With little competition and a large market, Laundry Project is likely to find the segment a great space to expand.
Over the next few years going to a laundry or a spa for bags and shoes will slowly be replaced with the service being delivered to your doorstep.
So believes R Balachandar, a master in business administration in international business from PSG Tech, Coimbatore.
Convinced this is the next big thing, he launched Laundry Project India Private Limited in 2012.
"We believe we can make daily laundry services affordable for the middle class," said Balachandar.
Backed by Das Star Ventures, Laundry Project is looking to raise Rs 50 crore or Rs 500 million to fund its growth.
It has already raised a pre-Series-A fund of $2 million (Rs 12.6 crore) from high net worth individuals, who do not want to reveal their names.
Fashion to laundry
Balachandar (see left), now 35, was Asia head of retail at premium leather brand Hidesign.
With experience in marketing and branding, he was interested in retail ventures, and started Lime & Vodka, a brand allowing young designers to showcase their talent.
He ran it for a year and was then looking for financiers. When he got in touch with Das Star Ventures, Balachandar discussed a few concepts with them and Laundry Project was conceived.
Unlike fashion, the laundry segment has hardly any competition. The market is huge - Rs 2.2 lakh crore or Rs 2.2 trillion in urban areas alone. According to a KPMG estimate in 2012, the organised market is around Rs 5,200 crore or Rs 52 billion.
In February 2012, Laundry Project opened its first factory in Chennai.
Initially, it catered to hotels - Taj, Oberoi, Marriot, Ascot and Radisson. This helped the team earn experience and augment quality standards.
Then, it branched to individual retail stores under the brand name of Wassup Laundry.
Now, the company operates out of Chennai (20,000 pieces per day), Bengaluru (5,000) and New Delhi (5,000). Its total capital is Rs 8 crore or Rs 800 million.
Cleanliness model
Customers can call for laundry services on phone, online or through a mobile app. The Laundry Project team picks up dirty clothes and delivers clean ones to their doorsteps.
The packages start at Rs 1,299 per person per month for 40 clothes for corporate employees and Rs 5,000 for families, in Chennai and Bengaluru. Prices vary by city.
Balachandar claims his company charges 40 per cent less than the competition. After expenses, they have a margin of 20-25 per cent. "In each new city, we take around 12 months to break even," he said, adding the company would be in profits in 24 months.
The market does have some competition.
Jyothi Fabricare Services, a part of Jyothi Labs, launched last decade, raised Rs 50 crore or Rs 500 million from IL&FS in 2008 and has expanded quickly to about 100 stores through acquisitions.
It has acquired Delhi-based Diamond Fabcare and Four Seasons Dry Cleaning, Mumbai-based Akash Cleaners, Bengaluru-based Snowways Laundrers, and Pune-based Fab Clean and Care.
These are some: Quick Clean, a laundromat backed by Electrolux; Spanish brand Pressto, which entered the country in 2008; WonderWash; French player 5-a-sec and SSK White Collar, with presence in several cities. But even with competition from regional players, there is enough room for growth. The quality of service is likely to be decisive.
"We believe that with the rising middle class and emerging problems such as lack of domestic help, paucity of water and electricity as well as time, taking away the pain of laundry would be a very lucrative business," said Durga Das, managing partner, Das Star Ventures, and managing director and co-founder, Wassup Laundry.
The investor holds 75 per cent of the company. She believes the laundry, uniform leasing and spa services of the company growing strong over the next few years.
Road ahead
As a player in a labour-oriented industry, the biggest challenge for the Laundry Project is recruiting and training the right people and changing the perception of the consumer.
"Hiring the right people and easy access to water are the two significant challenges," said Balachandar.
The company is planning to start a training academy to meet the personnel challenge. It is also tying up with laundries and dhobis to expand their presence, and investing in a water recycling operation.
It plans to have a presence in 10 cities by 2016. The potential markets are Pune, Chandigarh, Visakhapatnam, Mysore, Coimbatore, Kochi and Ahmedabad.
Fdrom the 30 stores now, they plan to increase to 200 in the next two years.
The company has already become an on-demand service, making offers through a mobile app. In the second quarter of this financial year, it plans to launch a home cleaning service, in collaboration with an international company.
It already has a technology platform to help integrate the entire supply chain.
It is looking at raising Rs 50 crore in a Series-A funding to support its growth over the next three years.
Das Star would dilute around 30 per cent of its shareholding for the fund raising. In 2014-15, the company reported revenue of Rs 5 crore, compared to Rs 3 crore in 2013-14. It is targeting Rs 25 crore for 2016-17.
FACT BOX
Area of business: Laundry and dry cleaning
Started: February 2012
Revenue: Rs 5 crore (2014-15)
Target: Rs 25 crore (2016-17)
Fund-raising: Rs 3 crore seed funding from Das Star Ventures in December 2011, $2 million from HNI in Chennai in May 2015. Looking to raise Rs 50 crore Series-A funding.
Anshul Gupta
EXPERT TAKE
The laundry segment has been very dynamic in the past few years. It was dominated by unorganised players but professional cleaners are entering the market, which still has a lot to offer.
Both segments - daily wear and premium garment cleaning - are large enough for steady expansion.
The market has widened considerably. People are now more open to sending daily clothes to laundry because of lack of time.
Sustainability would be a major challenge for players in this service segment.
One needs to connect continuously with customers to gain their loyalty. It is a Herculean task.
The market is also price-sensitive. Most customers will tend to shift to the cheaper service. Customers are also unaware of the service and unable to distinguish the better service.
Another challenge is the high real estate cost. Most of the market is confined to tier-I and -II cities.
But the huge potential in the segment is attracting corporate and venture capitalists.
The Laundry Project has followed the hub-and-spoke model, centralising the processing and collection centres, while offering door-to-door services.
The secret of success in this model is in the supply chain management and stringent quality controls. To meet customer expectation is the biggest challenge. They have grown in the past couple of years, and we wish to see them expand to more cities.
Anshul Gupta, the writer, is co-founder of Quick Clean Private Limited
