How Cleanly works: Insights about On-Demand Laundry Business Model, Logistics and Revenue
On-demand Laundry Business Overview
On-Demand laundry industry has attained an impressive height with every passing year. According to a recent study, it is revealed that the majority of the millennial populace don’t want to invest their valuable time in day-to-day household chores such as washing the clothes as they have other important assignments to attend to. Moreover, it is often regarded as a very hectic and tedious job that can consume a lot of time. So, the on-demand laundry business application has come to their rescue.
The above-stated scenario is contributing to laundry and dry cleaning mobile app development and thus the demand for such apps is thriving at sky-rocketing pace. Statistics show the revenue of dry cleaning and laundry services is projected to approximately 7,660 million U.S. dollars by 2022 in the USA alone.
The Cleanly Story and how it works
The average urbanite spends 10 hours per month doing laundry. Cleanly is a laundry and dry cleaning delivery service that solves this headache with a single click. Scheduled from their simple app, Cleanly picks up, cleans, folds and then returns clothes all within 24 hours. Their technology also automates the entire logistics chain – this efficiency allows them to stay price competitive with the local cleaners at just $1.50 / lb.
Clearly, the on-demand laundry and dry cleaning service started in NYC, has raised $7.3 million in funding so far. There’s been an increased focus on profitability and difficulty to raise funding throughout the space, and some companies have had to shut down entirely — including on-demand laundry competitor Washio. However, if you take into account certain important aspects while building an on-demand laundry service, your business has a good chance to prosper.
Value Proposition for on-demand laundry business
- Schedule a pick-up according to their time.
- Specify laundry preferences along with the request (if any).
- Get prompt notifications on their phone when the clothes have been cleaned.
- Pay your bills easily – online, COD or other options chosen by you.
- Receive clothes delivery at their specified time.
The 4 step model about how cleanly works
Cleanly was started to create an alternative to typical laundry and dry cleaning experience, which too often involves confusing pricing, unclear processes or poor customer service. Cleanly is an alternative where delivery occurs at the tap of a button and happens around the customer’s schedule.
Cleanly’s revenue model
Cleanly has figured out a unique model that balances competitive pricing with profitable margins.
$1.50 per pound for regular laundry. 24 hr turnaround.
- 30% monthly compound growth for 12 months.
- 23% contribution margins.
- 76% customers order more than once.
- $985 avg. customer revenue/year.
Risks and Future Challenges
1. Differentiation and barriers to entry
Laundry is laundry to most people. Is Cleanly’s convenience and quality of service worth the 20% price increase over local shops? Also, there are other hyperlocal startups working on the same problem. Can the backend software and low costs set them apart from the competition?
2. Demand outside wealthy cities
New York and San Francisco are the most expensive cities in the US. Often proving grounds for startups like Cleanly, it’s difficult to know whether 10-15 other urban areas will spend money on luxuries like laundry delivery.
3. Finance risk
Cleanly has raised $7.3M+ since launching two years ago. They’re on track to profitability by 2019 but running out of capital is always a risk.
4. Macroeconomic trends
Economic downturn could pinch wallets and result in more people walking to the laundromat. Also, increased minimum wage could affect Cleanly’s cleaning costs.
What makes Cleanly unique?
Cleanly is known to rise above the rest for three stated reasons: the business fundamentals, cleaning quality, and punctual delivery. Other laundry companies have failed because they didn’t solve for driver costs or managing quality assurance at scale. Scheduled delivery allows them to keep drivers busy all the time and labor costs low. They also have a methodical growth strategy rooted in densely populating each new neighborhood with recurring customers before moving on to the next market.
Get in touch with us if you are interested in starting your own branded laundry and dry clean business.