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On Demand Businesses 101

On Demand Home Services: Words of Advice

Live Life King Style

The on-demand home services industry is a very profitable one, and is also an extension of the spirit of the on-demand economy. All kinds of convenience at your doorstep, to be sure. The home services ambit largely refers to services whose purpose revolves around working on residential homes. This includes repair, decoration, refurbishment and more. Some home services companies may take on other commercial businesses like the delivery of various items, technological or otherwise. Strictly speaking, landscaping, flooring and other technical concerns fall into the home services categories in addition to the ones mentioned above.

Franchisehelp estimates this to be a $400 billion market as of 2016, which is hardly a small number by any margins, especially for the on-demand surge.

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Home Services capitalizes on the convenience factor, one of the greatest constraints plaguing this sector. In countries not that tech savvy, the time factor becomes apparent. Getting a repairman, or a specialist to one’s house is not the convenient an affair – especially when urgent repairs and needs are a concern. Most of these contractors are not really part of a grander database, and it is only with the rise of the smartphone that we have seen services become more flexible and accessible.

While in many developing countries, the labor may be relatively cheap, the story is quite different in the developed nations. The fact that most home services agencies tack on the convenience and manage to not be the most expensive service out there makes up for their costs – but just barely, depending on what model one follows.

One of the most crucial factors in the home services industry is skill, which differs from one repairman to another. This is doubly true of intricate jobs and certain ones that require aesthetic sensibility. The on-demand agency here replaces word of mouth reliability with digital ratings and user feedback, creating a network that was more powerful than the ones before.

However, all is not rosy in this covetous garden. Like the Eden of Yore, business disrupting serpents may just lurk across your trees of profit, trees that you so careful planted in the form of business ideas and investments. Even the on-demand sector sometimes consists of an extreme of models with the smattering of apps and services available.

A few noteworthy names are (or were): Homejoy, Exec, RedBeacon, and ServiceMagic and a new contender, HouseCall. Services like Homejoy specialize in one kind of house service, like cleaninh/housekeeping. On the other hand, companies like RedBeacon try providing a wide umbrella of services but involve a lot of form-filling, in addition to the wait that is involved when service matching takes place (by bidding etc.). Time is an immensely precious commodity for on-demand, and RedBeacon may just fall short in that regard.

HouseCall and UrbanClap are companies which bridge this inconsistency, where they try providing a wide amount of services which also are instantaneous in the delivery. They also deal with a lot of problems which involve tapping into a very finite supply of professionals and moreover, solving the issue of trust that often accompanies strangers coming into your house and leaving it intact, to pardon the indiscretion.

The Fall of Homejoy

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Homejoy, founded in 2010, was one of the most intense examples of innovation in the home services industry – a time when on-demand itself was taking off. Homejoy specialized in bringing housekeeping and cleaning services to customers via a smartphone app, and served in three countries at its apex: Canada, UK, and the US.

Homejoy charged customers per cleaning request, at an hourly rate. What was previously a slow job market quickly saw many cleaners go through their on-boarding process, which involved background checks and the like for instantaneous job creation.

Their dedication to this service was legendary. A particular story even claims that one thanksgiving in 2013, Adora Cheug, CEO and founder, took a cleaning brush and undertook a call herself when one customer’s request slipped unnoticed.

However, this success was short-lived. Homejoy, which was charted to be the fastest growing Y combinatory company, folded almost overnight due to a slew of issues which only became apparent in retrospect.

What primarily was made out to be a company which went down due to potential lawsuits, was actually a downfall engineered due to various causes. Homejoy’s treatment of its employees as contractors was a major pitfall, yes, what with four lawsuits and other companies like Uber facing the same at the time. It was a ripe season for litigation.

House-Services and Scrutiny

However, a closer look revealed other problems. Customer retention was a big one, in addition to the model itself being faulty as compared to industry standards. Many customers simply used the massive Groupon discounts (made available by the company in abundant quantities), getting their cleaning done in $19.99 – never to return again.

In short, the amount of money spent by the company to acquire customers far outweighed the returns they provided them with.

It was also another case of a company favoring aggressive growth over revenue, which does not do well in the on-demand economy – definitely not in the long run. Hyperlocal streamlining has to scale up accordingly – expansion cannot be undertaken blindly, without any thought as to how to sustain it. The fact that different models work with different countries according to their economic climate and industrial scenario also needs to be taken into account – which Homejoy discovered soon enough when they erroneously tried applying the same model through three cities.

The company was also plagued with other issues like being unable to deliver efficiently, and technical problems of time-management with service quality. If routing and scheduling services are not backed up with an intelligent, constantly evolving technological platform, then it only spells disaster of the worst form.

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Competitors only make the case worse, especially when you cannot differentiate from your competition OR match up to them – as its race with Handy proved.

The last lesson we can take is that of sustaining a rich work culture despite the fleeting nature of work itself in the volatile economy of freelancers and instant specialists. One has to ask whether specializing in only the cleaning services section is good enough, or whether diversification is key in a sector that is plagued by stagnation and further demand for trained, specialized personnel. Both, the demand and the supply sides have to be adequately crunched in order to stay afloat, and later thrive – entrepreneurs need to take heed when venturing into this market.

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