Turning Dirty Laundry Into A Profitable Business: UClean On A Path To Disrupt The $34 Bn Unorganised Market

“Behind every successful woman is a basket of dirty laundry,” Sally Forth quips in Greg Howard’s famous daily comic strip by the same name. The statement, Arunabh Sinha will agree, resonates with wisdom that is surprisingly universal. In fact, it was essentially what inspired Sinha’s first entrepreneurial venture: UClean, a tech-enabled startup that specialises in laundry and home cleaning.
 
With over 40,000 monthly customers and nearly 1,500 orders per day, Faridabad-based UClean claims to be India’s first organised chain of laundry and home cleaning stores, focused on fostering the DIY (Do It Yourself) culture. The startup offers its customers an option to wash their clothes at their nearest UClean outlet, according to their convenience.
 
It also offers pick-and-drop services for dry cleaning, laundry, and iron services, among other services. Based on the franchise model, UClean has till date raised more than $1.5 Mn funding across two rounds. Present in around 16 cities across India, the integrated laundry startup recently announced its $615K fundraise from US-based angel investor Anubhav Chopra.
 
As for Arunabh, he is an IIT Bombay graduate with a good amount of experience in the franchising and startup space. He has been instrumental in the India entry of several international brands including American food chains Carl’s Jr. and Fatburger, French luxury brand Longchamps and retail brands like Poney, Jymka, and Bricks 4 Kidz. In his last professional stint, prior to starting his own venture, Sinha headed the North India operations for Treebo Hotels.
 
During a recent interaction with Inc42, founder and CEO Arunabh Sinha shared some of the highs and lows of UClean’s journey, from the initial fund crunch to hitting profitability at the operational level in just over one year after its inception.
UClean, like many other businesses that have stood the test of time, was founded on an idea taken directly from the pages of real life. Sinha explained, “One fine day I saw my wife lose her cool with our house help over laundry. There was a lot of pent-up emotions which she vented that day when she couldn’t stand the daily haggling over laundry.:
 
This was, what we call colloquially, a light-bulb moment for Arunabh. Having discovered the huge untapped market opportunity quite accidentally, he immediately set out to look for a viable solution that could turn the mundane chore of doing laundry into a lucrative and sustainable business.
 
As he recalls, “Thereafter, I spent a lot of my time researching laundry and laundromat concepts globally and was particularly impressed by the growth of laundromats in Southeast Asia, Malaysia, Indonesia and Philippines in particular.”
 
The more he studied, the more he realised just how laundry has flourished across the world as a brick-and-mortar concept. Being a calculated risk taker, after extensive research and analysis, Arunabh took the plunge, building a laundry business based on the “offline first, online second” model.
 
Thus was born UClean. The tech-enabled integrated laundry services provider was incubated in October 2016 by initial Seed investment from franchising and licensing solutions company Franchise India.
 
In November of the same year, US-headquartered Alliance Laundry Systems also backed the venture, becoming its exclusive equipment and technology partner in the process. Within a few months, the company also onboarded actors Soha Ali and Kunal Khemu as its strategic partners, in a bid to further expand its reach. It was around the same time that the first two UClean stores were launched in Vasant Kunj, Delhi and Sushant Lok, Gurugram.
Currently, UClean’s key services include ‘Wash and Iron’ and ‘Wash, Fold and Dry Cleaning’, among others. Although the startup is age- and income group-agnostic, its primary target audience is nuclear and DINK (Double Income No Kids) families.
 
As stated by Arunabh, these are ‘live at-store’ services where the entire processing happens at the store itself. With technology at the heart of the brand, UClean also enables time-crunched customers to avail ‘pick-n-drop’ service from the comforts of their home or office.
Recently, in February 2018, the laundry startup forayed into the home cleaning segment with its new subsidiary Mint Clean, currently available in Delhi NCR. Under the ‘on-site’ category, it offers services like carpet cleaning and upholstery cleaning where the startup’s team travels to the customer’s premise and executes the service directly at the customer’s home.
 
Essentially, Mint Clean operates as an on-demand direct-to-home cleaning company, which offers door to door cleaning solutions through a “man and van” model. The brand was officially launched in January this year and has already commenced pilot operations in Delhi-NCR.
 
Like UClean, we would be building Mint Clean through the franchise route and would be targeting 100 franchises of Mint Clean by 2020. As part of the move, Mint Clean is currently working to create a tech platform for the business, which predominantly is B2B2B and B2B2C in nature.
 
Another service that the company recently launched was UClean Select, which is a premium dry cleaning offering for clothes and bags. The laundry startup announced the launch of its first UClean Select store in Delhi.
 
During the launch, the integrated laundry services provider also unveiled its upgraded Android and iOS apps, which are designed for the convenience of last minute bookings and quick doorstep services. As stated by Sinha, the company is aiming to set up around 50 franchises of UClean Select by 2020.
 
How UClean Is Disrupting The Laundry Market With Technology
As per reports, the Indian laundry industry is estimated at $34 Bn (INR 2.2 Lakh Cr), of which the unorganised market (dhobis, maidservants, and mom-and-pop stores) is valued at $771 Mn (INR 5,000 Cr).
 
The sector is fragmented with 767K establishments, 98% of which are micro-sized laundries with fewer than 10 workers. The organised segment comprises a mere 2-3% of the entire laundry market in India.
UClean, according to Arunabh, is built on the vision to bolster this industry collectively in collaboration with the local operators. The startup is primarily leveraging technology to offer the convenience of pick-up and drop-off to the customers from the comfort of their homes, through the click of a few buttons.
Technology also enables it to keep the entire process transparent, where the customer has full visibility into the whereabouts of his/her garments at any point in time through automatically generated SMSes.
 
