Business

Why service startups are taking a new route: Making products

IN WHAT may seem like a natural extension in hindsight, Indian service startups are leveraging consumer data generated on their platform to understand market demand for specific products and expand their business into manufacturing. For instance, home services marketplace Urban Company plans to launch its own range of water purifiers and is set to officially announce the product for users of its app, sources said.

From making reverse osmosis (RO) filters used by its service professionals during servicing, Urban Company has now decided to expand into manufacturing water. There are plans to launch more products depending on consumer interest in water purifiers, and hiring for product development is on, the person said.

When contacted, Urban Company said it has been running a pilot for selling water purifiers since November last year. More than 1,000 users have purchased the product during the pilot, the company said, confirming its plan to make and sell water purifiers under its own brand.

Similarly, social commerce platform Meesho had earlier shifted focus from its reseller-led model to selling products directly to end customers, like Amazon and Flipkart. From selling unbranded products, it is now learnt to be partnering with smaller brands to start offering branded products on its platform.

According to sources, over 60 per cent of Meesho’s transacting users are from its direct selling business. The company is looking to leverage this by partnering with smaller brands to launch branded products on its platform. Meesho did not respond to questions.

Before Urban Company and Meesho, several startups have leveraged data generated on their platform to expand into newer categories to increase revenues and attract investors.

Explained

Extract data, then monetise

MORE and more companies are realising the commercial value of customer data. Extracting such data, they not only get to understand consumer behaviour, but over time they can even direct behaviour to generate higher returns.

Zomato recently plunged into 10-minute food delivery aided by the insight generated over years by delivering food. This allows it to set up a network of food stores near high-demand customer neighbourhoods. The stores will keep the highest selling items in each locality, with cooking timing for these items estimated to be 2-4 minutes given demand predictability.

Competitor Swiggy has already successfully experimented with a cloud kitchen network across select locations.

Blinkit, which pivoted to deliver groceries in under 10 minutes, has opened a web of dark stores across cities based on consumer data it had gathered as an e-grocer in its earlier avatar Grofers. Workers in these dark stores had earlier told The Indian Express that different dark stores may have different high priority items depending on localities being served.

Community security platform MyGate, equipped with data of residents of residential societies using its services, had also introduced community-specific services such as enterprise resource planning solutions for Resident Welfare Associations to help with accounting, billing, and expenses tracking, among others. The startup had also launched a service called MyGate Club where big brands could interact with residents via curated experiences.

Not every data-driven expansion into the branded product segment may be successful. In March last year, Zomato had started selling nutraceuticals under its own brand name which it shut down within six months after a muted response from customers.




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