UrbanClap (Now Urban Company) Business/Revenue Model Explained

Last Updated on June 29, 2022

UrbanClap (Now Urban Company) is marked as one of the fastest-growing startups nationally as an online marketplace that helps connect service providers with service seekers. This is an end to your everyday problems. If you are searching for a beautician, a plumber, a mechanic, a yoga instructor, a lawyer, or a counselor, UrbanClap is studded with hailing professionals in all. UrbanClap went live in 2014, fuelled with the intention of changing the way local servicemen are working and paid.

Home services were previously one of those sectors that failed to witness many transformations. While services such as Sulekha, Yellow Pages, and Just Dial were common, professional services were not beneficial. These companies used to hire an aggregator who would transfer the job on to the professional individual, and doing so, a large part of the money would be spent to fill the aggregator ‘s pockets.

On the other hand, UrbanClap directly connects users with professionals who emerge to be the best of their kind. The team has had a lot of challenges but they’re still paddling them all.

They began with a handful of professionals back in 2014 and today UrbanClap has close to 50,000 professionals with another 15,000 in line trying to be part of this growing community.

You may be interested to know what backed this start-up and how they drove it from scratch to sky-high. So, let’s step in through the UrbanClap business model and unbox their path to success together.

What Does UrbanClap Do?

Imagine that your AC unexpectedly stops working in the summer as the clock ticks at 10 p.m. Now that you feel hot that you need a person to fix your AC, you’ll ask your relatives if they know someone who can fix them. Do all reject what to do next as his night? Now, if an agency comes into motion from where I will ask the individual and boom for AC repair! Now they’re sending someone to fix and save you from hot summer nights. Okay, “UrbanClap” does just that. 

The business works closely with Service Providers for Individuals (ISPs) and turns them into micro-entrepreneurs. UrbanClap does so by offering market access, credit, insurance, training, inventory, acquisition, payment and a host of other services to ISPs. We give their job-seekers “leads.” Through standardizing the end-user experience, pricing and distributing the service under the brand name of UrbanClap, they drive their entire business.

Major Milestones Of UrbanClap 

• Date to launch: October 2014
• Founders: Abhiraj Bhal, Khaitan Varun and Chandra Raghav.
• Received funding till date: $110.7 m (Till November 2018)
• Operating Citing: Present in eight cities (New Delhi, Bengaluru, Mumbai, Chennai, Pune, Ahmedabad, Hyderabad and Kolkata), where UrbanClap provides over 100 services, has a user base of over 3 billion people and employs over 50,000 professionals.
• Business Valuation: $480 billion in business value (as of December 2018)
• Order Cap: Average order Every month (as of April 2018): 4.50,000
• Main HeadOffice: Gurgaon, India

Brief History Of The Company 

Since its inception just over five years ago, the startup has steadily diversified its offers portfolio and expanded its business model to serve a broad customer base across India. Their approach behind service design has undergone adjustments based on market dynamics and their own goals, and it has been carefully designed to drive them to the forefront of our fast-growing startup ecosystem.

As UrbanClap launched in November 2014, co-founders Varun Khaitan, Abhiraj Bhal and Raghav Chandra started with the concept of linking customers to the local services industry through a marketplace for mobile apps. The idea was designed to overcome the challenges inherent in India’s unorganized local services market and to link freelancing professionals to customers seeking convenience and cost-saving from home comfort.

At the beginning, the co-founders were all about going big, rather than going home, particularly as the investors started showing interest and funds started flowing in. The business raised 10 crores having begun with only 10 lakh rupees. 

In 2015 the founders of SAIF Partners, Accel Partners and Snapdeal Kunal Bahl and Rohit Bansal were amongst others. In this phase of its growth, the management of UrbanClap decided to offer listings and service offerings in a plethora of fields: from at-home salon services to wedding photography. A long list of urban needs included the bouquet of services, be it yoga, interior design, laundry, or repair services.

In the early stages of the startup, the co-founders and their team were mainly targeted at growing their value proposition, rather than focusing on simplistic metrics such as a number of listed professionals or number of regular active users. The business plan at this point was to diversify offerings, link users to a broad range of professionals, market the app to the right demographics (ideally millennials relying on technology for conveniences) and build market recognizability to be the go-to startup for all kinds of services needed for a smooth urban life.

This business model served the economy’s dual purpose: To the problems of potential consumers and to help them derive more value from daily needs; and to enable local service workers (or “micro-franchisees”) to get more work than ever before. Before such a demand for services existed, these workers had jobs dependent either on word-or-mouth or by different intermediaries, such as shops and local brokers. 

The introduction of an app-based platform like this also helped them gain more exposure and draw more consumers than they would otherwise have had.

When the company picked up speed, more and more users came to access the services bouquet listed in the app. As a result, the company became the blue-eyed investor boy, raising as much as $185 million by August 2019 from leading investors including Tiger Global and Steadview Capital, and even celebrated industrialist Ratan Tata as well. As the years went by, and the money started to come in, UrbanClap adapted its business model to fit the lessons it had learned from operations.

