UrbanClap is a leading online marketplace for booking home services like cleaning, plumbing, carpentry etc. in India. Since launching in 2014, it has grown rapidly and now operates in over 20 cities providing thousands of jobs to professionals on a daily basis. The startup has raised over $100 million in funding from marquee investors like Bessemer Venture Partners and Ratan Tata indicating increasing interest in the on-demand services sector.
However, despite UrbanClap’s success, the on-demand home services market in India and globally remains largely untapped. The concept is still new in most cities and the current players have only scratched the surface of this multi-billion dollar opportunity. This is where investing in building an app similar to UrbanClap makes perfect business sense. With India’s massive population increasingly adopting smartphones and the internet, the potential for growth in this space is immense.
Large and growing on-demand services market
The global gig economy which includes on-demand platforms for transportation, food, logistics and services is worth over $150 billion currently according to a recent study. Experts project that it will grow to $500 billion by 2023.
In India alone, the online freelance and gig workforce is estimated to be over 30 million. A Nasscom-McKinsey report states that India’s digital economy including online services has the potential to reach $550 billion by 2025 given rising smartphone penetration and internet usage.
On the consumer side as well, there is a growing acceptance of the convenience of on-demand services. Busy lifestyles combined with traffic woes in metro cities have made people open to getting housework done via apps instead of relying on part-time helpers. The stigma around hiring hourly help is also reducing as more affluent and young professionals use such services.
Untapped local markets
While UrbanClap provides services across major Indian cities, vast opportunities exist in tier 2/3 cities and rural areas where reliable home services are scarce or unavailable. For most Indian families, basic repair tasks like plumbing, carpentry etc can be difficult to get done due to unavailability of skilled laborers. This is a major pain point which an on-demand app can solve.
There are over 2000 towns and cities in India with a population above 100,000. Together they are home to over 300 million people who still lack easy access to services taking for granted in metros like home cleaning, pest control or beauty services. With rising internet access in smaller cities, the demand for apps offering on-demand services will boom in the coming years.
Compared to India’s population of over 1.3 billion, even the largest on-demand players have barely scratched the surface. The opportunity is not limited to India alone. Most countries in South Asia, Africa, and Latin America present a similarly under-penetrated market. Read more about Zipprr: https://zipprr.com/urbanclap-clone/
First mover advantage
The benefits of being an early player in a new local market for on-demand services are immense. It gives the opportunity to quickly acquire thousands of app users before competitors through aggressive marketing and promotions. Brand recognition can be built by promoting through local influencers, newspapers/magazines and word-of-mouth.
This first mover advantage helps establish important relationships with local service professionals as well. Over time as the app base grows, it becomes more difficult for new entrants to displace the incumbents who would have a head start in user-base and service provider network. Being present in emerging new smaller cities thus helps gain a foothold early before the space gets crowded.
It also makes future expansion very cost-effective through replication of operational frameworks. The capital and resources required to introduce the service in new geographies gets substantially reduced once the core model is proven.
Increasing internet and smartphone penetration
India’s internet user base has surpassed 500 million in 2019 and smartphone shipments are rising at over 10% annually. The rural internet user base is expected to reach 835 million by 2023 opening up untapped demand according to an IAMAI-Kantar ICUBE study.
With mobile data tariffs plunging dramatically, even basic smartphones are now internet-enabled enabling access to apps. Wireless broadband technology like 4G is expanding connectivity to remote areas faster than ever before. The combination of these factors is bringing millions of new users online every month who represent potential customers for services marketplace apps.
By leveraging this digital infrastructure growth in emerging small cities early on, a company can establish a sizable user base ready to drive volumes and revenues as internet usage increases over the coming years. Catching this demographic transition presents a multi-year growth opportunity.
High repeat usage and referrals
A key advantage of players in the home services space is their potential to achieve exponential growth through viral user acquisition and high repeat usage. Once users experience the ease and reliability of finding help via the app, they use it repeatedly for other small tasks and also refer family/friends.
