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Follow on Google News | InvYramid | Impact | Village Laundry Service: A Disruptive Market opportunity in the missing middleInvYramid is a global Innovation Consulting firm focused on making innovation faster, cheaper & repeatable.
By: InvYramid Spottion the opportunity in the missing middle Dhobis are ubiquitous in India for the service they provide – fresh laundry at an affordable price. For the affluent, there are the more expensive dry cleaners. Essentially, there were high-end laundry services available at five star hotels and very low-end services from the local dhobi, but nothing in the middle, offering convenient, high quality yet affordable laundry services. This opportunity of the ‘missing middle’, led to the creation of Village Laundry Services. Going to the market In the Indian consumer’s perspective, outsourced laundry is dry cleaning, which uses chemicals. VLS sought to change this mindset and wanted to show the benefits of wet cleaning. With a key focus on delivery time convenience and a price point which was 30%-40% lower than the nearest competitor, working professionals and bachelors were targeted as the main audience. VLS launched with home pickup and delivery as Indian customers are more habituated of this service with the local dhobis. The home pick up added a touch of personal care, as Indian consumers are often emotionally attached to a garment and expect it to be taken care of. VLS set out with a concept outlet in Mumbai with one small store that could handle 3,500 kilos per month and a bigger store which could manage12,000 kilos a month. For each kilo of laundry, the customer was charged Rs. 100. A custom-design rig was designed measuring 8x4 feet, equipped with a washing machine, a dryer and a pressing board, with the intent of delivering laundry services in 24 hours. These rigs were launched with a capacity to service 1,200 – 1,500 kilos of laundry per month. Business model reinvention and operational break-even VLS raised seed capital of Rs. 1.2 crore from Innosight Ventures and Calvert Investments. Subsequently, VLS raised Series-A funding in June 2011 from Kensington Capital, Index Advisory and a high net-worth individual from India, which was used to expand operations and improve its customer acquisition strategy. As the services were launched under the brand name Chamak in Mumbai, the company soon expanded to Bangalore and Mysore. One of VLS’ bigger format stores in Mumbai did 2,000 kilos of laundry in its first month from close to 900 customers. Reacting quickly, VLS built delivery infrastructure (vans, bikes) 12 hour call centre and online booking, with the firm belief that pick-up delivery service would be key differentiator along with cleaning quality. VLS ran pilots in Tier II and Tier III cities, to explore growth opportunities for rigs. The company collaborated with Mumbai based NGOs and self-help groups to generate employment opportunities for the Bottom of the Pyramid. The VLS recruits were trained in Mumbai to re-enforce company quality service protocol and communications skills. The company managed to recover costs within a year, irrespective of the operating format. While it took Rs. 3.5 lakh to setup a rig, a small store costs Rs. 7.5 lakh and a bigger store, Rs. 22 lakh – 25 lakh. It took up to seven months for a rig to breakeven while it took upwards of nine months for a store. The road aheed... In the coming 15-18 months, the company plans to further expand their presence across major metros including New Delhi and Hyderabad. The target is to reach 50 stores. VLS is also investing a strong share of their revenues back into social and digital marketing campaigns. Currently, all the operational rigs are fully owned and managed by VLS. In the near future, taking the franchise route to expansion is a definite strategy. As the next reinvention for boosting growth, the company aims to keep 60:40 ratio of self-owned stores to franchises. The management team dreams Indians will soon embrace the idea of professional laundry services at their doorstep. End
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