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Pest attack? Just tap your app for it

Home and local services niches saw the highest number of new startups last year. But unfazed by the rush, players who eye a $100-bn opportunity see a
Last Updated 12 July 2015, 18:41 IST

The local and home services apps space in India is thriving with entrepreneurs and investors alike. While over 150 such marketplaces are estimated to be in operation, 70 of them were founded only over the last two years, as per a report by Tracxn, an analytics firm which tracks startups. Home services and local services niches saw the highest number of new startups last year, as per the report.

Operators are not intimidated by the crowded space. “The market is very challenging and provides an opportunity to do something interesting,” said Deepak Singhal, co-founder and CEO, Qyk. Nor is there any shortage of ambition. “The market is projected to touch $100 billion in the next five years,” he added.

Getting access to local services in time is seen as a painful experience, largely due to the lack of organisation and standardisation of prices as well as service providers. This is the problem which the app providers are trying to solve. These ePortals or m-portals do not just give consumers a platform to connect with vendors, they also search for vendors, screen them, compare prices, locate and identify suitable vendors, and finally, place orders for a service — all at the tap of a smartphone. In India, the space boasts of a host of players like LocalOye, UrbanClap, Qyk, Mr. Homecare, Timesaverz, HonestCollars and LookUp,  among others. 

Why the rush?

Aditya Rao, founder and CEO, LocalOye, has a theory on the surge. “Out of the two categories of things people want, the marketplace for products is saturated; however, the services market starves of organised providers.” With urban lives getting busier and the rise in spending capacities, demand for reliable and standard service providers has increased, he added.

Mumbai-based LocalOye has its presence in Mumbai, Bengaluru, and NCR. Ever since it set up shop in October 2013, it claims to have catered to over one lakh customers with a repeat rate of 28 per cent. LocalOye has raised $5 million from Lightspeed Venture Partners and Tiger Global Management as series A funding. The company plans to expand to four more cities in the next 12 months.

Saif Partners, Accel Partners, and Kunal Bahl and Rohit Bansal — founders of Snapdeal — have invested $11.6 million in two rounds in Delhi-based UrbanClap earlier this year. UrbanClap is India’s largest mobile services marketplace, claims Varun Khaitan, co-founder. The company currently serves in Delhi-NCR, Bengaluru, and Mumbai, where it offers more than 60 services.

Apps do the heavy-lifting

Another local services marketplace, Qyk, founded early this year, has spread its wings to Bengaluru, Mumbai, and Delhi. Qyk claims to be processing 20–30 per cent of the local services that are being transacted in these markets. Deepak Singhal credits it to the high level of customisation of services. “We do the heavy-lifting, by screening vendors as per customer requirements so that eventually, the transaction can be converted into sales. This saves time for both parties involved, and makes the transaction hassle-free.”

He notes that for services that are more general, like yoga instructors, the demand is high but the conversion rate is low. On the other hand, while the demand for a personalised photographer is not very high, the conversion rates are much higher. Qyk is seed-funded by an investor-base that includes Zishaan Hayath (co-founder of Toppr and Powai Lake Ventures), Abhishek Goyal (CEO and Co-founder of Tracxn.com) and Sahil Barua (CEO and co-founder of Delhivery).

Mr. Homecare has gone from offering just two services in March this year, when it started its operations, to providing five complete services package now. It raised Rs 4 crore initially and plans to raise a much larger round in the next 3–6 months. Asked about what sets it apart, Sahil Vora, co-founder, said: “We take the order and close the loop. And our experience with SILA (its facility management business) makes us better equipped to play in the market.” Mr. Homecare currently operates in Bengaluru, Mumbai, Pune, and Delhi. It has  plans to expand to two more cities by September.

Bigger players like Justdial and Sulekha definitely provide competition to startups, but each one claims to have core competencies in terms of what they seek to deliver and how they provide the service. “We are not a classifieds space; we, as a commerce platform, take charge of the entire process of using/providing a service,” said Varun Khaitan.

The element of completeness (discovery, comparison, negotiation and order placement) while making use of such services through apps, makes it more efficient and thus more appealing.

Today, people like to do and accomplish a lot with their smartphones; shopping, paying bills, submitting applications, etc. Local services apps allow for most of the pre-purchase transaction between a vendor and a customer to take place on their platforms. In this way, unnecessary wastage of time and money in looking for and screening vendors is avoided. Customers can also reach out to and connect with vendors located far away via such platforms, thereby getting a perfect match for their needs.

Although there are multiple operators in the market with many more jumping in, the players do not find it a problem, and in fact, consider it full of opportunities. “One positive of multiple players in the field is that a market is being created,” says Sahil Vora who does not see any threat. “Ultimately, the winner is not going to be the one that makes the best app, but the one who delivers the best,” he adds.

Local means moolah

“We do the heavy-lifting, by screening vendors as per customer requirements.This saves time for both parties involved, and makes the transaction hassle-free.”
Deepak Singhal, CEO, Qyk

“Out of the two categories of things people want, the marketplace for products is saturated; however, the services market starves of organised providers.”
Aditya Rao, CEO, LocalOye

“We are not a classifieds space; we, as a commerce platform, take charge of the entire process of using/providing a service.”
Varun Khaitan, Co-founder, UrbanClap


Quick stats

150 Number of marketplaces

70 Startups since 2014

$100 bn Projected market size in 5 years


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(Published 12 July 2015, 15:15 IST)

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