New-age start-ups are cleaning up the laundry market

Who truly enjoys serenading the washing machine? It’s exhausting and time consuming, and so whenever we can, we parcel it off to the neighbourhood laundry with a prayer for that new white shirt. Often, heaven has better things to do than whisper caution over the washerman’s shoulder and so our laundry returns, shrunk, stretched, and maybe a day late with a smear or two. 

What if all the negotiating and prayers and waiting could be wished away with one click? Now, with laundry start-ups, you can. All you have to do is log on to their website, or an app, choose pick-up and delivery timings (from two hours to a few days) and select the services you need (wash and fold or iron and dry clean). It’s tailor-made for a generation that likes to ‘add to cart’ rather than push it. 

But, can you really trust a faceless website with your clothes? Hmmm. So, the start-ups allow you to personally drop off and collect from their stores. Here a plush reception area welcomes you, with its glass partition that allows you to see the backend process of washing, drying and ironing. For all this, the price is not too exorbitant either, an average of Rs.90/kilo against Rs.50-60 charged by the local laundry. 

So, who is cleaning up the laundry market? Meet UClean, Pick My Laundry, LaundroKart and Wassup — a few of the start-ups. Each has a different business model, but the common goal is to organise the highly unorganised segment in India. “One of our customers told us ‘you are in the business of saving time, not washing clothes’. That was really memorable,” quips Balachandar R, founder, Wassup. The client base of these start-ups is varied, from bachelors and students to working couples and homemakers, across a wide age group of 18-60. They see demand from metros and a few Tier-II cities such as Ranchi and Guwahati.

The spin 

Balachandar is now part of an industry that’s worth over $50 billion in India, but most of it is unorganised. And that, of course, comes with its own set of problems. First, the quality of service is, many a times, questionable. “Every person, at one point, would have had a fight with their dhobiwala on a stain introduced from the coal iron they use, or formal trousers creased at the wrong place,” says Sandhya Nambiar, founder of Chennai-based Isthiri Petti.

Second, you never know where your clothes go or what they have seen, during the wash. Arunabh Sinha, founder, UClean, states that a dhobi usually does not have the infrastructure to wash a large volume of clothes. “There is zero visibility about where and how they wash them,” he says. In few cities it goes to the dhobi ghat and in a few others to the nearest water body, which could be a foaming lake. 

When you need something dry cleaned, it’s usually an expensive article of clothing — a fancy suit or curtains and rugs. “The smaller dry cleaners send them to a large central unit that uses white petrol and rudimentary, outdated equipment,” says Esther Lennaerts, founder & executive director, Pressto India, one of the earliest entrants in the premium laundry segment. On the contrary, Pressto trains its new staff for at least 12 weeks and organises refresher courses annually. “At our boutique stores, a well-trained team under the leadership of a store manager is responsible for the daily operations. They adhere strictly to detailed manuals and standard operating procedures,” says Lennaerts.

Clearly, the market was awash with problems, thus ripe for disruption. “There is no structure or a one-stop solution in this market yet. This is where the expertise of new age laundry start-ups comes into play,” says Himanshu Kumar, founder of the laundry aggregator portal, Laundrette. The new age launderers differentiate themselves with high tech equipment, internationally trusted techniques and high-quality chemicals and detergents. After the process, the clothes also undergo thorough quality checks and are packaged in biodegradable, easy-to-store bags for delivery. 

At Pick My Laundry, Bhupendra Beniwal is proud of his barcoding technology. A staffer collects the clothes, weighs it in front of the customer and feeds washing instructions into the app. Then at the store he tags each piece of clothing with a washable bar code, which carries details of the client and their instructions. Beniwal is also working on providing lockers in residential societies. So, even if the customer is not at home, staffers can pick up the clothes.

At your convenience

It won’t come cheap, the lockers and the staff of runners, but Beniwal runs an franchising model and so can afford ambitious plans that needs high capex. Start-ups in this space adopt various other models such as owner operated, partnerships and aggregator. 

UClean, like Pick My Laundry, is a franchising model. Sinha, who founded the start-up in 2017 with two stores, has today scaled up to 180 franchises across 40 cities, with Dhaka and Kathmandu in the pipeline. He only owns one store today. Typically, their 250 square feet store is located close to universities or residential areas to ensure minimal logistics cost. With 99% business coming from franchisee stores, the company earned Rs.85 million in revenue in FY19, and is optimistic of hitting Rs.250 million by FY21. “Apart from the Rs.500,000 franchising fee, we also earn margins on equipment, chemical and packaging, which is supplied by us,” says Sinha. While most of the charges are levied only once, the company also charges 7% monthly commission from the outlets. He claims the stores break even within one to three months. 