Key Components Of UrbanClap’s Business Model

Brand Statement

To provide instant access to reliable certifications and affordable services to the customers.

Key Resources

• A reliable mobile application
• A super engaging website.

Key Activities

• Simplifying the complex user journey with the help of technologies like artificial intelligence and machine learning.
• Personalizing the user experience on both the platforms, the application and the website.
• Pricing controls the scheduling.
• Reaching out to Tier 2 cities.
• A reliable marketing strategy for the company.

Cost Structure

• Technological infrastructure.
• Salaries of the employees.
• Expenditure on the marketing efforts of the company.

Key Revenue Sources

• Commissions from the service providers.
• Reverse auction.
• Lead Generation
• Advertisements on the platform.

Customer Relationship Management

• With the help of social media.
• Customer support.
• Review and rating by the customers.

UrbanClap Business Model- How it Works

Being an online platform, UrbanClap connects internet users with offline workers. UrbanClap was essentially a search-and-find tool during the initial stages.

Today, however, it has a model that lists professionals, trains them if necessary, and then connects them to the users in real-time. On the site, users can effectively book regular services.

We just need to check the app, select the services we need, and then schedule service according to their own convenience. Whereas one location UrbanClap promotes the process of identifying trained local business professionals; it also supports service providers by removing intermediaries and allowing them direct access to consumers.

The business model of UrbanClap works in two-ways.

1. Fixed Charged Services

For plumbing, electrical work for home maintenance, the organization 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 Any Fixed Charges

The company is paying lead generation and funding listing to the experts.

The customers are not charged right away. They know the operation. The specialist 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.

Five options are given to the user from which to choose the most comfortable choice. If the service provider’s profile is not shown, he earns payable credit. If the algorithm is successful, then less work must be performed by the user.

Working Of UrbanClap’s Business Model

Service Receiver’s End

• Using the app, users can go using a list of resources and select the correct one, based on their requirements.
• UrbanClap’s business model allows the customer to select a specific service; they can choose from a range of choices for one product. The option is usually based on a user’s budget.
• After purchasing the kit, the customer must pick a date and time for the appointment.
• The application enables users to test the service provider and its assets. The presence can be assured by visiting the visitor’s page.
• Payments are made using advance or COD (Cash On Delivery).
• Users rate the app and review them.

Service Provider’s End

• The app has a dual purpose-one for the individual and one for the specialist
• The practitioners in that field provide a notice when a service is requested. Whether they embrace or they reject it.
• UrbanClap’s business model is structured to allow the professionals to evaluate their job obligations and to approve or reject the request for service accordingly.
• When the request is approved, alerts are received from the customer and provider to validate the booking.
• The service providers are fined if any they back out.

Expansion Of UrbanClap’s  Business Model

The UrbanClap model has been very popular in the ten Indian cities in which it operates, and some 20,000 service professionals have been onboarded so far. In addition to the current source of commissions from hired service staff it also launched a new revenue channel in the first few years. This second revenue source came from lead generation and funded expert listings. The company paid a fee for enhanced freelancers exposure should their services be viewed and monetized through the platform. Through widening its activities, it has succeeded through gradually raising its sales to 116 crores in the fiscal year of 2019.

Notwithstanding these high sales, however, the company has yet to hit the break-even, as they’ve made 72 crores of operating losses last year.

Such an unreflective development and thirst for success, as I’ve written before, can potentially undermine sustainable startup success. It is a problem many Indian businesses are grappling with and trying to figure out the right strategy for foreign expansion to compensate for the losses. While it can be difficult to formulate the best combination of foreign activities, UrbanClap seems to have struck the nail on the head in preparing the expansion overseas. The business launched on-demand services in Dubai, the United Arab Emirates in 2018 and the following year it followed up with the establishment of a shop in Abu Dhabi.

It has launched services recently in Australia, too. The decision to move to the UAE was an important one, given the demographics available in the region. The region ‘s large Indian population was a strong reason for launching operations there, though cost considerations made it a viable move too. Customers in the UAE are less price-sensitive, so services are priced at 3 or 4 times the Indian prices, with more or less the same costs. Motivated by a similar idea was the switch to Australia too.

Though it has increased the field of activities and the size of the population served, however, the company has opted to cut back on the broad variety of deals it has put out on its website so far. In October 2019, UrbanClap was confirmed to be cutting back on non-core services including wedding photography and event management, while concentrating on home and beauty offerings that make up the largest portion of its revenue. The company also launched masculine grooming services in November 2019, delivering men’s salon products in the comfort of their homes.

Revenue Model Of UrbanClap

UrbanClap uses a four-way approach when it comes to earning money. This lists two categories of options, one being the booking section and the fixed pricing services accounts, and the other being the non-booking or variable pricing services.

