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Interview 2016-06-24

Wellness contributes 30% in our annual turnover of Rs500 cr: UrbanClap founder

With a strong hold in 8 leading cities that includes national capital and IT hub Bengaluru, UrbanClap has established strong market presence in India. The firm is aiming to enter in Kolkata, Chandigarh and Jaipur next.

Wellness contributes 30% in our annual turnover of Rs500 cr: UrbanClap founder

UrbanClap Technologies Pvt Ltd, one of the most funded local services marketplaces of India, was founded in October 2014 by Varun Khaitan, Abhiraj Bhal and Raghav Chandra. The startup connects service professionals like plumbers, wedding photographers, yoga teachers, make-up artists, interior designers and even fitness trainers to the consumers.

Currently, aiming high to expand its supply board to execute services ordered by consumers, UrbanClap has been taking every possible step to turn into a marquee player in the online service delivery marketplace.

To know more about the company’s business plans, growth strategy, focus area and future plans, WI Bureau spoke to Abhiraj Bhal, Founder, Urban Clap. Here is the edited excerpt:

Key growth boosting factors

People in India are becoming more and more conscious of their health and grooming. As a larger wave around keeping mental as well as physical fitness, people are willingly spending money on improving their lifestyle. So, at UrbanClap, we have a bunch of services which generally help you keep fit and take care of your body. Thus, a yoga trainer at home, a fitness trainer, a dietician, a physiotherapist or beauty services like party make-up artist, beauticians etc have been provided by UrbanClap.

The conceptualisation

One of the reasons that we started UrbanClap was the fact we realised that how difficult it is to get local services. Whether it’s a plumber, pest control service at home, dry cleaner, Yoga trainer, Wedding Photographer, Make-up artist or even skilled fitness training, these are hard services to get. And, when we started this company 2 years back, we used to hear, people in India can order clothes, mobile phone, books online and get it delivered in span of 24 hours at home. Despite all these advancements that internet has made, why it is so difficult for me to get a plumber? Why do I need to spend whole afternoon in haggling prices with a pest control company? Can searching Google or any of the directories and fixing any random service provider who may or may not be trustworthy help? Historically, internet enabled services has made it easy for you to start with your money, accept the local services where actually the entire space is not sought. So, that’s what basically got us started.

Consumer behaviour

I think Indian consumers are value sensitive, which means if they pay, they want to fetch value of their price paid. And, the value that UrbanClap brings to the table is of high standard. We only hire quality professionals on UrbanClap. We know that the person is qualified and reliable. That’s why we emphasise more on quality and relevance and that’s how we justify our work. UrbanClap ensures back end verification of the professionals, screening the verification, eye control over quality in terms of machine, on time service delivery, best professionals in desired budget and availability as per your time convenience.

The market is accepting online services with open arms. In the last one year, we’ve grown almost 100 times and that is the testimony of the way market has reacted. Right now also, we’re getting more demand than what we were prepared for. We’re not demand constrained marketplace, we’re supply constrained. So, one of the problems we’re facing right now is that of suppliers. So, that’s another testimony of the way consumers have reacted to the UrbanClap service.

Geographical presence & expansion plans

Right now, we’re present in 8 cities- Delhi NCR including Gurgaon (Gurugram), Noida, Greater Noida, Faridabad and Ghaziabad. We’re present in Bengaluru, Hyderabad, Chennai, Pune, Mumbai, Navi Mumbai and Ahmadabad. Soon we’ll be launching our operations in 3 new cities. These will be Kolkata, Chandigarh and Jaipur. So, by the end of the year, Urban Clap will hold presence in at least 11 cities.

Challenges of the segment

I think there are 2-3 challenges. The biggest challenge that a marketplace has been facing is of Liquidity. By liquidity I mean, we constantly need to have high quality suppliers and service professionals on the platforms and you need to have customers who are looking for them. So, at a classic marketplace, the supply and demand should always be balanced. I think that is one of the challenges relevant to the sector or any other marketplace. In this sector, it particularly becomes difficult because one has to actually go out and look for these service professionals. The second challenge is Quantity. One has to invest time and effort in terms of training, product filtration, maintaining high quality control on the marketplace- supplier side ecosystem and that is obviously not easy. In India, as you know, we have a lot of service professionals, probably around lakhs, but not all of them are high quality. I would say, there are about 20-30 per cent who is experienced, genuine, high quality service professionals. Then remaining 70-80 per cent is actually not so genuine.

