Big Idea

At your service

How online app-based aggregators are making life more organised for you

Do you remember the time you chased your electrician just so that he could come fix a blown fuse at home? Then you must also remember how helpless you felt when he stopped picking up your calls or answered the phone just to refuse point-blank. Rekha Pandit’s landlord, too, struggled for almost two weeks to find a plumber who could install a tap in her washroom.

“I finally had to ask my driver to find a reliable plumber. The one he found charged a bit too much but he got the job done,” she says. Like many others, Pandit realised that getting odd jobs around the house done at a convenient time and price has become almost impossible in most Indian cities.

But as with any other consumer segment, there is a clutch of start-ups hard at work in this space to make life easier for urban professionals. These companies have zeroed in on the scope of running a business that links customers to the right service professional, keeping in mind accessibility, reliability and convenience. 

“Unlike my regular carpenter, who wasn’t available, LocalOye connected me to a well-trained professional. The company gave me a range of price options as well. We fixed a particular date and time and got the work done as per my convenience,” says Mumbai-based Niti Dalvi, 28, who has also booked beauty services online through other service marketplaces such as LocalOye.

“The rates are cheaper than what I usually shell out in salons. The booking was also done painlessly via a mobile app,” she adds. While these start-ups aim to satisfy the customer, they also try to ensure an increased income to the service professionals.

“Zimmber made me undergo soft skills training for five days at YMCA. Even though I already have my own shop in Lokhandwala [a suburb in western Mumbai], tying up with Zimmber has got me more jobs,” says Kunal, who has been working as an electrician in the city for the past four years. Dalvi and Kunal are a part of a huge ecosystem that is funded by cash-rich venture capitalists such as Tiger Global, Accel Partners and Orios Venture Partners.

While companies such as HomeTriangle, Zimmber, Timesaverz, DoorMint, TaskBob, Housejoy and Jack On Block primarily target the home services category, LocalOye and UrbanClap provide service professionals for categories such as education and wedding photography as well. 

Setting up home

According to start-up locator Tracxn, over 150 companies targeting local services through apps and online bookings have come up over the past two years. While top segments include horizontals such as home maintenance services, the verticals include laundry services and interior design. More than 60 start-ups are specifically targeting home services. While 2013 saw the birth of nine such start-ups, 2014 witnessed around 23; while 25 more were set up by mid-2015.

“There is a glut of at-your-doorstep services. Large e-commerce companies have basically help build a market where you expect everything at home as per your convenience,” says Neha Singh, CEO, Tracxn. Of the 80 such start-ups since 2011, 12 have received investor funding. “They are essentially cutting out the middleman, who puts the initial capex and helps in demand generation while taking a cut on every transaction. The platforms are doing the job of demand-generation here and, in some cases, standardisation of services delivered,” Singh adds. 

 The entire online service sector can be broadly divided into three categories. First, companies such as UrbanClap and LocalOye, which connect consumers to service professionals. In case of these companies, customers are given a choice of service professional according to their budgets. For standardised services such as carpentry and plumbing, efforts are made to enforce standard rates, whereas for customised services, the price varies from professional to professional.

Secondly, there are companies such as HomeTriangle, Housejoy, Zimmber, TaskBob, DoorMint and Timesaverz, which provide service professionals to customers based on the services they demand. The customers usually have no discretion over the service professional and it’s solely up to the company to decide who will perform the task.

These companies may either get the job done through various individual service providers that may or may not be on their payroll or through small or medium sized enterprises. Thirdly, there are companies such as Jack On Block, which provide service professionals to both corporate and individual customers and to companies. “70% of our transactions are B2C, while 30% are B2B,” says Sharath Vatsa, founder, Jack On Block.

All the start-ups are targeting the huge customer base who either can’t get in touch with service providers or are dissatisfied with the options available. As expected, many of these start-ups have attracted investors such as Orios Venture and the likes. The top funded start-ups include Housejoy, LocalOye, UrbanClap, TaskBob and Zimmber “We noticed that the Justdial model was an irritant to customers as well as service professionals. On one hand, there are repetitive calls and on the other, there is too much competition among service providers to grab the opportunity,” says Gopal Modi, president, investments, Orios Venture Partners, which has invested $1.2 million in Mumbai-based TaskBob. The start-up was founded in December 2014 by Aseem Khare, Amit Chahalia, Abhiroop Medhekar and Ajay Bhatt. “This is an unorganised sector. There is an absence of pricing standards and guarantee, which has to be sorted,” adds Modi. 

