The Multi-billion Dollar Market That Doesn’t Exist!

Over the last few months, I have read with interest articles on the laundry segment in India – articles by VCs, entrepreneurs and journalists. Most articles typically begin with a market size estimate which ranges between $2 Bn per annum and $32 Bn per annum.

This is in stark contrast with the performance of laundry startups. Both food and grocery delivery startups have raced away in terms of growth. Several of them are doing tens of thousands of orders daily – all in a matter of 18-24 months. By comparison, the largest laundry startups have barely managed to achieve 500-600 orders per day in the same timeframe. If the market is so gigantic, why aren’t laundry startups able to replicate the success of their hyperlocal cousins?

What are the possible reasons for this?

1. All the laundry startups are poor executors – Naturally being the founder of a laundry startup, I have a bias in answering this question. However, objectively speaking, there are dozens of teams executing laundry across India and it is unlikely that all the good talent has decided to only deliver groceries and food.

2. Laundry startups are underfunded – Laundry startups have definitely attracted less capital than their richer cousins in food and grocery – but that is a result of their slower growth, not its cause. I know of many grocery and food startups that were doing 1000+ deliveries per day even at the seed stage.

3. There isn’t enough supply to aggregate – Unlike the hundreds of thousands of restaurants or grocers, the supply of laundromats or laundry service providers is low. This is an impediment, but not a big one. Unlike grocery (which requires huge inventory) or food (which requires changing menus and a lot of variety), setting up supply for laundry is fairly easy. It is quite capital efficient as well – INR1 of investment can generate INR7 of revenue. Moreover, startups like BigBasket, Faasos’ and Freshmenu have succeeded in scaling while setting up their own supply chain in grocery and food.

So then why are none of us able to crack this multi-billion dollar market? The reason is that the actual market size is ZERO. Outsourcing laundry as a habit is alien to India. Over the last 30 years, the washing machine has implanted itself firmly at the center of the laundry process for a household. Sure, people will give some of their clothes for ironing to the local dhobiwala and for dry cleaning to the dry cleaner. But the bulk of the process – washing and drying – is always done at home.

Contrast this with food and grocery, where people have been accustomed to ordering from restaurants and local grocers for decades. The startups are adding a layer of convenience there. Regardless, they are piggybacking on an existing consumer habit.

We are faced with the unenviable task of category creation – changing a consumer behavior that hasn’t changed in decades.

So what do the large market size numbers mentioned in all these articles really mean? Those numbers represent the latent market – the annual spend on detergent, electricity, labour and machinery attributable to the household laundry process in India. And that is indeed a big number. If we are to make a dent in it, we will need to give something to users that the incumbents are unable to provide.

[Vivek is co-founder of OneClickWash, a Gurgaon-based laundry startup.]

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