On-demand help: Investors lift valuations, consumers unsure

MUMBAI: After quick grocery, instant house help services space is the new hot pick for investors—valuations of platforms Snabbit and Pronto which allow consumers to book help for household chores starting at Rs 99 have doubled in a few months. India’s home services market, pegged at over $60 billion, is today largely informal and investors are betting on the potential they see: if companies can provide reliable house help services to consumers in a market where maid absenteeism is the biggest pain point but willingness to spend is not an issue, it will work out over time. “There is a huge market for house help already, which nobody has ever been able to organise,” said Rohit Sood, partner at Bertelsmann India, which has backed Snabbit, adding that about 10% of the entire wallet spend on house help today is immediately available to capture by the platforms because of absenteeism. While the problem serves as an entry point, the challenge is that not many consumers are convinced they would want to use instant house help services other than as a temporary fix. Consumers’ conundrum Snabbit and Pronto’s consumers are largely time-constrained urban young professionals and dual income families including with children, heavily dependent on house help for everyday chores, the firms said. For this cohort of consumers, the apps seem like a go-to option but lack of slot availability, higher charges after the first few bookings and poor customer service are among reasons many users do not find them to be viable in the long run. “There is a lot of hassle to get a confirmed booking because of the high demand and pre-booking slots every time requires planning. Also, they are costlier than regular maids,” said Bengaluru-based Sarmistha Dutta, adding that the first few bookings on Snabbit and InstaHelp were for Rs 99, but then went up to Rs 170. The customer service is poor, said New Delhi-based Manthan Khakharia who didn’t get any response from the Pronto team when his help arrived 1.5 hours later despite making more than a dozen calls. Then there is also a small consumer cohort such as bachelors, who wouldn’t mind substituting maids with the apps. The investor view Investors love the business model. “The economics in this segment are pretty good. This can be a pretty profitable business at scale and that’s a profile that we already like,” said Sood, claiming that Snabbit has grown over 10 times in six months. They are of the view that while the first use case may stem from absenteeism, once consumers get used to the apps and like the service, they will come back for more. “Regular maids don’t do a lot of ad hoc cleaning work. There can be new use cases like wardrobe shuffling, unpacking of bags. Already, a small subset of consumers are transitioning to the platforms,” said Manish Advani, of Elevation Capital. Anjali Sardana, founder & CEO at Pronto said that the top 1% of its customers book the platform 23 or more times a month and the top 10% do it at least nine times. “Urban consumers are increasingly seeking flexibility, reliability, and standardisation which on-demand platforms are well placed to offer,” said a Snabbit spokesperson. In India, where house helps are largely recruited through word of mouth, trust will be key to the model’s growth. Trust needs to be solved for by the brands, said Advani. “Our goal is to be the provider that customers can trust over the long run...we are starting to deliver on that. Consumers come back when the work is consistently good,” said Sardana.