Both the companies and investors are counting on smartphones to drive the next growth phase. “There will be 500 million smartphones in India in 10 years from now. We have made the investment keeping in mind where LocalOye can reach by then” says Dev Khare, MD, Lightspeed Venture Partners, which, along with Tiger Global Management, has invested $5 million in LocalOye.

UrbanClap, founded in October 2014 by Varun Khaitan, Raghav Chandra and Abhiraj Bhal, currently provides services in Delhi, Bengaluru, Chennai and Mumbai. “Users just need to submit their requirements on our app and we send them the most suitable service professional,” says Khaitan, who claims to have more than 5,000 service professionals registered.

LocalOye, founded by Aditya Rao in October 2013, on the other hand, has around 7,200 service professionals currently working with it in Mumbai, Delhi and Bengaluru. Housejoy, founded in January 2015, has already received an investment of over ₹25 crore from Matrix Partners and currently focuses on 14-15 services under various categories such as pest control, laundry, repairs and health and fitness. “Investors look at the size of the market and the start-up team. We have an excellent team and the market is huge,” says Sunil Goel, co-founder, Housejoy.

Abhinav Agarwal, who founded Mumbai-based DoorMint with Naman Lahothy and Piyush Ranjan in January 2015, vouches for the opportunity in this market. “I discovered that many service professionals were not punctual and there were issues with pricing and the non-availability of post-service guarantees,” he says. DoorMint has enlisted around 500 service professionals across seven service categories.

Work in progress

Just like their customers, these start-ups also had trouble finding the right service professionals in the initial months after setting up their business. “We generally get people on board through referrals. Initially, we visited hardware shops and called Justdial to get in touch with them. Now, we receive 10-15 requests from service providers every day,” says Amit Kumar, co-founder, Zimmber. The company was founded in October 2014 and currently has 400 service professionals registered.

Zimmber saw a recent investment of around ₹13 crore from IDG ventures and Omidyar Networks, with participation from Google founding board member Ram Shriram through Sherpalo Ventures and Manipal Global Education chairman TV Mohandas Pai through Aarin Capital. “We avoid putting unnecessary pressure on our customers by not giving them a list of service professionals to choose from,” adds Kumar. The company is currently present in Mumbai, Pune, Delhi, Noida, Ghaziabad and Gurgaon. “All our champs (service professionals) are people who have been living in the respective city for a minimum of five years,” he adds.

While TaskBob, Zimmber and DoorMint have individual service providers listed, companies such as LocalOye, Timesaverz and UrbanClap list a mix of individuals and contractors comprising freelancers and companies. In fact, Bengaluru-based HomeTriangle, founded by Ramesh Chincholi, Dhirendra Pratap and Manohar Negi, has a wide variety of companies as its service providers. “We have more than 200 registered companies which perform the services for us.

They are shortlisted by our vendor management team,” says Negi. No matter how much a customer bargains, they are always left with a niggling feeling that they have been overcharged. To avoid this scenario, the founders are focusing on fixing the price of most of the jobs listed.  “We know how important price transparency is to our customers. Our prices might change as per the city but are otherwise fixed,” says Gaurav Shrivastava, co-founder, Zimmber. On the other hand, LocalOye does not fix the price but promises to list merchants under every budget. Most of these companies have refrained from offering discounts, for now. 

Almost all these start-ups have signed up for compulsory third-party background checks and police verification. “We also have a 45-parameter internal quality check that every merchant has to go through,” says Aditya Roy, founder, LocalOye. While Zimmber and TaskBob also provide training to their professionals by tying up with agencies such as YMCA and IDFY, companies such as DoorMint hire in-house experts for the same.

