Funding does not seem to have dried up completely for on-demand laundry space. After PickMyLaundry raised $200K in angel round, Bengaluru-based LaundryAnna today raised Rs 1 crore in seed funding from a group of angel investors.
Prateek Rana, Founder of LaundryAnna, said that the funds will be used to expand the processing unit and supply chain and logistics. LaundryAnna operates on a full-stack model and owns complete supply chain from logistics to garment processing.
Started in 2015 with a capacity of just 300 garments per day, LaundryAnna now processes over 3,000 garments every day. Currently, it operates only in some selected areas in South Bengaluru. LaundryAnna operates as the exclusive partner for many apartments and hostels like Symbiosis Institute, Serenity Group of hostels, IIITB among a few.
Prateek brought rich experience in service industry with companies like ITC Sheraton, Kingfisher Airlines and Biocon. Prior to LaundryAnna, he also co-founded a social enterprise HouseMaidForYou, working on upliftment of domestic workers with his spouse Rathi Rana.
“LaundryAnna doesn’t see this as a market of just cleaning and delivering garments at the doorstep, but building trust and goodwill with the customers. Still, there are abundant opportunities and no big player emerged as of now, and the one who shows long-term commitment, better in-house technology and logistics along with a strong focus on customer satisfaction can certainly stand to gain a lot of traction and will emerge as the leader,” said Prateek.
Traction and future plans
Prateek said that the decision of working with apartments and college hostels proved to be good as it helped to cut down logistics and processing cost by a significant margin and developed a sustainable model.
He further added that almost 80 percent of the order of LaundryAnna are from repeat customers and a good number of users have been added without significant marketing expenses or discounting.
LaundryAnna plans to expand to other areas in Bengaluru and will not consider franchise model owing to stringent focus on quality and turnaround time. It will continue to have in-house processing and upgrade the existing infrastructure to cope up with the expanded operations.
Online laundry going through tough times
According to a Euromonitor International report, the unorganised laundry sector in India is worth 200,000 crore annually. Only five percent of the market is organised, while the rest remains unexplored.
While the online laundry space has seen few startups raising Series A fund last year, this year it has witnessed two angel investments. It is no more hidden that the online laundry space is going through rough patches. Mumbai-based Doormint and Delhi-based Tooler shut down its operations this year. Bengaluru-based Mywash got acquired by Housejoy and home services startup UrbanClap shuts down laundry services.
In an open letter to laundry entrepreneurs and investors, Wassup founder Balachandar R said,
“These events have led to the loss of entrepreneur and investor confidence in our industry, which is pegged at $34 billion in India alone. Be fully integrated or a managed hybrid model. If you carefully look at people who have shut down, 90 percent of them have been aggregators.”
He advised to the entrepreneurs in the laundry space to go for a combo of B2C and B2B. B2B is not an as easy a business as it seems, but it is totally complementary to a B2C model and helps achieve earlier breakeven and lowers cash burn.
“Focus on unit economics and find your answer for logistics costs - logistics costs for on-demand laundries are 40 percent or more as it has reverse logistics too,” said Balachandar.
Prateek mentioned that LaundryAnna does not outsource any of its services related to the processing of garments and logistics to any third-party service providers.
LaundryAnna currently has a team of 25 employees. According to Prateek, the startup is has achieved a revenue of Rs 1 crore in the last year and is growing by seven to eight percent per month.