Source | YourStory : By Athira A Nair
Right after online grocery startup PepperTap’s shut down a few days ago, online beauty startup Amber Wellness, co-founded by former Co-founder of Housing.com Abhimanyu Dhamija and fellow IIT-ian Saurabh Goel, has shut down. They are ending their services in all the three cities they operate in – Bangalore, Delhi and Mumbai – due to low margins.
Abhimanyu confirmed the development to YourStory and said that they were doing well otherwise, with a ticket size of Rs 1,300 on average. He said that although it was a hard decision, they took it because on-demand businesses are going out of fashion. “We are not shutting down the company. We are making a conscious call to get out of this business. And we will be coming up with a new concept and launching in the next couple of months,” says Abhimanyu.
Abhimanyu and Saurabh had been working on Amber for 11 months before launching in August 2015. Amber had raised about $1 million risk capital from undisclosed angel investors. They had launched an app about three weeks ago. They had partnered with some baby care brands as their target audience includes pregnant women and young mothers who stay at home. Amber had five in-house stylists and 20 freelancers. In the events category, they had 275 freelance bridal stylists. Yet, March and April saw little traction.
Challenges in beauty space
Startups have been mushrooming in the beauty space for a while now. The sector is unique – it’s the most personalised service, highly capital-intensive and operationally challenging. Abhimanyu said: “On-demand models work in an environment where there is enough liquidity on the demand side and the supply side and there is localised match between the two. It requires a lot of capital investment on both sides.”
Beauty service on-demand has been going on in an unorganised fashion. The tendency is to pay less for those services compared to a salon. For a body massage, women at home pay Rs 400. Since people won’t pay a premium for such services, a lot of investment is needed to maintain a margin and liquidity on supply side. Abhimanyu adds: “We were not making local supply-demand match, and logistics costs go through the roof. On the customer side, this is not something completely new that people want to pay highly to try out.”
Beauty space is not like taxi, house repair or grocery where you just want the service done, regardless of who is doing it. Since this is a personalised service, you need to know who is the beautician servicing you, and once you develop an affinity to a stylist, you would want them every time. Then demand-supply mismatch happens, because if one stylist is really good people would want her repeatedly. Abhimanyu says: “In the longer run you have a few stylists who are very good, and others will be filtered off. Then we need more liquidity.”