“The training costs us around ₹7,000-8,000 per professional, inclusive of the devices we provide them with,” says Agarwal of DoorMint. Jack On Block has trained nearly 80 technicians from urban slums, tier 2 and tier 3 cities, and put them on its payroll. “In another three years, we aim to train 500 such youngsters,” says Vatsa of Jack On Block. “We check their skill levels and approve less than 50% of them,” says Khaitan of UrbanClap, which does not conduct in-house training as yet. 

The companies are also looking at ways to keep their customer base intact. “Even though our service providers are mainly companies, we provide insurance of up to ₹10,000 for every job in case of damages borne by the customer,” says Negi of HomeTriangle. Timesaverz has made customer feedback compulsory after every transaction.

“We release the payments for our service providers only after we receive customer feedback,” says Debadutta Upadhaya, co-founder, Timesaverz. The company was founded in 2013 by Upadhyaya and Lovnish Bhatia and today has a presence in Mumbai, Bengaluru, Pune and Hyderabad. It got a recent investment of ₹15 crores from Unilazer ventures. With a rise in the number of people using mobile apps, these companies receive reviews and ratings through the native app stores as well. “All our customers might not be good customers, so we rate them internally as well,” says Negi.

“Only companies that are fast in terms of technological improvement and strong execution will sustain,” says Zishaan Hayath of Powai Lake Ventures, which has invested in DoorMint. Although most companies have an online payment and cash option, Timesaverz also accepts payment through cheques and its payment wallet. 

Show me the money 

Currently, almost all the players earn their revenue by charging an average commission between 10% and 30% from their service providers. While LocalOye makes cash payments during its bimonthly meetings, Jack On Block has its service professionals on its payroll and disburses salaries of ₹8,000-10,000 to housekeepers, whereas technicians earn between ₹15,000-20,000 per month. It also charges an average commission of 10%-20% from customer companies such as LocalOye, Housejoy and HomeTriangle. TaskBob on the other hand ensure a minimum guarantee to their service providers.

“Commission is charged when they cross the minimum guarantee amount,” says Aseem of TaskBob. While one of the service professional of Zimmber says he gets a minimum guarantee of ₹3,000 per month, Anubhab Goel, co-founder, Zimmber declines the same. “At times we support some of them on ad-hoc basis. We don’t support minimum guarantee otherwise.” Zimmber charges between 10% and 25% from its service providers, while TaskBob charges 20%-30%. “Our champs have been trained by us and we trust them on delivering services according to our standards,” says Kumar of Zimmber. 

There’s certainly no lack of business and funding. LocalOye witnesses around 3,500 service requests every day, of which 65% gets converted. The company received angel investment of ₹200,000 from Sidharth Rao, Haresh Chawla and Sachin Bhatia. It also received series A funding of ₹31 crore from Tiger Global Management and Lightspeed Venture Partners.

Similarly, TaskBob, which sees around 300 requests per day with an average ticket size of ₹1,000, has received over ₹7 crore from Orios Venture Partners and Mayfield India. UrbanClap has grabbed investments of over ₹7 crore in two rounds from Accel Partners, Kunal Bahl, Rohit Bansal and SAIF Partners. With an average ticket size of ₹8,000, it clocks around 2,500 transactions per day. DoorMint has an average ticket size of ₹500 and witnesses around 200-250 transactions every day. “This is a multi-billion dollar market. We see a great opportunity in home services,” says Abhishek Gupta, investor in HomeTriangle, which witnesses around 30 transactions per day with an average ticket size of ₹3,500. 

Jack On Block has also received investment of ₹1 crore from United Seed Fund, with 40-50 transactions every day and an average ticket size of ₹4,000-5,000. The company clocks revenue of ₹2.5 crore and claims that salaries account for its biggest cost for now. “Even though our fixed cost is higher, our service delivery is impeccable,” explains Vatsa.

For now, the companies are focused on expanding their service area to other cities, especially tier 2 and 3 towns. “For us, the biggest competition still remains the offline space, which has companies such as Justdial,” says Rao of LocalOye. Each company here believes what will take it ahead will be the quality of its service. While Timesaverz expects to hit break-even in not less than three years, other start-ups don’t have a date in sight. “Break-even is not our target. We want to deliver efficient service for now,” says Khare of TaskBob. It is tough to guess the road ahead for these companies and perhaps only time will tell how they fare. But they are certainly making life easier for Dalvi, you and me.