Demanding Customers (or are they?)

Uber changed everything.

Or did it?

There’s no doubt that if you own a taxi medallion or drive a cab then Uber has upended your world. Your life and your livelihood have been “disrupted.” The business model that Uber seized upon – leveraging technology to fuse pent up demand with excess supply – has been so wildly successful that they, more than any other company, have come to define the “on-demand” economy. So much so that “Uber” and “on-demand” are virtually synonymous.

Uber’s runaway success touched off a scramble among copy-cat venture capitalists and entrepreneurs everywhere who, gripped by FOMO (fear of missing out), went looking for the next Uber opportunity. Surely there were people willing to pay a premium for other services that could be summoned with the click of a smartphone button. But where would they find that opportunity? Grocery stores? Housecleaning? Laundry?

And that brings us to Washio.

It wasn’t long ago that much of the chatter in the laundry pickup and delivery space was dominated by talk of Washio – a company that literally defined itself as the “Uber of laundry.” But If you’ve been paying attention to the laundry pickup and delivery space then you know that after two years and 17 million dollars, Washio exists only as an industry cautionary tale.

So what went wrong? Surely there was a market for people wanting their laundry done. (Laundry is, according to Proctor & Gamble, the second most hated chore). And we all know that the Laundromat industry – on the micro level of our individual stores and on the macro level of the industry as a whole – suffers from over capacity. Fertile ground for the “Uber” model, no? So we ask again, what went wrong?

Washio made lots of mistakes but perhaps the biggest – and one that absolutely contributed to their premature death – was believing without any evidence that their success was contingent upon offering their customers the “convenience” of on-demand service.

There’s no doubt that we made mistakes along the way. Lots of mistakes. But we survived because we learned (unlike Washio) that offering true on-demand service – where the customers dictate your pickup and delivery schedules – is a very good way to kill your margins and lose money.

Lots of money.

Quickly.

Unless you’re doing a very high volume of business in a very compact area, you can be undone by the on-demand inefficiencies. Here’s the good news: People don’t think of laundry as an impulse item. It’s not so much an “I need it right now” service as it is an “I’d like it sometime today” service. That means you can build your service around routes that you define and your customers will be perfectly satisfied with that arrangement. There’s nothing to prevent you from offering service 5 days a week to the same neighborhood, but you may find that you don’t need to. Route-based is win-win for everybody. Focus on what your customers are really “demanding” – great customer service and near-perfect execution and build yourself an efficient and uber profitable route-based business.

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