All stores are controlled centrally and also equipped with supply chain support through a central proprietary software called CleanOps. This software, as per the company’s engineering team, helps the franchise owner to keep a tab on all active bookings as well as the status of the inventory. This, in turn, allows them to plan the orders well in advance, averred Sinha.
 
On how the startup is utilising technology to bring efficiency to the fragmented laundry sector, Arunabh added, “The idea has always been to build UClean as a hyperlocal neighbourhood concept, powered in the front end by technology. We will continue to work on streamlining the overall supply chain even further and are working on developing technology-based modules for the same.”
 
From Touching 1500 Daily Orders To Hitting Operational Profitability
Backed with innovation and a vision to modernise the still-antiquated laundry market in India, UClean, in just over one year, has managed to expand its presence across 16 cities. Today, it services around 40,000 customers every month on a pan India basis and claims to have a high percentage of repeat subscribers.
 
Clocking over 1,500 orders daily, the startup processes nearly 100K kilograms of clothes per month currently. As shared by Sinha, at present, every UClean store is fully equipped to process clothes in-house.
 
Furthermore, each of these outlets has in-house laundromats and a full-fledged vacuum table-based steam iron setup, which enables the company to swiftly deliver processed and packaged clothes back to the customers.
 
Through its many products and services, UClean is also striving to empower local entrepreneurs and small businesses operating in the laundry space. According to Arunabh, the entrepreneurs are trained, equipped and handheld during the process of building and operating their own UClean franchise store.
 
With a workforce of more than 60 people across offices in Mumbai, Pune, Hyderabad, Kolkata and Bengaluru, apart from its headquarters in Faridabad, UClean has raised over $1.5 Mn (INR 10 Cr) in funding till date across two rounds.
 
Highlighting the impressive growth that the company has charted in the last 12 months or so, its founder Arunabh Sinha said, “UClean is striving to not just be a brand but an overall segment creator. In a segment that remains technologically challenged, despite its enormous potential, we have already become operationally profitable with decent cash flows.”
 
The growth, as attributed by Sinha, has been largely due to the strong partner network UClean has.
 
On Overcoming Fund Shortages And Crippling Stereotypes
“When we started in the first place, we had limited funds at our disposal. Starting a store of our own would have meant deploying all the funds in this single store, which would have limited the scope for quick expansion,” replied Sinha when asked about the initial pain points in UClean’s journey.
To overcome this challenge, the team took a conscious call to use the funds to go all out in the market to look for franchises who would work on the FICO (Franchise Invested Company Operated) format and quickly help set up ‘proof of concept’ stores in the market. However, as Arunabh recalls, it was easier said than done.
 
Since the startup did not have any stores that were operational at the time and its founder and CEO did not have an existing laundry background, it was a major hurdle to convince investors to jump onboard. For close to two months, Arunabh and his associates met around 30 investors but could not get a breakthrough.
 
Things, however, took a turn for the better when Franchise India pumped nearly $1 Mn in UClean as part of its initial fundraise. On the company’s future plans, Sinha clarified, “As a brand, the target is to become the one-stop-shop for all cleaning requirements inside a household. Whether it is dirty clothes, dirty carpet, dirty upholstery, dirty homes or dirty car, we want to cater to all of them.”
According to estimates, there are nearly 100 startups in the laundry market in India, including Laundryprime, UrbanDhobi, Super Dhobi, Wassup, LaundryAnna, Laundrokart and Washbuddy.
 
Then there are those in-home services sector offering laundry services such as Zimmber, Amazon-backed HouseJoy, Urbanclap, among others. Another player in the space, PickMyLaundry, announced the acquisition of subscription-based laundry services provider OneClickWash in an all-cash deal last March.
 
Despite the burgeoning competition, Arunabh claims that there are quite a few counts on which UClean stands out. Operating a chain of laundromats that provides ‘live cleaning services’, the startup ensures greater transparency by allowing customers to see the entire process at any point in time.
 
Elaborating further, Sinha stated, “This is very unlike the local mom-and-pop operators where you have zero visibility into the overall process once the clothes leave your place. You have no visibility about where the clothes are getting washed (ghats or washroom or river), the kind of water that is being used, the kind of chemicals that are being used or even the way the clothes are handled. This has resulted in a huge sense of distrust, which is what UClean wants to eliminate.”
 
Editor’s Note
A report by FMI, titled “Laundry Care Market: Global Industry Analysis and Opportunity Assessment”, estimates that the global laundry sector will witness a sizeable revenue growth from about $75.5 Bn in 2017 to nearly $127 Bn by 2027 end, resulting in a CAGR of 5.3% during the forecast period.
 
This means that it would take only 1% of this market for a company to become a billion-dollar enterprise! Now wonder, startups are moving in fast to conquer the category, which in India remains largely unorganised.
 
In India, laundry has always been a necessity and a time-consuming chore. As estimated by Arunabh, by end of 2020, more than 3 Mn Indian households will need outsourced laundry and cleaning services due to time crunch and rising disposable income.
 
This represents a huge opportunity for startups, regardless of whether they offer on-demand laundry services with vendor association, or with a functional plant, or through a hub and spoke model, or by aggregating laundromats.
 
Having already turned profitable at the operational level, UClean is undoubtedly in a strong position to emerge as one of the champions of the organised laundry market in the country. With an assortment of products and services, whether it manages to turn dirty laundry into a sustainable business will be interesting to watch.
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