Why On-demand laundry app, FlyCleaners failed. Top on-demand business challenges you need to know before going for on-demand app development?
Posted on June 17, 2019 By Dikshita Dudhat
“Sharing”, “Peer to Peer”, “Gig”, or “On-demand” industry has received criticism for incorrect business practices and higher business risks. In fact, a leader of the World Economic Forum, April Rinne stated in one of his interviews that on-demand services are complex and messy in nature. These services are valid only in a limited manner.
However, a few on-demand taxi and food delivery services have shattered illusion about incorrect and incomplete on-demand services. With the help of unique customer-friendly services, profitable business model and customer acquisition techniques, they have shaped the on-demand economy. Inspired by their overnight success, many new entrepreneurs have come up with different ideas to amplify the reach of the on-demand economy. One such idea which is to start on-demand laundry service has helped owners of FlyCleaners to earn well. However, they recently laid off the majority of their employees as (according to the founder of FlyCleaners), cost of the internal team was too large to bear and it wasn’t letting them sustain the growth of the business.
In this blog, you will get to know,
- On-demand economy
- About FlyCleaners and why FlyCleaners failed?
- Things to avoid to kick off a successful on-demand laundry startup or any on-demand business.
- How much does it cost to develop the on-demand app?
In the last few years, several companies have shown the huge impact on on-demand business. Uber which was started its operation in 2011, had total assets worth $24 billion in 2018. Another on-demand accommodation provider company Airbnb which hits the valuation of $35 billion. These companies have already surpassed other top incumbents.
Talking about a few more facts about the on-demand economy, more 280 companies offer on-demand services in 16 different industries as the demand for on-demand services has expanded to every industry.
Though its impressive market share, according to BIA/Kelsey, current on-demand economy serves only 7% of its potential market, that means, there is still a lot of room available for new entrepreneurs to start an on-demand business.
But exploiting that potential business can only be possible with proper risk management, IT infrastructure and customer service.
Apart from this, the top 5 on-demand startups have seized more than 75% of the funding.
Insight into an on-demand laundry service provider, FlyCleaners and why it failed?
FlyCleaners is the USA-based on-demand laundry service providing company. It was founded by David Salama and Seth Berkowitz in 2013 with the ambition to take away people’s least favorite chore which is laundry. In their one only funding round, they have raised $2 million. That series A funding round of the FlyCleaners was lead by Zelkova ventures in 2013.
How does FlyCleaners function?
Like all other on-demand companies, FlyCleaners satisfies its major business operation with an on-demand mobile app. It allows the user to request a pick-up team of the FlyCleaners to pick up the clothes. Then, the pick-up team of the FlyCleaners delivers the clothes of the user to their laundry partners. Business partners of FlyCleaners handle the cleaning of clothes. They can even update the status of cleaning in their app. Once the cleaning is completed, users can again request a team of FlyCleaners to deliver the washed clothes to their doorstep.
Here it is worth to mention that FlyCleaners isn’t deriving benefits from the last-mile logistics industry as when FlyCleaneres was started, the gig industry or last-mile logistics industry wasn’t capable to offer effective services to their customers.
But why FlyCleaners failed?
According to Max Loosen, who is the co-founder and CEO of Singapore-based on-demand platform for cleaning and household services, proper ways to use the model of on-demand service such as quality assurance, automatic key processes, are still being figured out in many industries. Though Uber and Airbnb have been successful, many other on-demand services are new concepts for users. Service of FlyCleaners is not at all similar to services of a few successful on-demand service providers. Thus, the prime goal of FlyCleaners should make people believe that on-demand laundry service is an excellent service. But they failed to convey how their service can possibly help users to get rid of one annoying task and became the victim of a thin market problem.
Disordered logistics, poor IT infrastructure, small margins, and destitute customer service also cause FlyCleaners to be asset-light organization by laying off the employees.
Business journey of FlyCleaners which has turned into arid plains from the rainforest is learning for entrepreneurs who want to start on-demand laundry or any other on-demand business. In the next section of the blog, we will study the challenges of the on-demand laundry business and how much does it cost to develop an on-demand app?
Which are the top on-demand laundry business challenges you should need to know before going for on-demand app development?
The on-demand industry is the bubble and it can be burst with a small mistake. So, don’t be bubble buster and prepare yourself to lock horns with possible business challenges of the on-demand laundry business or any on-demand business.
Settling in the local market
As we have discussed, many on-demand services may sound like jazzy which don’t make customers believe in the actual presence of such services in the market. Thus, you have to burn the candles from both sides to acquire the users by presenting the possible solutions of your on-demand laundry services in the all possible way. This initial customer acquisition process can last longer. Moreover, you also need to make sure, you keep the CAC (Cost to acquire a customer) as minimum as possible while customer acquisition process.
So, do you have ways to keep the CAC as minimum as possible?
While moving in the on-demand industry where all laws have been overlooked, hold your horses and study the rules and regulations of your desired operational areas. Many on-demand service providers like Uber have already been involved in legal battles over their workplace training, income instability, and privacy. You also need to be prepared to perform a daring maneuver if all of sudden a government imposes a new law while your on-demand app is already in the service.
So, have you studied the legal norms to keep away from the legal troubles?
As an on-demand startup, you, off course, follow city-by-city roll-out model that makes your services local. But deploying online marketing campaign to acquire the initial customers in a local market means many growth channels don’t work as an SEO campaign needs a nationwide footprint.
So, do you have the plan to run an online marketing campaign efficiently?
An on-demand service provider is neither a supplier nor a customer. But on-demand service provider let anyone be the supplier of a particular service. So, now when a customer requests for that service, it is the supplier’s call to respond on his request. But that doesn’t mean that an on-demand service provider isn’t a responsible authority. An on-demand service provider needs to make sure that his platform accommodates enough number of suppliers to deliver the services. If he fails to do so, he will not able to offer on-time services to the users and so, he will be considered as another failed on-demand startup.
So, are you ready to manage the supply according to the demand?
Customer experience is the driving factor of the on-demand business. Providing a good customer experience and showing them that you actually value their time and the issues can actually increase the user adoption rate of your on-demand business. Following image clearly depicts the fact that an on-demand and satisfactory customer experience can avail on-demand service provider to take many advantages.
So, are you ready to be armed with proper techniques to enable satisfactory customer experience?
Considering the fact that you are not a supplier of the on-demand services but you are the supplier of the platform on which independent suppliers can register and the customers can make a request for a particular service, an on-demand platform or on-demand mobile app can be called the product of the on-demand business.
The approach you choose to develop an on-demand app defines the future of your startup. You can either opt for app cloning approach or custom built approach. Going for app cloning is surely a pocket-friendly choice. But clone app doesn’t offer customization and some groundbreaking features like AI, BI, and data analysis.
On the other hand, a custom-built app development approach which cost more but makes your app equipped with all important features.
Thus, going for a hybrid solution that cost you less and provides all important features is the ultimate choice. But here it is worth to mention that, cost of on-demand app development highly depends on the number of customized features you ask on-demand app development company to integrate into the app. With every new customized feature, you are charged more.
So, are you ready to be flexible with app development budget?
How much does it cost to develop an on-demand app?
Coruscate Solutions is the top on-demand app development company which is capable to develop a clone app, custom-built app, and a custom app on a hybrid platform. Our highly skilled developers and designers have already developed a few on-demand apps and figured out the ways to develop a moneymaking on-demand app. With our hybrid platform named Vahak, we can develop a custom on-demand app within 45 to 55 days and under $10k. To know more about on-demand app features, visit our on-demand app solution page. We also provide a free demo of the on-demand app. So, feel free to ask for it.
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