Following the somewhat surprising acquisition of Dollar Shave Club for US$1 billion at the end of July 2016, Unilever has followed by announcing a three-month partnership with Persil and Zip Jet, an on-demand laundry app service provider. The start-up began in London in 2014 and soon expanded to Berlin, Paris and Dublin, recording some 50,000 regular users in 2016.
The “uberization” of laundry has been driven by the clear intensification of consumer lifestyles, especially in major urban centres, which is leading many to look for ways in which to buy time and remove chores from their routine. Laundry apps have become a feature of Western cities, targeting young professionals with higher disposable income but also, in the case of Zip Jet, urban families with busy lifestyles supported by a consistent increase in smartphone possession rate in Western Europe (predicted to reach 93% by 2030).
The partnership is an interesting one, Persil benefiting from discovering trends in what still remains something of a grey area (certainly compared to the more conventional environment of retail laundry care) while Zip Jet will evidently benefit from association with Persil, a trusted and established brand, to help increase its sales conversion rate.
Persil’s attempt to close the gap with competitors
In the space of two months, Unilever entered the subscription business model with the acquisition of the Dollar Shave Club and on-demand services by collaborating with Zip Jet. With only 50,000 Zip Jet regular users, it is neither Persil’s sales nor brand awareness that Unilever is necessarily focusing on. The informative value found in the data collected through Zip Jet mobile app is gold for Unilever.
There are a number of questions Unilever is hoping to answer from data collected through Zip Jet: What is in the laundry basket? How much of their laundry do customers outsource? Which type of washes are still performed at home? How often do customers use on-demand laundry services, when and why? Unique insights can be generated from this data to help Unilever understand its customers changing behaviour and develop new laundry care products dedicated to the mass market.
Taking the collaboration further afield
As of now, the Zip Jet-Persil collaboration is limited to London; however, expansion opportunities could be seen in other markets where Persil already records the highest market share in laundry detergents. Disposable income per household in these key countries’ capital cities is expected to grow substantially from 2015 to 2030. This could strengthen the argument for extending Zip Jet to these markets, where Persil is already a preferred brand for consumers. For instance, Unilever’s Persil brand records the highest market share within laundry detergents in New Zealand, a developed market whose disposable income per household is expected to grow by 28% between 2015 and 2030. Collaboration could even go further and see potential in emerging markets such as Iran, whose capital, Tehran, is becoming very appealing to young entrepreneurs and where the culture of Do-It-For-Me is very much widespread.
But as Unilever and Henkel both manufacture Persil, selling it in different markets (as the agreement states), what would be the implications of Unilever Persil entering B2B in Henkel’s Persil markets through the collaboration with Zip Jet?
Can on-demand laundry apps expect a bright future?
It wouldn’t be the first time an industry had its environment disrupted by the growing popularity of an app, but realistically, how much potential has laundry when it comes to on-demand services? It is unlikely that a significant share of consumers will see the value in outsourcing 100% of their laundry, to the point where they stop using, and replacing, their washing machines. Consequently, home laundry appliance manufacturers do not have to worry much about the growing popularity of on-demand laundry apps. However, those who should be less reassured are detergent manufacturers, as consumer sales could be affected if consumers are doing less laundry at home and outsourcing more often. In this context, Persil, through its B2B collaboration with Zip Jet, is one step ahead, by potentially offsetting losses associated with outsourcing from its B2C operations.
Laundry apps are most associated with developed markets and capital cities, but there could be some potential for this kind of service to gain traction further afield - in Asia Pacific and Middle East and Africa for example, regions where maids are often still seen in middle class homes. Legislation concerning domestic help is getting tougher and less flexible; laundry apps could emerge as an alternative for households with rising disposable incomes, living in fast-growing urban areas and used to hiring someone to do the washing for them. On-demand laundry services might not remain restricted to Western markets only.