Beniwal, founder of Pick My Laundry, adds that it is much easy to break even in a franchise model. “We have 17 franchises, each receiving about 40 orders a day. They make a monthly profit of Rs.150,000,” he says. The company’s FY19 revenue was Rs.42 million.

Perhaps Beniwal and Sinha are convinced by the franchising model, but there are start-ups that are happily owner-operated. Take for example Isthiri Petti, which means ‘iron press’ in Tamil, founded in 2018 as a micro-sized steam ironing unit. This has grown to a small-scale factory set-up, which provides both laundry and steam ironing services to retail and institutional clients such as Oyo Rooms, Ford, Shell and L&T. The start-up clocks monthly revenue of Rs.400,000, processing 150 kilos of clothes per day. Founder Nambiar says that the personal touch has helped their business flourish. “In our early days, customers would visit the facility to check the hygiene standards of the outlet,” she says. They also had to educate the customers about their technique and elaborate on why steam iron is more efficient. For instance, it works well on tricky parts of clothing such as the cuff of a shirt and avoids damage of the fabric. The owners are also proud of their fragrance ironing service “which makes each piece smell like new after every wash.” Similarly, Pick N Wash, started by Neha Agarwal, operates through a processing unit at Mayapuri in Delhi. It serves retail as well as institutional clients and posted FY19 revenue of Rs.4 million. 

One drawback of the owner-operated model is that it is operations heavy, so both brands have limited geographical presence. Sanjay Singh, manager at Master Clean Drycleaners which has expanded to five stores in the NCR region over the past four years, says that they invested about Rs.600,000 to Rs.1 million per store. Each day, they process around 500 clothes for laundry and dry cleaning, cashing in nearly Rs.30,000 per day. 

Vineet Patil, co-founder of LaundroKart, believes that he has figured out the right model with partnerships. His 101 stores in Bengaluru only act as pick-up points. All the orders received by each store then get processed at third-party dry cleaners, who are specialists and who comply with the start-up’s quality standards. “We manage logistics in-house, and utilise excess capacity of third-party dry cleaners who take a 40% cut,” he says. For instance, customers opting for their 5-Star laundry service can get their clothes processed at facilities in Bengaluru’s five-star hotels that have joined hands with the start-ups. LaundroKart has also struck exclusive partnerships with ISRO, Flipkart and SAP, and has pick-up points within their office complexes. “The employees can simply drive into the parking lot, drop the laundry and collect it while driving back,” says Patil. Currently, about 1-3% of the employees at these partner companies use the start-up’s service.

Institutional customers, such as corporates and hotels, are good for the start-ups’ branding but the margins are unexciting. The margins there are 20% lower than what the start-ups make from a retail customer. “Also, institutions work on credit, whereas retail means upfront payment, which is better for the business,” says Sinha. Hence, only 20% of their business comes from institutional clients.

Finally, like in every field today, there are also aggregators. These start-ups essentially offer a tech platform for on-demand laundry apps to co-exist, and enable customers to get the best deal possible. “We are a technology and marketing platform, which aggregates 150 laundry start-ups in cities including Gurugram, Delhi, Noida, Bengaluru and Pune,” says Kumar. They charge the start-ups a small fee to list on their platform. If things go wrong, Laundrette assures customers a compensation that is 10x the order cost.

Tackling tough spots

Seems like everything is a gentle breeze, but then you are forgetting the initial capex needed for such a venture. The machinery isn’t cheap. Remember DoorMint, the start-up that was launched in 2014? Few people do, that’s the point. It went belly up within two years and was acquired by Wassup. 

The newer entrants are learning from past mistakes. “If growth is available within a region, then that should be prioritised over spreading thin. We learnt the lesson the hard way when we expanded to 10 cities in our first year of funding. Then we had to scale down to four,” says Wassup’s Balachandar. Pick N Wash’s Agarwal says that logistics is the biggest cost in this business and that can drain resources. “We have a team of four to handle logistics, but it gets difficult. So, we are thinking of also setting up collection centres to lower logistics cost,” she adds.

Meanwhile, Sinha says that there is lack of skilled manpower, which is crucial as one scales up. “We have set up a training course at our Noida store,” he says. The 60-day course includes training on the use of machines. Besides a stipend of Rs.5,000, the start-up also offers job guarantee to those who complete the course. They have already recruited 24 trainees through this initiative so far. 

It is still early days but businesses in other parts of the world have seen success. For example, Kaodim, LaundryMart and Little India Laundromat in Singapore. Meanwhile, laundry start-ups in Europe are not exactly smelling of Febreze. Last year, UK’s largest on-demand laundry service came into being with the merger of Laundrapp and Zipjet. However, it failed to stem the cash burn and the venture was soon acquired by Inc & Co Group. New-age Indian launderettes have both success stories and failures to learn from. There is promise in this line of business as people are willing to pay for convenience.