UrbanClap, Housejoy, QuikrServices prepare for battle over dominance
There is no clear leader in the segment and the three companies have built a war chest to fund their fight
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Bengaluru: UrbanClap Technologies Pvt. Ltd, Housejoy (Sarvaloka Services on Call Pvt. Ltd) and QuikrServices (part of Quikr India Pvt. Ltd) are preparing to duke it out for dominance of the so-called local services business in a year that some analysts say will be a “defining” one for the business.
That’s because there is no clear leader in the market and the three companies have built a war chest to fund their fight.
UrbanClap has raised $36.6 million, Housejoy has raised over $25 million (Amazon.com Inc. led an investment round in December) and Quikr has announced investment of Rs.250 crore into its services business.
There are close to 100 home services and local services firms in India providing plumbers, electricians, wedding photographers, fitness instructors and tutors.
The sector has attracted deep pocketed investors such as Amazon, Bessemer Venture Partners, Vertex Ventures, Qualcomm Ventures, Ru-Net Technology Partners, Matrix Partners, Accel Partners and SAIF Partners further validating the business model.
Platform operators charge 10-30% commission from service providers for every transaction. Analysts say that it is not fund-raising or gross services value (GSV)—the value of services sold through the platform—that will determine market leadership. That will be decided by commissions, they add, and the winner will be the company that can clock $100 million in commissions from service providers.
That would mean around $500 million in GSV, maybe a little more, and that’s what UrbanClap, Housejoy and QuikrServices are after. On average, the companies serve 4,000-5,000 user requests a day. All of them want to increase their geographical reach, list more services, and acquire customers.
Saran Chatterjee, chief executive at Housejoy, says that the company is looking to spend around 30-40% of the around $23 million it raised in December for a 360-degree marketing campaign, customer acquisition, and city and category expansion. “We are looking for a 5x growth in the next 18 months.”
Chatterjee says that Housejoy will explore ways to leverage the Amazon network to help it clock $100 million in GSV later this year. Its current revenues are in the range of $20 million.
UrbanClap has already surpassed the $100 million GSV target and is now aiming at the $1-billion mark by year end. “We have already started monetization of the platform,” says Varun Khaitan, co-founder of UrbanClap, adding that the aim is to achieve 100,000 job orders per day by the end of 2016 from around 5,000 currently.
The very local nature of the business means there will be space for several companies, some of the entrepreneurs in the space believe.
“It is not about funding alone, but focus on quality and reliable service,” says P.D. Sundar, head of QuikrServices.
The company will use its existing online classified platform and its newly adopted vertical strategy.
Quikr recently announced separate verticals for housing, automobiles and jobs among others, which it will hope to use not just to leverage the services portfolio but also for cross selling. The platform has 250,000 listed service providers and 50,000 user requests a day. Quikr reported sales of Rs.24.78 crore (across all its verticals) for the year ended 31 March 2015.
The push by the larger companies is putting considerable pressure on smaller companies in the space who have to grow rapidly, merge, or simply shut shop.
The three large firms apart, others in the local and home services space have cumulatively raised close to $15 million.
LocalOye (Imma Web Pvt. Ltd) has raised $5 million, Zimmber (Rejuvenate Solutions Pvt. Ltd) has raised $2.4 million, UrbanPro (Thinkvidya Learning Pvt. Ltd) raised $2 million, Doormint (Blackcotton Solutions Pvt. Ltd) raised $3 million and TimeSaverz Dotcom Pvt. Ltd with over $2 million and Taskbob (Crenovative Ideas Pvt. Ltd) with $1.2 million.
Anubhab Goel, co-founder of Mumbai-based Zimmber, says that the large rounds of fund raising by the three large firms has put some pressure but adds that this could attract more investments and investors to the space. Tiger Global Management Llc is yet to increase its stake in the services space despite having entered early in 2015 with LocalOye.
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