What are the advantages of getting everything in-⁠⁠⁠house?

However, even at its current scale, UrbanClap has achieved positive unit economics. This is due to it offering a wide-ranging basket of services, so high-frequency categories make up for low-frequency ones. While people may need a plumber just once every few months, beauty services, for example, are used far more frequently. What further helps is the volume and margins that the company makes on every order.

Here’s how UrbanClap sees things. There are 15 million households in the country that can afford UrbanClap’s services. This should grow to 25 million households over the next few years. Right now, Khaitan pegs their average annual spend on home services at Rs 30,000 ($426.89). As more people move online, this number will increase.

Each of these households needs about 20 beauty services and 10 home services in a year. It’s a big enough market. As of now, the overall services market volume stands at 500 million transactions. With just 5 million currently happening through UrbanClap, the company believes there is a massive opportunity at hand and it is just getting started.

The beauty of on-demand services

To realize this opportunity, UrbanClap is focussing on three core areas—beauty, home repair, and maintenance and large home projects. Of these, beauty is the biggest category, contributing more than 25% of UrbanClap’s overall revenue. Each month, some 150,000 customers are serviced by the platform’s 4,000 beauticians.

Interestingly, while the average ticket size is currently over Rs 1,000 ($14.23), the startup is working to bring this number down to increase affordability and access.

Already, says Khaitan, there is enough anecdotal evidence that UrbanClap and services like it have disrupted the beauty services space, giving offline players a run for their money. Some offline chains such as VLCC—one of the largest offline salon chains in the country—are even moving online. VLCC did this through its acquisition of Vanity Cube, an at-home beauty services brand.

However, while he admits that UrbanClap has pioneered the affordable at-home beauty offering, Deepanshu Khurana, business head at VLCC’s Vanity Cube, believes traditional businesses like VLCC still have the edge in the space.

“Players like us have a distinct advantage in terms of getting everything in-house—from beauticians and products to our customer database. Beauty is our domain expertise”, says Khurana. Additionally, as more offline salons begin to move online, UrbanClap’s dominance in its best performing segment will come increasingly under threat.

Maintaining control

Khaitan says that all three core categories—beauty, home repair, and large home projects—are growing 3-4X each year for UrbanClap, but the approach now is to go full-stack. Essentially, working directly with professionals to control the entire chain and bringing down the price further. In cleaning and pest control, for example, Urbanclap earlier worked with companies. Now, it has partnered with individuals, effectively lowering prices. It is also ramping up the personal grooming category on the platform.

The home services startup has learned to shed dead weight. It is quick to exit categories that didn’t show initial signs of success. These include laundry and tiffin services.

But despite the deft control with which the company has been directed and developed, it has an Achilles’ heel. One that could jeopardize everything that the company has built over its lifespan. Rakesh Kalra, the founder of tutoring services company UrbanPro, points this out.

The Achilles’ heel, he feels, is the multiple-touch models in play in categories such as house painting or even tutoring, where it competes directly with UrbanPro.

“In the single-touch services, the person comes and offers a service, and the job is done. In the multiple touch categories, a direct relationship tends to form since interactions happen over several days and weeks. There’s some leakage that happens there as sometimes the professional chooses to skip the platform and come directly,” says Kalra.


Leave a Reply

Your email address will not be published. Required fields are marked *