UrbanClap reports that over 30% of its orders come from repeat users who opt for regular service subscriptions like monthly cleaning. App store ratings and reviews play a big role in user acquisition which in turns is driven by good experiences. A well-designed app focusing on quality user experience from the start thus helps fuel long term growth.
Additionally, integrating an achievement/rewards based referral program incentivizes existing users to drive word-of-mouth growth. For every friend referred, a user could earn points redeemable for discounts on future orders. With lack of transaction costs, the marginal user acquisition costs decrease substantially through this organic viral loop compared to traditional marketing.
Opportunities in specialized services
While general multi-service apps have gained popularity first, there are opportunities to focus on individual specialized services as well. For example, dedicated plumbing apps solving drainage or pipe leak issues through verified professionals can attract users swiftly in metros where such problems are common.
There is also opportunity to target the needs of commercial property owners, housing societies and large residential apartments who need regular upkeep and repairs done. Apps specifically catering to bulk or subscription based requirements of larger clients present a different revenue stream than individual users.
With technology enabling better discovery, reliability becomes even more critical for specialized services. Features like real-time monitoring/tracking, video verification help address trust issues and create a differentiated experience compared to traditional service discovery methods. advanced app frameworks that can be customized for specific verticals.
Partnerships with service professionals
Access to a large network of trained, verified and reliable service professionals is essential for an online marketplace app to function and fulfill demand from users. While initially bootstrapping off existing freelancers and micro-entrepreneurs, dedicated programs are required to partner and develop local talent over time.
Partnership models that offer benefits like referral income, promotions, low commission subscription plans, co-branded uniforms/identity cards help attract more professionals while aligning incentives. Training workshops on customer service, basic accounting/invoicing skills etc. add value and differentiation. Quality monitoring through user ratings/feedback ensures high service levels.
Insurance and financial services tie-ups offering safety nets promote participation of talents wary of risks. Contract-based arrangements respecting the flexibility required in gig economy help build mutually beneficial relationships versus employer-employee models. Going further, SaaS tools enabling invoicing, accounting for partners presents cross-sell revenues.
Product USP and features
The on-demand services market is becoming increasingly price-competitive with many localized players emerging. Hence focusing on core product differentiation is important. Some unique value propositions could include:
- Instant visible pricing and booking without login
- Geo-tagging of tasks for location-specific discovery
- Real-time progress tracking and two-way communication
- Background verified professionals with skill certifications
- Customizable subscription packages for regular needs
- Integrated payments, invoices and settlements
Ease of use, seamless navigation, simple on-boarding and a personalized dashboard also enhance engagement. Progressive web app (PWA) version ensures smooth mobile experience. Proactive push notifications on service status keep users informed and satisfied.
Revenue streams
The following streams can contribute towards a sustainable revenue model:
- Commissions on booked jobs – Taking a 10-15% cut of the service fee paid by users is a core revenue driver
- Subscription packages – Monthly/annual packages offer commissions on pre-paid credits
- Value added services – Selling consumables, extended warranties etc.
- Premium listings/sponsorships – Prioritizing top rated professionals
- Referral rewards – Converting virality into additional revenue
- Advertisements – Contextual ads from vendors, suppliers in relevant categories
- Marketplace analytics/insights – Monetizing aggregated demand patterns
- Lead generation – Selling profile views/contacts to interested parties
A diversified model tapping multiple small sources helps achieve profitability faster than relying on commissions alone in initial stages. It also provides cross-sell opportunities to engaged users and vendors on the platform.
Conclusion
Investing in building a home services app similar to Urbanclap presents a tremendous business opportunity. With the on-demand services sector still in nascent stages in India and globally, a well-executed local player can carve a Lion’s market share. Rapidly increasing internet access especially in smaller cities and the network effects of the marketplace model indicate potential for exponential user and revenue growth long-term.
