Putting the partner protests behind through the 'well-received' 12-point changes, home services marketplace Urban Company is now looking forward to a stellar business growth in the post-pandemic period in both beauty and home services segments. In fact, the company is set to launch a slew of new services, including home chef, nail art, and women hair treatment, in key cities, Urban Company co-founder Abhiraj Bhal tells Business Today's Dilasha Seth in an interview.
The company's services mix changed during COVID-19, with the share of beauty services down to 25 per cent from 40 per cent before and growth declining to 40 per cent post COVID-19 as compared to 100 per cent year-on-year before that. On the other hand, home services grew three times during the Covid period. Bhal says the company is planning to increase prices of high demand services marginally, by 2-3 per cent, as part of its 12-point action agenda, so that it becomes an additional incentive for the service partners. Here are edited excerpts from the interview:
Were you broadly aware of the grievances of Urban Company's partners before nearly 70 of of them went public with the protests outside your Gurugram office?
As a company we've always taken great pride in being a platform that is much better in terms of earnings as well as livelihood benefits and social security for all our partners. Anybody who's used Urban Company knows that. When you talk to partners, they will have only positive things to say about the company and the impact that the company has made on their lives. So honestly, when these protests happened last week, we were taken aback more than anybody else. No founder likes to see protests happen. That's not the day for which we should build the company. So it took us a while to absorb what happened.
When did you decide to act on it? What transpired during the last week?
Last Sunday, we came out with a very detailed blog post which highlighted all the earnings, and all the other measures that we take to improve the livelihood, and well-being of our partners. We knew when we were doing that, it is now going to move from being a small Twitter storm to being a large mainstream media story. And as we had expected, it did become a mainstream media storm. And that's fine. We didn't act because of that, but because it was the right thing to do.
We spent the next few days talking to thousands of partners across all our cities, regardless of the category that they belong to. We thought if we could use this as an opportunity to really make meaningful changes, which can dramatically improve the lives, the livelihood, and the earnings of our partners. We didn't want to do small changes, we didn't want to do things here and there. We wanted to do something that was needle moving, and in a single shot we wanted to do it. And as we reflected on those conversations internally on discussions, that's where we came up with this 12-point program that we released on Friday. Six of these points are related to earnings and the other six are related to the safety net.
Did your business get affected due to the protests?
No. In fact, between October 1 and 14, we are up 30 per cent month-on-month. The protests have no correlation to this. The 12 action points were not released because we were losing business or anything of that sort. It was because it's the right thing to do. We believe that happy partners equal happy customers. That's why we've made these changes. They come at a cost, but we see it as an investment into the quality of the marketplace, health of the marketplace, and over time the growth of the marketplace.
What is the reaction that you have got from your partners for the 12-point action plan?
We've spoken to thousands of partners in the last few days. When we told them about these changes, we have received, what can only be termed as an absolutely extraordinary reception from the entire community. We have been flooded with thank you WhatsApp messages, videos emailers. It has been very heartening to see the reception that we have received for these changes. I think the partners also realise that we're doing things keeping their best interests in mind, and that we're a company who has its heart in the right place. And that's what really matters.
Did your investors raise concerns about the company's practices after these protests?
Not really. They let us do our business without bothering us too much.
You have changed the algorithm with respect to temporary blocks on partners. Does this also address the issue of minimum acceptance of orders as well?
What happens on many platforms like ours is that there are algorithmic blocks that are applied for a variety of reasons. Each time a new algorithm is defined. It creates some improvement in terms of customer experience, etc. But these algorithms add up creating a significantly suboptimal experience for the gig workers. So we have decided that we will do away all sorts of blocks on our platform in one shot. This excludes quality related blocks which, of course, we can't do away with because customer quality is paramount. But all other types of blocks, including blocks related to minimum acceptance, etc., will be done away with in one shot. This simple yet powerful change will reduce all blocks by 80 per cent. It will allow partners to work more on the platform, and improve their earnings.
You have also decided to increase the price of services. In what range will the price increase be?
In the last three to four years we haven't really tweaked pricing. So we selectively looked at a few important high demand services and marginally increased price, not by a lot, but by 2-3 per cent, so that it becomes an additional incentive for the service partners. We have also slashed the commission for our partners by slashing the highest slab from 30 per cent to 25 per cent. Besides, the penalty cap has also been halved to Rs 1,500 per partner per month. We actually don't want to penalise out partners. It hurts us more than anybody else to penalise partners, so we'll keep bringing this down over time.
What is your service mix in terms of contribution to your overall revenue? Did the mix change post Covid?
Prior to the pandemic, the beauty services was 45 per cent of the platform. Today, it's about 20-25 per cent. It has grown but not as rapidly as the other categories. Other categories have seen good business even through the pandemic. But in beauty, it's been slower to pick up because, generally speaking, beauty service consumption by women has come down in the pandemic and is now climbing back to where it was. But in the last 18 months it's not been very smooth sailing for our beauty partners. However, the home services have grown more rapidly. While our beauty category grew by 40 per cent post pandemic, the home category has grown three times.
What are the top categories in your home category?
Cleaning services, electricians, plumbers, carpenters, and appliance repair painting. Even haircuts for men have grown rapidly.
Are you also expanding the services you offer? You recently launched home chefs in Bangalore.
Yes, we are going to launch services like home chefs in other cities as well. We are now launching other services like nails, women hair treatment, etc. So a whole bunch of new services are in the offering.
With COVID-19 nearly behind us with a high rate of inoculation, do you think that people will prefer to step out for services, having some impact on your revenues?
We're growing faster than ever. We don't grow as much during Covid, we grow when there's no Covid. And that's when our consumption happens, particularly for categories like beauty and other services. So we're glad that COVID-19 is ending, because we think we can grow much faster now that it's behind us. Our beauty category was growing 100 per cent year-on-year before COVID-19 but has grown 30-40 per cent in the one-and-a-half years post COVID-19. So that's not great. Our homes business grew at 200 per cent during this time, and would have quadrupled had there been no Covid.
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