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Home » Professional » Laundry Solutions » Fly, Crash & Burn: Why very few laundry start-ups survive

Fly, Crash & Burn: Why very few laundry start-ups survive

As an 80-billion-dollar industry, the laundry sector in India competes with the likes of the hotel industry, logistics, mobility sector and delivery sectors in terms of size, scope and scale. The business per se is as old as civilization itself; man has had to clean his clothes ever since he began wearing any. Hence, laundry is an integral part of the ‘Roti, Kapda, Makaan’ trilogy that is essential to human survival – the principle on which other businesses are founded.

This massive yet critical need should have augured well for the industry and elevated the laundry business to one of the most celebrated and highly desired businesses for young people looking to invest their minds, time and energy into something wanted and worthwhile. Unfortunately, the present scenario indicates that nothing could be farther from the truth than this.

Despite the humongous size of the industry, laundry happens to be the only business where the domination of the unorganised sector is as high as 97%. Individuals or small families make up the bulk of the solutions to India’s garment cleaning needs. The industry is sadly missing a poster boy or a unicorn brand which can force the world to wake up and take notice of how the organised sector can revolutionise cleaning in more ways than one. Not that people have not tried; multiple start-ups have tried and failed to create a ‘laundry revolution’ of sorts. Start-ups have come and gone, while the traditional laundrymen have stayed. There is still a plethora of start-ups across India which are battling and waging their individual wars in an attempt to ‘organize’ this industry.

What really ails the laundry business? Why have so many starry eyed youth, who had taken the plunge into the industry with loads of vigour and enthusiasm, exited it even more quickly? My laundry journey is about two-and-a-half years old now, and has been fraught with various kinds of challenges. Based on my own experiences, I have tried to analyse some of the key factors behind this exodus:

Lack of technical knowhow

Owing to the extent of disorganisation in this industry, there is no real knowhow on how to run a business. At no point have the giants of the industry come together and agreed on what works and what doesn’t, what should and what shouldn’t be done. If they have, they have certainly kept this information only to themselves. There is no one who can be treated as an absolute authority, whom the newbies can reach out to when they are stuck.

While the industry is as old as civilization itself, the methods and processes it uses seem to be equally outdated. The ones who have been in the business for generations have not invested in upgrading themselves, and are content to carry on using obsolete techniques and equipment.

The ones who are trying to venture into the business get lost because of the complexity of the business, and lack of guidance in how to begin and what path to follow. How do we find the right machines? Indian vs imported machines, which are better for me? How do I find the right chemicals? Which chemical works best for which stain? What should be the ideal turnaround time? With this lack of coherent and cohesive guidance or any established benchmark, everyone tries to come up with his own formula or methodology, which they promptly implement, only to find out too late that it is failing, and going belly-up just a few months down the line.

Unreal customer expectations

The customer is king, and he has realised this like never before: Thanks to the huge rounds of capital investments which have happened in the other industries, these sectors are in a position to offer massive discounts to customers to expand their customer base, and are able to absorb the initial losses with their deep pockets. There is literally a rat race of sorts to please the customers. This is evident from the kind of freebies, hampers and ‘customer delight’ strategies being adopted by the players in the other industries. Everyone is doling out offers like never before to pamper the customer like never before.

Unfortunately, this means that the customer also expects a similar royal treatment from the laundry operators, who cannot afford to subsidise the customer’s cost to even lesser than their operating costs. Hence, brand loyalty is inconceivable in the laundry sector.

The smallest of manual errors receives the worst possible escalation on social media, which the brands are unable to arrest or combat owing to their lack of funds. The disrepute that ensues can sometimes be back-breaking and disheartening to the extent that it might convince the operator to call it quits.

The Price War is for real

While price wars are a part and parcel of any fledgling sector and are important to drive parity, the impact of the same on the laundry business is particularly damaging. Laundry is one business sector which has received step-motherly treatment from investors and venture capitalists, with everyone shying away from this unglamorous industry. Laundry is one of those unique ‘low ticket size, low margin businesses’. The only secret mantra is to drive up volumes and maximize your operational capacity. To achieve this, a lot of players are resorting to deep discounting and price wars which compels everyone in that particular micro-market to follow suit.

The best case in point is an area called U Block in Gurgaon where there are 50+ laundry stores in various shapes, sizes and formats, all located within a 1 km radius. The area is now witnessing a ‘laundry bloodbath’, where the only focus of every player is to offer rock bottom prices. It is thus not at all surprising that U Block has also become the deathbed of so many startups in the last twelve months alone, most of which have been collectively responsible for their own failure.

The dhobi doesn’t like being a dhobi

Arunabh Sinha
Founder and CEO, UClean

This is the single biggest and most heart-breaking challenge this industry is currently grappling with. The ‘Dhobi’ has traditionally been looked down upon as a profession and the impact of  this has been particularly bad on the current generation. As a profession, laundry is devoid of glamour and glitz. The current generation of dhobis would prefer to work for a salon or a restaurant over the laundry industry because it offers them the respectability they crave. Desperate for working hands, the industry is fast losing credibility and sourcing manpower for the business is becoming increasingly difficult. A lot of start-ups feel the heat when they try to expand their business and operations, as they are not able to find people from the industry who are willing to take the plunge into scaling up. Bringing in people from outside, skilling them and enabling them involves significant investments in terms of time, efforts and resources which can burn in the pocket of even the most profitable start-ups. A lot of ambitious and well-to-do start-ups end up losing steam as they try to grow, and end up limiting themselves to a single city or single micro-market operator precisely for this reason.

The stark reality of the laundry industry is that most of us are groping in the dark while trying to attract customers with shiny lights we cannot afford. Prospective entrants need to be aware of the potential pitfalls in their trajectories in this business, while established laundries need to understand that they need to create a knowledge base and healthy competitive ecosystem to ensure their own survival.

As an 80-billion-dollar industry, the laundry sector in India competes with the likes of the hotel industry, logistics, mobility sector and delivery sectors in terms of size, scope and scale. The business per se is as old as civilization itself; man has had to clean his clothes ever since he began wearing any. Hence, laundry is an integral part of the ‘Roti, Kapda, Makaan’ trilogy that is essential to human survival – the principle on which other businesses are founded. This massive yet critical need should have augured well for the industry and elevated the laundry business to one of…

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