Use of on-demand apps has soared in recent years while permeating a wide range of industries. Sources indicate conventional on-demand marketplaces operate primarily on an outsourcing basis, acting as an intermediary between consumers and product or service providers. Customer requests are then contracted out to independent providers or outside companies.
Homejoy closed its doors for business in summer of 2015 giving us all a lesson to avoid the trap of applying Uber’s top-down model to a more complicated vertical like home services. However, we are seeing more and more home services marketplaces are popping up everywhere especially in Dubai.
Examining reviews for few on-demand marketplaces in globally and regionally as a proxy for customer happiness would indicate that a positive customer experience has not scaled well with the platforms.
Consumers expect a quality service executed at their home by an experienced professional — and it turns out that even great software cannot make a housecleaner want to do a thorough job of cleaning a home.
Failure to acknowledge that the economics of home services are really tough.
Whether it’s home cleaning, lawn care, or pool servicing, the dynamics of the home services industry are very challenging. Low barriers to entry cause the existing industry pricing and margins to already blade thin, even before a tech-based marketplace attempts to revolutionize it. Effectively adding in a middleman to take a chunk of the thin margin leaves no meat on the bone for the service provider to deliver a quality job and ultimately please the customer.
Startups applying Uber’s model to home service verticals fail to recognize that Uber and Careem created an entirely new market alternative that sidestepped the regulatory bloat of the taxi industry, unlocking the margin to fuel its viability. Homejoy as a case study suffered a negative contribution margin on every cleaning it performed we see more and more service marketplaces are going in the same direction.
I believe in few years we will see more and more service marketplaces shutting their doors. I predict it takes 5 years for a VC backed service startup to shut their doors for business and less for the ones without a VC backup
What do you think?
MaidServiceDxB.com(TM) has distinguished itself from the common methodology with its new hybrid service, providing the touted speed and simplicity of the on-demand sector while employing an in-house team of Maids in Dubai to provide cleaning services.