In a world where it’s becoming increasingly easy to avail nearly any product or service through an app, the MENA region is seeing its fair share of players in the on-demand services sector.
Among these companies is Washmen, a UAE-based scaleup revolutionising the laundry and dry-cleaning market in the region.
Launched in 2015 by Rami Shaar and Jad Halaoui, the company started life as an asset-light aggregator that handled customers’ clothes by outsourcing to local laundromats via a revenue share model.
This configuration worked at the time because laundromats usually have excess capacity that isn’t being utilised, so this allowed them to maximise productivity. Additionally, Washmen would provide these businesses with market reach that they wouldn’t be able to acquire on their own. This was two years after Uber had entered the MENA market, so there was a lot of buzz around availing services on-demand, which made onboarding laundromats easier.
This is according to Shaar, who also serves as the company’s CEO, in a conversation with the Abu Dhabi SME Hub. He explained that targeting the laundry and dry-cleaning segment for disruption made sense. As a regular customer of laundromats, the service he received was often subpar: from delays to cleaning inconsistencies and other challenges, a lot was left to be desired. He conducted a high-level customer survey and market research into multiple segments within the on-demand services sector in the UAE. While most verticals, like groceries and home cleaning services, were being disrupted by some regional players, the laundry and dry-cleaning services portion of the market was completely unaddressed.
And so, Washmen was born.
Rami Shaar, Co-Founder and CEO of Washmen
This model would serve the scaleup well for three years, but as both the company and customer demand grew, being dependent on a third party became a liability.
“When you’re working with an [outsourced company] or a third party, there’s a limit to how much you can integrate your tech inside of their operations,” Shaar noted.
By 2018, Shaar and Halaoui realised that it was time they took charge of the entire operation, from pickup to delivery.
The company’s initial three years as an aggregator helped the team acquire experience and key data, essentially informing a proof of concept for the business they really wanted to build. This made it much easier to onboard new investors for the company’s new direction, and led to old investors doubling down.
To Shaar and the team, they saw this next step as an undertaking to build a tech solution, not just simply an intermediary that managed orders.
“The supply chain integration was really a way to untap capacity,” Shaar said. By taking control of the entire supply chain and building tech, Washmen would be able to grow towards being able to handle unlimited capacity at a much higher quality of service.
“The innovation becomes endless, because you just keep testing things without any challenges or any resistance from the partners you’re working with,” he continued.
Building for the future
Eight months later, the company’s facility had become a reality, one of the largest of its kind in the world. Washmen was now in charge of the whole laundry and dry-cleaning process, providing a specialised and highly digitised service, where every item is trackable across the entire supply chain.
Moreover, the new facility was designed with the future in mind—it has a maximum capacity permitting the cleaning and pressing of 30,000 items per day. However, Washmen is currently only using one third of this capacity. What this means is that the company can scale its operations whenever needed, as the necessary infrastructure is already in place.
This future-centricity informs all of Washmen’s decisions. By focusing on the tech, the company is able to solve a lot of the potential issues it is likely to face and monitor every point in the system, allowing the team to quickly pinpoint issues and to allow it to scale moving forward.
“So, when we have an issue, we don’t think about solving it for today,” Shaar said. “We think about ‘How can we solve it if the problem was 10 times bigger?’ So that by the time we’re 50% bigger than we are today, we’re not having scale issues. We’re thinking about the next 50% or 3x.”
Emerging from the brink of bankruptcy
The COVID-19 pandemic was a challenging period—a boon for some companies and a disaster for others.
For Washmen, it was the latter.
The company faced a lot of uncertainty in the first half of 2020, and initially saw an 80% drop off in business. After all, people were no longer going to work, which meant that business wear, which Washmen’s business mostly revolved around, was no longer being sent it for cleaning and pressing, not to mention that people had much more time to do their own laundry at home now, and preferred not to interact with the outside world in fear of infection.
It was a very challenging time for Washmen, almost to the point of bankruptcy. Even with demand diminished, the business’ fixed costs weren’t going anywhere. Shaar, Halaoui and the managerial team shouldered big paycuts, while operational employees took smaller cuts and unpaid leaves with the promise that basic necessities like food and accommodation will be taken care of with their salaries being reinstated as soon as Washmen's financial outlook started to look promising. . Given Halaoui’s involvement in the day to day running of the company, and his familiarity with his employees, there was a shared sense of loyalty—so much so that not a single employee quit Washmen during this period.
Washmen’s business partners, like its landlords and suppliers, were also quite accommodating, offering them temporary discounts and price cuts to help the scaleup stay afloat.
Shaar noted that it was with the support of these stakeholders that Washmen remained standing during those difficult times, and that he is very grateful to them. With their support, Washmen has now doubled in size since its pre-pandemic numbers.
Refusing to “grow at all costs”
In 2023, Washmen is closing in on 8 years of operations. In fact, it is slated to be their healthiest year yet.
According to Shaar, 2022 was a year of solid growth, showing a notable rebound post-pandemic.
Notably, it was the first year that Washmen didn’t burn cash and was in fact making a profit. He noted that their level of service, backed by powerful tech that allowed them to identify and solve problems as soon as they arose, was how they made it this far.
One of the key elements that helped Washmen maintain a consistent level of quality is that the team was confident in the level of service they were providing, and so they had to price accordingly.
“We realised that to offer quality, [the service] needs to be priced properly. We’re not in it to provide quality and keep burning as a business,” Shaar said. “We had months where we were burning $300,000 a month. That’s not sustainable. We really needed to be aware of our financials.”
In 2021, the company bumped up its prices twice to better manage its costs. However, there wasn’t any notable dropoff in demand.
“If you’re not confident with the level of service that you’re providing, then yeah, price increases will be quite scary,” Shaar stated. “But if you are performing above and beyond, and your metrics in operations are quite strong, yes, you will be a little scared in the first couple of weeks of increasing prices, but you will realise that customers will stick around and will understand what they’re paying for. Despite the increase in prices, it is because of its commitment to quality that Washmen is proud to serve over 50,000 customers.”
After all, Washmen “didn’t want to grow at all costs.”
“I can drop my prices by 50% and grow but that is not a sustainable way of winning the market,” Shaar said.
In 2023, Washmen will continue to focus on the UAE market, with revenue expected to grow 60% year-on-year. Washmen will also be launching a couture high-end service in the market—”low volume, high margin.” The company will also grow and refine the shoes and bags restoration service it introduced last year, and will continue to integrate with super apps like it did with Careem in October.