Zenoti looks beyond marketplace model, caters to beauty and wellness segment’s niche requirementsTausif Alam
There is not a single sector that hasn’t been impacted by technology and the spa world hasn’t been spared.
Along with the increase in demand for spa and wellness treatments, technology-based platforms are also upping the pace looking for solutions that will ease business challenges for service providers. With the evolution of the industry, salon, spa and wellness operators of all sizes need modern tools to manage their business and meet evolving consumer demands.
Founded in 2010, Zenoti, formerly known as ManageMySpa, is a platform that provides services and solutions for the entire spa and wellness industry. Initially, the product was built as a management solution for spas and salons. Over the years, it has grown to include other wellness and beauty service retailers including studios for Yoga and Pilates, fitness centres, and a variety of wellness clinics. It is a large market that Zenoti is targeting. According to a KPMG wellness report, the beauty and wellness market in India is expected to nearly double to Rs 80,370 crores in FY 2017-18.
“Changing our name from ManageMySpa to Zenoti gave us a sense of approachability for businesses other than just spas and made the company seem neutral in terms of the industry we were targeting,” says Sudheer Koneru, Founder and CEO, Zenoti. He is a serial entrepreneur and has 20 years of experience in the software industry.
Birth and growth
Before Zenoti, Sudheer and his brother Dheeraj Koneru had founded and operated a chain of spas and fitness centres under the Tangerine Spa and Salon and Latitudes Fitness banner in Seattle in the US. As he saw the business of salon and fitness brands grow in India, it quickly became apparent that there was a market gap between what a business needed and what the existing software solutions could actually address.
This inspired him to launch a platform that would fill the existing gap between the service and solution provider. Their platform offers software solutions for billing and inventory, marketing, online bookings, and other services to both chains and individual centres.
“Our experience helped us to recognise what the market was missing and they had the experience and know-how to build an enterprise solution,” says Sudheer.
Headquartered in Seattle, the company has offices in seven countries and a customer base in 30 countries. The company has made a significant investment in the Indian market with clients, including Kaya Skin, Enrich Salons, O2 Spas, and Blush Clinics.
“To reach this stage, we’ve always committed to customer success. We upgrade our platform every month. This means that customers are constantly receiving enhancements, and we’re able to respond to market needs very quickly,” says Sudheer.
He adds that he has also invested heavily in technology internally to grow the business. Internal departments such as sales, marketing, customer support and product management make use of the best-of-breed technology to help the platform do better and perform faster.
Today, six years down the line, Zenoti is believed to have a presence in 35 countries with offices in seven countries. Over 5,000 outlets, operating from 853 cities across the world, are said to using this platform.
In July 2015, Zenoti raised $6 million from Accel Partners in a Series A round. It says that the investment allowed them to accelerate sales and marketing, globally. It’s also planning to raise Series B this year.
Market embraces technology
According to Frost and Sullivan, there’s an addressable market of over $4 billion in the beauty and wellness business across the world.
In 2014, the market for enterprise software solutions was valued at $9.5 billion and is set to cross $15 billion in the next two years. With the expected growth, it plans to capture a larger piece of the market in the next few years.
“When we first started in 2010, we had to convince spas and salons to move from using in-house manual methods to running their business with a software. The next step was convincing them about the merits of cloud technology, especially as most spas and salons did not want to invest in the Internet back then. Today’s landscape is very different. The brands that adopted technology were the ones that were able to grow very rapidly, and it’s something that is recognised in the industry,” says Sudheer.
He adds that today, as the company scales, it’s a challenge to consistently provide strong service delivery, a thorough onboarding process, and exceptional customer support. It is one thing to build a powerful solution, but without proper education and awareness, the adoption of the solution can fail.
Yuvraj Singh-backed Vyomo is another startup that offers CRM, ERP, EPOS, performance management, booking management and data analytics and AI. Last year, it raised another $2 million in a Pre-Series A round from Rocket Internet.
Stylofie is another technology-based platform that provides a unique model where, as a partner of a salon and spa, it provides them with bookings and insights into their daily operations, with solid unit economics from day one. In September last year, the Gurgaon-based platform raised $250, 000 in seed funding from a Hong Kong-based company Swastika. This year, it raised an undisclosed amount from Jaideep Mehta, managing director (South Asia) of IDC.
On competition, Sudheer says that there are a few modern solutions, some of which are run on the cloud. “We differ from those solutions largely in that we’re designed for the enterprise. Our solution is architected to handle scale very well. This is important not only in Asia, where brands are rapidly growing, but also in the US, where technology is a significant competitive differentiator.”
Now the platform is looking to further penetrate the Southeast Asian market and the Middle East. “Our expansion today is largely focused on the US, which is the single-largest market with many small, medium and enterprise brands,” says Sudheer.
It has recently launched a new consumer initiative called Take5 in India. It is a mobile app, used by consumers, and helps users find salons and spas based on real-time availability, proximity, ratings, and so on. It expects to take this app to a global audience very soon.
What others think?
According to Vikram Bhatt, Founder, Enrich Salon, the beauty and wellness industry has completely transformed over the past two decades. “As the business has grown, the industry has also grown through the behavioural change. And technology has played a crucial role tin bringing this much-needed development. Platforms like Zenoti have helped in managing our complex business environment situations efficiently and smoothly.”
According to Shekhar Kirani of Accel Partners, an investor in Zenoti, Accel invests in companies with strong founding teams and a product that serves high-growth markets. He believes that Zenoti is at a pivotal point in its growth trajectory and has all the competencies to become the leader in its space. We’re excited about the momentum the company has experienced so far and the growth of the wellness industry globally.
In the past few years, many startups have thronged to the beauty and wellness industry. They are trying to provide various solutions; and marketplace models with some technology assistance have got the maximum attention. Vyomo, Stylofie, and Purplle are some of the major businesses following this model.
However, platforms like Zenoti are addressing the pain-point of individual spas and offering various kinds of software solutions to them.
In the past few years, Zenoti has spruced up its position with its eye on the Indian market. This space seems promising and is open for more plays. We anticipate more startups will have an eye on this space that is worth millions in the MENA region.