Uber for Laundry: Business Models to Start an On Demand Laundry Business

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The widespread success of Uber – the on demand cab company, has motivated entrepreneurs in different industry verticals to replicate Uber’s business model and enter the on demand space. The laundry and dry cleaning sector is one such industry which has radically mixed well with the on demand and Uber for X trends. Let’s put some light on how the ‘Uber for Laundry’ trend evolved and what are the various possible business models in the on demand laundry sector.

With less time and more work to do, people often need simpler ways for their daily tasks. Laundry is one such task that has seen a huge change in recent years. From washing clothes at home; to public coin operated washing machines, and from going to a dry cleaner; to simply tapping a smartphone, it has become easier than ever before for people to get their clothes ready when they need. The efficient full cycle approach being followed by on demand laundry enterprises (from booking to pick-up, cleaning as per instructions, and delivering at scheduled time) has changed the consumer behaviour in such a way that people won’t settle for anything less than this VIP treatment. If you own a laundry, it is time to tap this technology and reinvent your business model in terms of the on demand sector. Companies like Washio, Cleanly, Rinse and others have already realised the immense potential in this technology and are thus ready for the future. Interested to know more about Uber for laundry? Read On!

Earlier, people used to visit laundries having coin operated machines where they could sit, relax, read magazines and even have some snacks to munch on while their clothes were being washed. No doubt, such laundries provided excellent value to customers and did a great business. But people had to spend time, and quite often they had to stand in a queue waiting for their turn. Even if someone preferred a dry cleaner over laundry machines, then also they had to take out time to visit the store in order to first drop and then pick up their clothes. All these problems seems to have vanished with the arrival of on-demand startups in this space which have disrupted the laundry industry.

Entrepreneurs have successfully created and launched mobile apps by which a user can request the pick up of dirty clothes by providing his location along with a suitable time and get them delivered to his doorstep after they are washed. The ease of getting one’s clothes washed with the help of tapping a button on a smartphone has caught the fancy of people in a huge way. Often called as “Uber for Laundry”, the on demand economy has integrated so well with this industry that traditional laundry set ups are almost on the verge of being extinct. Let’s take you through the value propositions being offered by startups in the on-demand laundry industry and how successful they have been. But before that, here are few facts that powered this change.

Trends that changed the traditional laundry industry into on demand sector:

  • Consumer Behaviour1420824518053

Consumers are being attracted to businesses that provide a full cycle approach. Easy booking, pick-up and delivery at doorstep, the option to choose a detergent for washing their clothes etc. Moreover, being updated about every step in the procedure is also something that consumers want. The transparent approach being provided by on-demand laundry businesses is not just appreciable but can also be considered as the turning point that changed consumer behaviour.

  • Crowdsourced Supply

In order to scale a laundry business, entrepreneurs in laundry industry had to hire more people, which was nothing less than a risk. A risk as in you’d have to pay more salaries without being sure about the business you’ll get. The second trend (after consumer behaviour) which has changed the model of today’s laundry industry is ‘crowdsourced supply’. Instead of hiring people on full time basis, you can simply hire them as freelancers that too for a specific time according to their availability.

If we talk about the workforce in USA alone, 38% of people work as freelancers and this number is rising month over month. Integrating crowdsourced supply into your laundry business will not only be beneficial to you as you’ll have to pay much less compared to permanent employees, but it will even be beneficial to freelancers as they’ll happily work for you in their free time.

  • Less Ownership Model

The third trend which is impacting laundry business owners to make a shift towards on-demand business model or the ‘Uber for X’ model is ‘less ownership model’. The term might seem confusing but let’s understand it with an example. Suppose you own a laundry at one part in a city. In order to scale your business, you might want to add another watershed area in the other part of the city from where you could serve more people. But in order to do so, the first step would be to own or rent a space, build infrastructure and hire a team. This would require huge capital investment, infrastructure costs and lot more.

Investing on physical infrastructure is a thing of the past. Just imagine how companies like Washio are serving a huge customer base without even having a single watershed area. Less ownership model definitely puts you in a win-win situation.

Laundry Industry at a glance:

laundry-home-pageAccording to available statistics of year 2014-15, thirty thousand companies in the laundry and dry cleaning business made over 10 billion dollars in annual revenue. These companies served about 30 million people. If we talk about these 30,000 companies, stats show that 70% of these were retail laundry and dry cleaning operations while 30% were coin-operated laundry locations.

Without doubt, the laundry industry is a huge one and has got real growth potential. On demand ‘Uber for Laundry’ startups are disrupting this industry by hacking the growth. These on demand laundry companies are increasing their customer base not by steps but by leaps. The fact that so many investments have been made in the on demand laundry space is also an indication about the bright future of these companies.  

Here’s a list of few companies in the on demand laundry space that have attracted funding and are doing good.

  • Cleanly = Founded in year 2013. Received seed funding of $2.3 Million.
  • Washio = Founded in year 2013 and has received a funding of $16.8 Million.
  • Edaixi = Founded in 1990. They changed their business model to on-demand. Got $123.2 Million.
  • Laundrapp = Founded in 2014 and received $5.9 Million funding till date.
  • Rinse = Founded in 2013 and received $3.5 Million.   

There are many more in the list which are growing rapidly. The companies listed above operate in different geographical location and have their own unique selling points with different business models. Let us take you through the 3 possible business models in the on demand laundry sector or as they say the ‘Uber for Laundry’ sector.

On Demand Laundry / Uber for Laundry: Possible Business Models

  • On Demand – On Siteimage-iphone-hand

If you own a Laundry / Dry Cleaning Service Business and have a team of specially trained staff which can help you create an awesome experience for your customers, then on demand on site model can work best for you.

