Source | Entrepreneur : By Apoorva Mishra
In the last few years, we have seen a lot of start-ups emerging in the area of on-demand services. With the advent of technology & app-based services, everything from cabs to groceries is being delivered to your doorstep with a click of a button; but still, the market for on-demand services like plumbers, electricians & other maintenance services remained un-cracked. We have also witnessed a considerable number of shutdowns along the way.
So is it a Failure?
Well, I wouldn’t declare it a failure right away, but the simpler explanation behind this is good old unit economics. Take a case study: An average plumbing service costs about INR 400. While on-demand marketplaces operate within the margin of 10-20% commission from third party service providers to cater to these requests. Assuming the maximum commission of 20%, the company is earning only INR 80 per lead while the present customer acquisition cost is somewhere in the range of INR 700-1000. Simply put, in order to break-even on a particular lead, a customer should come back for at least 10 jobs around the year averaging INR 400. This is, of course, ignoring the administrative & infrastructure costs on top.