UrbanClap business model is one to learn a lot from for young entrepreneurs as the company has started from a very simple idea.
Introduction of UrbanClap
A brief history of the company
UrbanClap (Now Urban Company) was started in 2014 by three young men Abhiraj Bhal, Varun Khaitan, and Raghav Chandra. The organization was founded as a need to bridge the gap between service providers and service receivers. They mostly wanted to take the concept of Yellow Pages and convert it into an online format.
Varun and Abhiraj studied together at IIT Kanpur. They shifted to the US, in 2009, to work. Khaitan worked at Qualcomm and the Boston Consulting Group and returned to India in 2013. Surprisingly, Abhiraj also came back at the same time. A familiar friend introduced them to the third co-founder, Raghav. Then 3 of them together founded UrbanClap in Gurgaon.
What does UrbanClap do?
It is an online platform that allows people to find professionals to help them with daily services. UrbanClap’s services range from home cleaning, appliances repair, and engineers to photographers, lawyers, and much more.
Funding and valuation of UrbanClap
Since its inception, funds have been pouring in. UrbanClap has so far raised more than Rs.1406 crore (about $185 million) from investors such as Accel Partners, SAIF Partners, and Tata Sons’ chairman emeritus Ratan Tata. In less than 6 years, it had become one of the highest funded startups in the hyperlocal segment and is valued at around Rs.6406.8 crore ($843.4 million).
The company now serves in 22 cities in 4 countries – India, Dubai, Australia, Singapore.
But what is the business model of UrbanClap? What is the revenue model UrbanClap?
In this post, we will be diving deep into the Business Model of UrbanClap and understand how they channelize their functions and make money.
Read: How Zomato makes money?
UrbanClap business model and How does UrbanClap make money?
Introduction to UrbanClap business model
UrbanClap’s business model is a simple basic idea that someone sitting at home can hire help for a varied range of jobs. The business model of UrbanClap is a way to change how members of the armed forces get employment which is paid quickly.
Many hurdles have been overcome in recent years, and the company has become one of the fastest-growing startups.
The business model of UrbanClap works in two-ways
1) Fixed Charged Services
For plumbing, electrician work, or home cleaning the company accepts the money from the app and then charges its dues to the hired assistance.
They cut a different fee off the collected funds.
2) Services without Fixed Charges
The organization charges the experts for lead generation and sponsored listing.
The customers are not charged right away. They get to know the service. The expert shall pay a fee for approving the order. If the expert is able to persuade the customer to purchase the service, then monetizing is a success.
Read: How IPL makes money?
UrbanClap’s revenue model
UrbanClap uses a four-way model when it comes to earning money. Urban Clap business revenue model mainly based on the following ways:
When customers book services from the UrbanClap platform they pay a fixed amount. The UrbanClap charges some percentage of this total price of the service to the service provider in the form of commission.
Depending on their job, UrbanClap collects specific commissions from each vendor or servicemen. Therefore, the more work they do, the more reward they get from providing home services.
UrbanClap generates 85 percent of its overall revenue in the form of commissions.
2. Lead Generation
Lead generation is also a good way to generate profit. But UrbanClap’s main source of revenue generation is through charging a commission.
In lead generation, customer specifies its requirement. According to that, the customer either can contact the mentioned professionals or they can contact the customer.
In this way, UrbanClap is giving the leads to the servicemen offering a specific service for customers. For this, Urban Clap charges the servicemen for the lead generation.
3. Reverse auction
A service provider using UrbanClap can pay a fixed amount for promoting its services on UrbanClap. In exchange for this money, the UrbanClap team helps service providers in lead generation and conversions. It’s sort of like a reverse auction. Through this method, the customers are not specifically booking the service. Instead, they spend time in their awareness of the operation. To approve the request a specialist must pay a fee.
Monetization here is based entirely on the ability of the specialist to convince the customer to book the service. UrbanClap introduces the user to five experts, who may vote for one after their assessment. When a professional’s profile isn’t presented, the professional gets his credit paid back.
Besides all the above-listed ways of earning money, there is another way of earning more money which is – advertisement. Businesses, manufacturers, and services use the UrbanClap platform to run their advertisements in exchange for advertising fees to the company.
Urbanclap marketing strategy
To stand out from other startups, based on their services urban Clap is using different types of marketing skills. This way it is making way to customer’s minds to have their attention. Some of the marketing methods used are:
- Almost every internet user is on social media platforms. It’s the best way to reach out to the audience. Using social media ads on Facebook and Instagram they try to reach every potential customer they can.
- Urban Clap posted very heart-touching and relatable videos to grab the attention of the audience in relaxing their lifestyle through Urban Clap. In this way, they are also reaching into the audience on YouTube even in their ads.
- Social media influencers have lots of followers who believe in them. UrbanClap makes them promote their services. This way people trust their services.
Is urbanclap profitable?
As of now, UrbanClap is running in losses. When asked about the company’s profitability, one of the co-founders said:
“If we want to, we can turn profitable in the next three months. Instead, we want to invest in our future and build our scale to one day make UrbanClap a $100 billion company”
How much commission does UrbanClap take?
On average UrbanClap claims to generate business worth Rs.1.5 crore every day. This it does by clocking about 5,000 orders per day, with an average order value of Rs.3,000. Of this 15-20% of the orders are for beauty services, where the company claims to earn a 15-20% margin.
According to the company, in case of repairs like plumbing the ticket size is as low as Rs.200 where it earns about Rs.40 – Rs.50 as commission. Moreover, the start-up earns Rs.100 – Rs.150 as commission from appliance repair, where the average order value is Rs.500 – Rs.1000.
The business of UrbanClap aims to achieve a more comfortable, faster, and more organized way to connect the human needs to the providers of these services. The app helps to reduce the middlemen concept. The co-founders had put together their desire and brains to come up with a unique idea of providing services that are required by a person daily.
In a nutshell, the business model and revenue model of UrbanClap focuses majorly on commisions and in expanding its business across different countries.
It is the millennial version of Yellow Pages and is going to reach applauding heights.
Thanks for reading. Stay safe.
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