The business takes two strategies focused on the same, to bring capital to the table.

• Commission Model

UrbanClap generates 85 percent of its overall revenue by subscription. They charge some percentage of the total price of the service to the business owner in the commission-based process.

In this way, they support all customers by providing them with fast and reliable service.

Depending on their job, they demand specific commissions from each vendor or servicemen. Therefore, the more work they have done, the more reward they get from providing home services.

• Reverse Auction

UrbanClap has supported the strategy of charging the specialist for lead generation and listing for the second group (photographers, interior designers, or yoga instructors). 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. Here’s where the algorithm for matchmaking comes in. The better the algorithm here the lesser is the work to be done by the customers.

• Lead Generation

Lead generation also offers a good way to generate income. But the key source of revenue generation for UrbanClap is by commissioning charging. The customer defines the requirement in lead generation. Accordingly, either the client can contact the aforementioned experts or they can contact the client.

In this way, UrbanClap is giving rise to serviceman customers looking for a specific service. With this, UrbanClap charges to the lead generation from professionals and servicemen.

• Advertisement

Besides all the above-listed ways of earning money, there is another way of earning more money which is – advertisement. Businesses, suppliers, and providers use the UrbanClap platform to display their advertisements in return for the company’s advertisement fees.

Marketing Methods Used By UrbanClap

To look different from other companies, Clap hires various styles of marketing skills based on their urban services. This way, getting their focus makes way for the mind of the consumer. Many of the approaches used for the advertisement are:

• Basic PPC or Search Ads

The main purpose of an advertisement is to lead you or your potential customers to wherever you or they want to or need to go.  And  Google search ads allow you to do just that.  You can see their search ads on the browser if you enter some keywords related to their website.

• Social Media Advertisement

Quick every user of the Internet is on social media sites. It’s a very good way to reach out to the public. They’re trying to hit every potential customer they can by using social media ads on Facebook and Instagram.

• Video Advertisement On Platforms Like YouTube

UrbanClap has been posting very touching and interesting videos to catch the audience’s interest in soothing their lifestyle through UrbanClap. Thus, this is another way how they are able to increase their customer base manifolds using YouTube advertisements.

• Paid Marketing via Social Media Influencers

Well, the thing about social media influencers is that they have a massive following who genuinely trusts them. So collaborating with all the social media influencers and asking them to promote your service is a very brilliant move that UrbanClap has been doing really well.

Rebranding And Their Way Forward

UrbanClap recently rebranded itself as the Urban Company as a move to help its global aspirations and create itself as a recognized name worldwide. The rebranding was done to give the startup a clear, easy-to-remember name, that’s work across demographics and geographic borders. When the company goes global, having a simple name that is widely appealing would help it draw customers and get the company’s mission across. This is a startup to make urban life simpler, and that is the meaning that the new brand name captures.

The effort by UrbanClap to go global comes at an opportune moment as a platform for horizontal gigs. These gig marketplaces are going to become the flavor of the decade as freelancing takes hold, and Urban Company is filled with the ability to make the most of it.

Urban Clap is rising higher and higher at a rapid rate. In providing services at home in India it is one of the most popular startups. To several other cities too, they are extending their facilities. In addition, they have also been working recently in Dubai to make their services available efficiently.

There’s no question that Urban Clap is rising, so fast rather than intense competition from other related on-demand services startups. Regularly they change to provide better services to their customers. They have also provided an option for chatting so that users can chat with ease with their selected servants if they can not call.

Final Words

While Urban Clap has seen considerable success in recent years, it is just the beginning. Recently, the App has been using AI-enabled data to better evaluate a user’s demands. That’s how UrbanClap works, and how the toady industry is evolving.

Capturing user needs, allocating manpower, and then monitoring everything under a single roof was a difficult challenge. But with the help of technology, the creative minds were working on their loopholes. They’ve now fused methods backed by Machine Learning and AI to codify the way decisions are made. The right distribution of resources, evaluating who is available and where intensive processing is needed at the rear end and running it pretty well thanks to the tech team. With those moderations and improvements, the startup is expected to have a long way to go.

Frequently Asked Questions for UrbanClap Business Model (FAQs)

Q. How does UrbanClap manage their services?

Urban Clap provides easy access to its home services through an online website and mobile app. The company has built a platform that is collaborative and easy to understand. Everyone can easily use it and book its services. Any user, or expert, effectively accesses the features.

Q. What is the vision of the company?

Urban Clap’s main focus is to satisfy every customer with their reliable and easy to get services. Urban Clap focuses on addressing the issue of recruiting experts for various occupations. They want to shift the chaos in the way services are available in India according to the founders of Urban Clap. They want to have facilities readily accessible without leaving home.

Q. How to search for the most suitable developers for my app?

You should start by looking for trusted and experienced app development experts in your local area. You’re looking for people who can understand your vision and are willing to work as per your needs and have a good record. You can also reach out to developers online, discuss your idea, and get a quote!