Do you agree- Laundry is a traditional business? A decade back, the answer is probably ‘Yes’, but now the on-demand business model has taken the laundry world by storm. The investors who were showing reluctance in investing in laundry start-ups are now actively contributing. The influx of start-ups is seen because entrepreneurial minds are finding new opportunities.
Undoubtedly, the enormous adoption is the result of the changed people’s lifestyles and evolved preferences. The people are enjoying the privileges, but it’s not the case with on-demand laundry businesses. Despite winning customers and earning billion dollars, the businesses are standing amidst the plethora of challenges, which needs to be addressed immediately.
As an entrepreneur, do you want to sail a boat in the market, that’s worth billions of dollars? If so, then before getting funded and starting the laundry business, you must be aware of the hiccups that may likely come in your journey.
Let’s take a sneak peek inside the challenges and their solutions:
- Low margins
The delivery costs associated with laundry business is the topmost operational challenge that business face because pickup and drop-off the laundry is the minimum expectation, and the customers don’t want to spend even a single penny for the same. In the initial phase, the delivery cost put a strain on the operations and cut the margins. The problem grows by manifolds when the order density is less, which is common initially.
Solution: In the beginning, the start-ups may face the problem, but leveraging technology the operational challenge can be overcome. Using predictive field executive stationing, the load-carrying capacity of field personnel can be increased by analyzing location and time-based tasks and then allocating the tasks to the field executive accordingly. By identifying the order density hotspots, the distance covered for each task can be minimized, which helps in reducing logistics cost, thus margins won’t hurt.
- Lack of skilled labor
Not just hardworking labor, but educated and skilled labor is the need of this industry. Finding the laundry experts is difficult in the market. For instance, there is a need for experts who know how to clean the female’s dyed fabrics else the clothes would get ruined. The laundry is done in volume, so clothes sorting by the staff are very essential. However, counting on laundrymen is not reliable, which impacts quality delivery.
Solution: The intelligent system can be employed where the chemicals and detergent powder suitable for the cloth and texture can find out. Even, the field executives who pick up the clothes are trained to segregate the clothes, check the fabrics, separate the clothes based colors and other criteria, and then tag the clothes for quality laundry.
- High logistics cost
In the laundry business, the two way logistics is the minimum requirements from the customers’ side because the traditional laundrymen are providing these services at the cheaper rates. Moreover, the unavailability of the customers at home during pickup or delivery, the inability of field executives to reach customers on time, locating the customers’ address, and miscommunication between customers and laundry boy are the very common problems.
Solution: The logistic problem can be resolved by making field executives complete more orders on the same route. With route optimization, the easiest path to reach the customer can be defined, which minimizes fuel consumption and time consumption. With in-app chat, the customers can be pre-informed about the laundry boy’s arrival, and if the customer is not available, then they can reschedule the pickup or delivery. Also, dropping the clean laundry or pickup is enabled through Valet in the absence of customers.
- Making inroads into the market
When the laundry business targets hyper-locally, then the market is already overcrowded with local laundrymen, dry cleaners, and maids that make it difficult to gain a market share. Spending heavily on discounts and marketing negatively impact the bottom line.
Solution: The best thing is to focus on enhancing customer experience and making the customers place more orders to the same laundry business. The focus must be shifted from marketing-orientation to customer-orientation to delight the customers by providing quality services.
- Backend issues
Many on-demand businesses that are working as aggregator model, they just get the laundrymen registered on the platform and then expect the customers and laundrymen to trade off on the platform. It won’t help the business sustain in the long run because the outsourced services to local laundrymen lack quality and on-time deliveries, if not monitored regularly.
Solution: To establish a solid presence in the niche market, it’s necessary to have an in-house team that constantly monitors the operations of clothes, and the services offered. The quality checks at different stages are all-imperative.
- Higher customer churn
In the unorganized sector, the customers expect consistent quality, in addition to a refreshing experience, which is not feasible. It means retaining the customers is very difficult. When the items are misplaced or ruined, then convincing the customers to come back even after making the payment is nearly impossible.
Solution: Technology comes to rescue. The business should establish standards for every phase of laundry operations and employ the quality supervisors to perform in-house quality checks and analyze the quality as a whole. Additionally, the Laundromats should be supplied the limited laundry, don’t overdo. Else, the quality issues, spoiled, or misplaced items become very common. It helps in enabling timely and quality delivery.
Every shining star has a dark side too. So is the ugly reality of on-demand laundry business, which is barely discussed and told. In this blog, we have shed some light on the challenges that laundry start-ups are facing and many of them have failed due to these roadblocks. But, on the brighter side, some smart entrepreneurs have leveraged technology to innovate the operations and processes and now, doing exceptionally well.
Is there any challenge that you don’t find on the list? If so, we would be happy to listen to you and provide the right technology solution to your laundry business problem. Get connected with our business consultant to get the answer for the same.