our acquisition strategy has also helped us grow. We acquired MyWash, an on-demand dry cleaning and laundry company, in February 2016. Soon after this, we acquired Orobind, an at-home personal fitness tech start-up. We are focusing heavily on technology. With our acquisition of MyWash we will have a deeper understanding of the industry and thus provide better quality service to consumers and scale up that line of business. The geo-tapping technology upgrade is a response to Housejoy’s increasing customer base and vision to provide the most responsive and reliable service to them. Besides this we receive a substantial number from desktop users also. Going forward, Housejoy will focus on catering to customers on the mobile.
Since margins in the category are thin, what will it take for players to sustain themselves in the long run and grow?
On an average, a woman spends anywhere between Rs 2,000 and Rs 3,000 on a monthly basis on basic beauty services. According to industry estimates, the market size for beauty services is around $4.8 billion and it’s growing in India. We started with plumbing, electrical and carpentry services and soon realised the need for high-frequency services as well. That is when we forayed into beauty, which by itself is a billion dollar-plus category. Beauty at home was an alien concept in India before we introduced it. Now other players have picked that up. We receive about 400-500 orders a day. We have 500 service partners enrolled on a monthly payroll with us across the country.
Break-even is possible as the average order value increases. At MyWash, an average order value (AOV) was Rs 360 and we are trying to better that at Housejoy laundry. I firmly believe as AOV increases break-even is definitely possible. Housejoy is on path to break-even in major cities this year.