Specific technology solutions can help your customers:

  • Schedule a pick-up according to their time.
  • Specify laundry preferences along with the request (if any).
  • Get prompt notifications on their phone when the clothes have been cleaned.
  • Pay your bills easily – online, COD or other options chosen by you.
  • Receive clothes delivery at their specified time.

Besides all this, you get to create an incredible quality and experience for your customers with speedy turnaround and control over your vetted cleaners. All activity of your mobile workforce can be tracked in real time.

  • On Demand – In Store

The on demand in store model is best suited for entrepreneurs who want to deliver a customer friendly environment by enabling them to drop off their clothes at laundromats located at specified areas in the city. This model does not require a dedicated staff for pick up. Instead it is handled by kiosks where users can add details of the clothes being dropped.

This model can help your customers:

  • Drop off their dirty clothes at a laundromat.
  • Add details for each cloth and know the prices.
  • Add specific delivery times to receive clothes.
  • Make transactions from the app.
  • Marketplace (Aggregation Model)

Another business model possible in the on-demand laundry space is the aggregated model where an app acts as a marketplace. This business model can be adopted by anyone, irrespective of owning a laundry. Over here, information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. All services are delivered and fulfilled by the participating laundry providers. In this model, entrepreneur can take a cut out of every transaction happening on the platform. This model gives you a huge database as all users are primarily your customers.

This model helps users:

  • Choose a laundry store based on ratings and reviews.
  • Give a rating and review to a laundry after services have been provided.
  • Filter laundries based on prices, ratings, location, etc.
  • Make easy transaction on the platform.

The fact that everyone wants to wear clean clothes not just makes the laundry industry an evergreen one but also highly scalable. Still dreaming? Get Started Now!

Want to get the business model of your On Demand Idea right?
Download the free eBook ‘On Demand Economy Business Model 101’ now!

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7 factors that will make your Uber for X startup a success

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Uber for X is attempting to disrupt industry value chains across many verticals. Both enterprises and entrepreneurs involved are vying to create successful platforms. But not all platforms created on the Uber for X model are successful. Here are 7 critical factors which can govern the road to success for your Uber startup.

1. Right Problem Statement

Everything starts with a WHY. The golden rule for any startup is that they should be solving an unmet need for customers.

When we talk about Uber for X startups in particular, they essentially are dealing with multi-sided customer segments with buyers and suppliers being the 2 core segments.  So for these Uber startups, the problem that you are trying to solve should echo with both of the groups.

There have already been some failures in the OnDemand space that I know of having failed for trying to solve a self prescribed problem –

Read Dinnr (On-Demand Ingredient delivery service startup) founder talking about the reasons behind the startup’s failure: Seven lessons I learned from the failure of my first startup, Dinnr

2. Unit Economics

At the end of the day even if you are backed by VC War chests you need to reach a point wherein unit economics start making sense. What VC’s are betting on is the platform attaining the scale/critical mass beyond which the unit economics starts making sense.

Although it’s difficult to accurately predict the unit economics to begin with, but a rough analysis of where the cut from every transaction is going to go before hitting the critical mass and after hitting the critical mass helps to decide the viability of the model.

Read Prim’s story – On-Demand Laundry startup- of Unit Economics gone wrong: Prim: Anatomy of a folded startup

3. Transaction frequency

Uber’s success can be partly attributed to repetitive high margin purchases. According to reports, a large number of Uber users spend more than $100 every month on the service.

There are some services which translate naturally to this metric. There are others which are used sparingly. Beauty of On-Demand platforms is convenience which leads to high retention rates.

Read Cherry’s story – On-Demand Car Wash-  of how low transaction volumes led to difficulty in scaling up and folding: Iterations: Lessons We Can Draw From Cherry

4. Reaching the Critical Mass

As is the case with multi-sided platforms, reaching the critical mass is the first milestone that all entrepreneurs are working towards.

What does critical mass imply for On-Demand startups?

Critical Mass leads to ensuring reliability (customer is not denied the service/product) and efficiency (service providers/delivery personnel are engaged above a certain threshold). Uber is built from the ground up on these principles.

For more details on Maths behind Uber and Uber startups – Read this analysis: 4 Key Elements that will impact your Uber-like Business Model

5. Right Design Choices in the Business Model

Any business model, either Uber for X or some other, needs a unique business model design to make itself different from others. Make sure that you choose the right model while defining your business.

Scheduling vs Instant

Scheduled and Instant both are permissible models and one is more suited viz. a viz. the other depending on the vertical you are operating in, area of operation, funds, etc. Instant puts more pressure on the supply side infrastructure and its easier to start with only scheduled if you are bootstrapping a business.

Aggregated vs Integrated Supply

Freelancers help in scaling the platform fast while the contracted supply helps in keeping the reliability of the supply side high. I have seen many platforms start with contracted supply, set the standards for the initial demand in the evolutionary phase and slowly start adding freelancers. Once you reach the critical mass the reliability automatically increases as you always have a sizable amount of available supply that is not engaged at a certain instant.

For detailed analysis on critical design choices for On Demand startups, go through this free ebook: Business Model Uber for X 101

6. Total Addressable Market size

A significant TAM is essential to make it worth your while. It’s important to differentiate between Total initial target market and TAM. Ideal scenario is starting off with a smaller initial target market and expanding to other use cases.

7. Domain Knowledge

It can be difficult to succeed without any domain knowledge since most of the On-Demand startups demand heavy-lifting on the operations side. Without the right knowledge, it is quite possible that you might not be able to understand your audience and ask the right questions.

It is furthermore important to look into the Cost to develop and app like UberHaving the right idea and the right resources can surely take you ahead.

Feel free to Get in touch with us for a sound technical advise in regard to your on-demand startup.


Want to get the business model of your On Demand Idea right?
Download the free eBook ‘On Demand Economy Business Model 101’ now!

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