Home is a place that is loved by everyone and is needed by everyone. The 7.4 billion population does not live in cave-like homes now. Home services and utilities are everyone’s need and greed. People spend nearly $25,000 annually just only on their homes. Targeting a market with much potential requires consultancy in details and that too from tech giants. Moreover, people have started to move towards app-based services in order to manage the needs in a house. Now-a-days, starting from paying electricity bills to buying daily groceries is what people prefer. According to startup industry tracker Tracxn, the home services industry in India is growing rapidly with about 69 startups founded in 2014 alone. The range of services provided varies from six to 1000.
To truly understand how consumers have opened up the concept of hiring on-demand services, one needs to take a look at the number of daily transactions query log of these startups and the proportion of repeat customers. Doormint is based Mumbai receives about 200 requests daily on its platform, while Bangalore-based HomeTriangle receives about 50 requests. Urbanpro, which claims to serve about 2,000 categories, receives over 1 million visits in a month from about 750K unique visitors. About 68% of the enquiries come from tier 1 cities and rest from tier 2 and tier 3 cities. More than 70% of our customers place a request through the mobile app.
According to a VC investor e27 spoke to for this feature, the Indian home services space is estimated to be around US$7-US$8 billion, of which laundry alone accounts for US$3-US$4 billion. Metro cities account for around 12 million online consumers that are growing at a compounded annual growth rate (CAGR) of 20 per cent.
According to a report by the Internet and Mobile Association of India, the mobile Internet user base in the country is 213 million. Startups are pinning their hopes on these growing numbers to cater to the Indian consumer with home services. “More than 50 million in India are shopping online. There is tremendous traction and potential in providing a good quality service,” says Anubhab Goel, CEO and Co-founder of Zimmber, another startup in the space which bagged US$2 million, co-led by IDG Ventures and Omidyar Network.
As consumer Internet grows in India, all related industries are seeing massive growth. On-demand home services are also going through the same phenomenon. What is worth noting is that the majority of these startups are based in Mumbai and are yet to start scaling to other cities; this includes tier two and three cities.
Experts feel that a majority of these companies will find it hard to scale beyond major cities, as consumers in smaller towns and cities will still depend on local people to get their things done. This, coupled with the fact that many home/local services have a lower frequency as compared to on-demand cabs/online retailing, will make it hard for them to make money on a regular basis.
Startups and VCs, however, are betting big on the increasing migration of professionals to major cities and the surge in smartphone penetration to yield big dividends in the future.
The service sector has further 4 sub-industries which are