Next Wave in Retail India: On-Demand Hyper Local
Next Wave in Retail India: On-Demand Hyper Local
Not country-wide expansion, but category expansion is on-demand hyper local player's focus. 
India has a tremendous untapped market for the hyper local marketplace for services, which, with the aim to connect experts with customers, is seeing traction and a massive spurt of investor and start-up activity recently.
Many companies came into the picture as classified listing platforms, but they left the customer hanging in the middle after a contact was established. It left scope for a platform which will connect customers with 'customised' service professionals for their daily needs. Enter on-demand hyper local service provider, LocalOye, which started in 2013 as a venue booking service for weddings and private parties and went on to become a horizontal marketplace offering more than 30 services to the customers across ten categories such as home, education, beauty, health and fitness, astrology (online), financial consultancy (online), event planning etc.
Backed by Tiger Global and Lightspeed Venture Partners, LocalOye can help connect customers with experts rather quickly. Competing with other on-demand hyper local platforms such as UrbanClap, Housejoy, Timesaverz, TaskBob etc, this is how LocalOye's model works: A customer logs onto the app to look out for a personal trainer and with the help of the recommendation engine finds a suitable profile. He finalises the trainer he thinks is best for him and connects with him.
Nitin Abbey talks to the LocalOye's sole founder Aditya Rao and discusses about the model of business and category expansion plans among other things.
 
Explain your business model in brief.
The way it works is that it is completely free for all the customers. LocalOye doesn't charge them anything; of course, they have to pay the service provider upon being serviced. We make money in that we have a prepaid account, and when any service professional sign on to the platform they have to sign up for Rs 7,000. We have a recommendation engine which recommends the right kind of partners to customers who log onto LocalOye on Web or app. Now these relevant matches will send a query on the service provider's phone, letting her know of the details. They can further look out for the user requirement and can get back to them with the quotation. And every time they talk to a customer, we deduct Rs 500 from their account. He will get customers till his prepaid account will have balance and it is discontinued if the prepaid value is finished, until he gets a recharge.
 
So, it is not a transaction-led model wherein you will charge if the service is taken by the customer?
That's an interesting question. Although we have set up a hybrid model now, which until recently was a prepaid account model only, we did experiment with the transaction model. In categories like beauty and home services we do take full ownership that the service provider will deliver their job. We take a potential cut from the prepaid account and a transactional cut from the confirmed value that it was able to provide to the customer. Categories like event services, education etc is not possible to do under a transaction-led model because it will sometimes take weeks, even months to decide and for the final transaction to take place. That cannot be done online. For those kinds of services, we only have a prepaid account.
 
What would you attribute the spurt in investor and start up activity in the hyper local space to?
I would say the wind is definitely blowing in the right direction. There are horizontal players who are building up the Flipkart of services, and then there are vertical players who are concentrated on let's say home services that are going up. When it comes to a broader hyper local play there are food, groceries and other things involved. There are two things happening: E-commerce has done right in that they have completely established themselves, they have completely cracked the market and now they are going after consolidation.
In the services part, the local players' space is empty right now. The same eCommerce battles that were fought in 2012-13 are going to be fought in the services done in the hyper local sector in 2015-16. You will definitely see a lot of action, and of course, a lot of growth. I think in 2016 there will be a lot of M&A's happening between some of the biggest players in the space. The space is surely heating up!
 
How many service requests does the app receive in a day?
We get almost three thousand requests per day.
 
What challenges do you face on a daily basis?
For us, it is really important that every service provider who comes on board walks through several stages of quality check. We do a lot of pro-active screening of our partner to make sure before they are coming on board. I think we are the only horizontal marketplace out there that actively measures and tracks and executes every end of the transaction. Our job is to not only give you the phone number of the plumber; we will make sure that the plumber will arrive at the asked time and does the job you want of him. It's quite similar to how a Grofers or a Flipkart would ensure a timely delivery each and every time. We ensure the service is delivered properly and stand right behind our customers. We also give a 100 per cent return and a free service if things go awry.
 
What role has technology played in the app's life so far?
We have always tried to automate the platform as much as we can. Like, when my customer gives me a service requirement, the technology would make sure that the requirement matches the recommendation and things don't fall out. We make sure that the best partners are getting recommended to the customers. We also have a good backward integration, so we can also track the service provider's availability and the kind of service he provides every time. 
Name the cities you are present in.
We are there in Mumbai, Bengaluru, Gurgaon and Delhi.
 
What are your expansion plans?
We are actually live India for some categories, and for some we are in the four major cities that I mentioned earlier. We do not intend to expand any more, at least for the next two quarters. We want to build up our categories instead of expanding to everywhere. We will soon be expanding to a hundred categories. A few services, which can be delivered virtually (like Astrology, financial consultation etc) are available for all to use.
 
How do you connect with the service providers? 
We get a lot of them organically, while the major chunk comes to us by references, like a plumber referring to his electrician colleague or a friend who's into other house service. We actually also connect with a lot of potential customers on the platform through sms', emails and phone calls.
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