Overcoming challenges

I think in two or three ways we may do it. First is, we have a very strict quality control process and at time of on-boarding a vendor, we do a thorough background screening and skill check across multiple parameters, in order to ensure that the guy is good. Then, on an ongoing basis, we are also taking customer feedback for every service that the person delivers and in case it was below 4.0 out of 5, then we remove the vendor. The third is, in certain categories, especially in blue collar categories, we also impart training and skill enhancement efforts in order to make sure that the blue collar side professionals deliver good quality services.

Current turnover

We are currently doing, in terms of volume of business we extend to our suppliers, about Rs 500 crores of business. The volume of business we’re sending to our suppliers in wellness category, which is the gross service (GS), would be about 30 per cent, which I would roughly say about Rs150-200 crores.

Therapeutic area to foray

Next, we’re planning to get on-board varied sports and training expert like swimming coach, a badminton coach, a tennis coach etc, which you may expect by the latter half of this year.

Saga of funding

Last year we raised a total of about Rs 230 crores in three rounds from some marquee investors and we continue to talk to the investors and continue to evaluate potential investment offers. And, as and when we feel that we need to raise more capital in feasible terms, and in line with our expectations, we will raise. At this point of time, we’re very well funded, so, there is no need to raise capital as such.

Focus at present

Right now it’s just growth and we’re just growing. I think we figure out the right model to deliver high quality services and now, its just about Growth. Constantly adding the platform and adding many more suppliers to lift the standards of delivering high quality services.

Scaling up required

Supply side is what we’re focusing on the most because that’s where we mainly constrained the most.Today we have about 35,000 vendors and service professionals on our platform. The idea is to scale this to 3 Lakh, hopefully, in the next one year. That’s the only area we’re constantly working hard to centrally change things.

How UC dominates the sphere?

We’re the largest. It’s as simple as that. We’re at least 5-10 times larger than anybody in this space at this present. And, everybody else is just too sub-scaled and too small which is essential to understand. I don’ think there could be vertical players who built vertical marketplace for specific sectors of the wellness industry, like people are making ‘Beauty Only’ online platforms. They’re trying to build ‘Health and Wellness only’ platforms. I don’t think that works because going back to what I said initially, the most important thing for a marketplace is Liquidity. From a customer’s point of view, if you’re only doing Yoga sessions, the customer goes to you once, take the session and that’s it and your platform is irrelevant to him further. It’s hard for them to aggregate demand. Similarly, for the supplier, fewer customers on the platform looking for them and everything on both- the supply and demand side, will make their dollar efficiency for marketing much poor. If you do only one service than you acquire customer who may use it for multiple services.

Plans to foray in small towns

Yes, we do want to establish presence in tier II and III cities. We want to be present in 30 cities by the end of next year.

Eyeing at 2016 end

By 2016 end, we should have about 150 thousand service professionals on our platform.

Changing the edge of Indian wellness space

We’re making it far more affordable and far more accessible for regular middle class consumers to act as health and wellness service providers at-home. Earlier, if you wanted the same at home, be it a beauty service, yoga or fitness, physiotherapist, dietician etc, it was not easy to find out whose trust worthy, reliable and available, which is the whole point of access. Even if you identify, people who used to come home to deliver these services, they were too expensive to afford often.

Pricing strategy

We are priced 20-25 per cent lower than the open market for the same quality of service that they provide. So, if you go for same quality of services provided by UrbanClap to any local beauty parlour, you would end up paying 20-25 per cent more for it.

Social media Marketing

We rely on ‘word of mouth’ publicity and digital marketing. We’re a new age company and therefore we don’t rely on traditional marketing through newspapers or TV commercials. We focus on high return on investment marketing channel. The highest worth marketing channel is of course ‘Word of Mouth’ and referral programmes and that is something we rely on a lot. Our focus is to deliver a very high quality service experience, so that, our customers talk about us and refer us to others and that may bring us numerous new customers. The second channel is Digital Marketing, for which, we use Facebook, Google search that too mostly focusing on organic reach, but some degree of promotion is paid as well.

Overseas expansion

Right now, our soul focus is India, so we’re not eyeing at overseas market.

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