Cleaning up the laundry sector

It all started when one day, an investment banker turned operations and logistics manager at Uber, got into an argument with his local laundry service.

The irk of unreliable delivery, inconsistency in quality, and poor hygiene standards and clothes treatment was something Rami Shaar was not immune to. Where many others would get annoyed, he saw an opportunity to change things. That was the beginning of Washmen, a startup that has grown to become one of the top two laundry apps within the UAE since their inception in 2015.

The 27-year-old founders, Jad Halaoui and Rami Shaar pitched so well, that he managed to raise $400,000 in seed investment in less than 30 days. Their Series A funding was undisclosed, however they announced last week that they raised $6.2 million in Series B.

The laundry startup space is very interesting in the UAE. On one hand, there are many local shops that are highly price competitive, offer pick-up and delivery service, and are experienced in the industry. However, they often do not inspire trust for handling high-end fashion clothing and delicate materials.

On the other hand the growing number of millenials wanting the ease of ordering laundry or dry cleaning service, as well as the assurance of quality and professionalism, especially for high-end clothing has been growing. This has created a marginal but sizeable space for laundry startups to establish themselves in the region, especially in the UAE.

And this is exactly how Washmen entered the market.

Their space is much different, yet very similar to the core business workings of local laundry shops. While the prices are not much different, neither are their delivery and pick-up timelines, the professionalism and promise of quality inspires trust that the local shops haven’t managed to, especially for first time customers.

The question is: can they sustain their business and grow in light of a number of small businesses offering a very similar core service at highly competitive rates?

Local shops might not have apps, but they do have WhatsApp through which people can directly communicate with them and schedule the pick-up and delivery. There are thousands of small laundry shops in the UAE who simply act as collection points and middlemen who aggregate clothing to send to massive cleaning companies with industrial level equipment. They add their margin to the rates and keep the business going. This seems to very similar to Washmen's business model.

So, Washmen is not exactly disrupting the sector as much as they are providing a digital alternative that works in a more organised fashion. More importantly, they provide a more trustworthy and professional service owing to their trained customer service who are better able to communicate with the English speaking expats.

For many expats, the convenience, professional and trustworthy service experience see them returning to Washmen as repeat clients, even if they have experienced damaged clothing.

There are many such customers Washmen serves who are delighted by their services. However, there are others who prefer the local shops because the businesses owners can see the item and recommend what kind of treatment is better for the clothing. They do not receive this service from laundry apps who only send collection agents that have no knowledge of the industry.

When it comes to supporting families owning these small shops, it is debatable whether laundry startups can provide as many jobs even as they grow bigger. Having said that, as the market needs change, the job opportunities change; and as startups grow, they provide more, albeit different jobs to people, and add a significant chunk to the country’s economy.

The main crux of any laundry startup in the region is the price and service. Washmen delivers on all accounts, but is still competing with many local laundry shops who are slashing rates and providing more professional services to stay in the business.

Given that price plays an important role and there are many more fees Washmen levies, such as 50% surcharge for next day delivery, minimum AED 45 order value, delivery surcharge of AED 7 for orders less than AED 100, there are many Gen Zs and price-sensitive customers who might shy away from using them. For example, in India, laundry startup Doormint could not compete with the low-priced local laundry workers.

However, as a business model, Washmen has a solid one that has seen success in many other markets, and evidently has investor’s trust as well. We are curious to see how the industry changes in the coming years and how Washmen plays a role in this change.