In our fascination with making money, be it via smart investment strategies or finding a financially rewarding career, we tend to forget the simplest things in life, like having a fresh-smelling neatly-pressed suit or a clean shirt to wear.
Rami Shaar, CEO of UAE-based laundry service Washmen, whose own bad experience with a laundromat gave him the idea of disrupting the business, is creating a seamless, contactless experience with not only cleaning our clothes but also our linen.
His success is also giving him immense pleasure to prove certain people wrong.
Dang. I’ll do it myself
Rami was a former investment banker at Morgan Staley when his clash with a laundromat sparked his Eureka moment. He tried recruiting an Uber friend to go in business together but that friend ended up helping recruit Rami to work at Uber as a Logistics Manager.
“I had experience with operational models and data management which are compatible with Uber’s model and I expressed opinions on how things should work there, but my views were not received well by my bosses, and I knew then I had to leave,” Rami told AMEinfo.
He quit a lucrative career and together with his partner Jad Halaoui, whom he describes as a walking encyclopedia, got their hands dirty with developing Washmen, now the largest regional laundry retail business and a globally recognized and awarded tech startup.
Early days, seed and Series A, B funds
Washmen started in 2015 with a $400,000 seed investment after completing an accelerator fund with Flat6labs in Abu Dhabi, enough for an MVP (minimum viable product) to get the business running.
One year after building the proof of concept and getting traction with customers, the business managed to attract VC funding, a Series A of just over $1 million, followed by a few extensions with proper series B funding, raising a total of $10 mn in funds.
“The idea was to create an asset-like model by connecting existing suppliers of laundromats centralized on the outskirts in industrial areas of the UAE and have our drivers bring collected clothes to,” started Rami.
“We built some technology around managing our partners but as we started scaling and trying to maintain quality, we realized that to be experts in what we do, it was important to integrate down the supply chain, and diverge from the original asset-based model into a full-scale operation.”
This kicked off a path towards vertical integration for Washmen, building tech around the operations and delivering with in-depth quality control, while building their own facility in June-July 2019, after investors and major manufacturers like Persil’s Henkel bought into the concept.
How does the business work?
From their Jebel Ali-based facility, Washmen is able to serve both Dubai and Abu Dhabi.
“We are well-positioned to go to other emirates if and when we decide to go there. Our focus is B2C, and we have a dedicated fleet of drivers positioned around the city in specific geo-fences that we divide virtually within our algorithm software,” explained Rami.
“We created a dispatching algorithm that has a capacity understanding of each geo-fence, able to service customers’ pick up and drop off times in a timely manner via our app.”
A contactless experience
As contact with customers is only done at a premium service and only represents around 10% of the business, Rami says Washmen’s dispatch algorithm gets more efficient as the demand becomes denser within the city.
“A food delivery business would do in very good hours 2 to 2.5 tasks per hour. Our drivers, using company-branded vans, can do up to 8 tasks per hour, which is very efficient. The reason being that a lot of drop-offs and pick-ups are at doors without the need to meet customers,” said Rami.
“We managed to find an excellent balance between CX and flexible time windows for the logistics to allow our drivers to perform as efficiently as possible in a milk-run fashion.”
The next person who opens the app to check, for example, a laundry pick-up schedule will see a preference towards a predetermined drop-off time in that specific area to incentivize that customer to pool demand around that same time.
Security of items
In a laundry business, one is faced with different types of residential setups like apartments, villas, and even hotels, each with an operational flow.
“Since villas are gated communities, customers leave their laundry bags outside their doors without any issues. In hotels, people leave it with the concierge. In apartments, there are security cameras and personnel. And Generally, there is a high level of safety in the UAE,” said Rami.
Also, to prevent loss of clothing items, Washmen drivers photo-document every bag that is collected, and each is earmarked with a geolocation, and the reverse is done at the factory when drop-offs are assigned.
“Typical small laundries manage 100-500 items, and manually. Not us. We exchange on average between 15,000-20,000 items daily and we have not registered one security incident to date,” revealed Rami.
It is a logistics business using a state-of-the-art 30,000 sqft as a transit operation, like an e-commerce business, with items on consignment that come in for a very short time and are later delivered.
“It’s not a typical factory where you have raw material that one stores, manufactures, and later ships. It is about managing the logistics and technical requirements around laundry and dry cleaning,” described Rami.
“It’s about the processes and chemicals that help us do that. With the added challenge of managing the high number of items per day, the technology is needed to deal with the exponential complexity of coverage and services which we deal with via advanced technology and automation,” Rami added.
COVID-19 and thinking out of the bag
Within 6 years, Washmen managed to become one of the largest laundry businesses in the world.
According to Rami, his company sales grew between 50-100% year on year, but Washmen faced a setback in April 2020, after COVID hit, when people stopped going out, spent more at home where they did their own washing and cleaning, and had no need to press work-wear since they worked remotely.
“When the markets reopened, things got better but we realized that working from home became the new norm. So we had to innovate,” said Rami.
“50% of our work-wear business was in danger and that forced us to identify new opportunities and introduce the right machinery and technology for a line of business usually within the realm and domain of a B2B laundry business: Linens.”
Washmen thus introduced Homecare, a B2C service focused on bed sheets, linen, pillows, pillowcases, and others.
“It was an instant success,” said Rami.” We have one massive bag to fit 15 kilos of linen items, for 65 dirhams ($17.7), compared to 150- 250 dirhams ($41- $68) elsewhere. It’s cost-efficient because of our collection/delivery model and the pressing and folding technology and modules we use, where time and cost are greatly saved.”
So, as it turns out, Washmen’s post-COVID-19 sales are higher than pre-pandemic ones but the number of items collected for work-wear was 60% lower thanks to the linen business.
“Now, we are asking ourselves ‘Why haven’t we thought of linen before’, nonetheless, we are looking to recoup organic growth in work-wear around Q4, 2021 as more and more people go back to the office,” Rami predicted.
For regular clothes, the cost on customers for cleaning and pressing a shirt is 12 Dirhams ($3.3), while in the market, there are prices as high as 27 dirhams ($7.3), and as low as 3 dirhams ($0.85).
“Mid-market market prices are 8-15 dirhams. We are on the upper end of the mid-market, but in terms of quality, focus, and the technology we deliver, there are no shortcuts, and with clothes, it’s costlier to fix mistakes than doing it properly from the beginning,” said Rami.
Running a profitable, award-winning business
Rami said that Washmen is on a monthly run rate of $600,000 in sales, declaring it is a profitable sales number re-invested back into marketing and growth.
“It will be more profitable the more items we collect and as we have a very high fixed cost, the business presents an entry barrier to competition and smaller players,” said Rami.
“As we invest back into the process and introduce new ideas, this will put more pressure on the industry but will allow us to innovate and improve CX as well as have a very defendable position to keep existing customers. To date, 50,000 customers have used Washmen and more than 10,000 represent monthly active users.”
Smoot sailing, award-winning operation
All booking operations and payments are done via the company app.
“We have an operations dashboard, a customer service dashboard, a driver app, and the customer app to create a seamless operation and refined CX,” Rami said, adding “all systems and algorithms are supported by operational staff and 20 engineers, between product design and engineering.”
Rami revealed that before building the technology facility, the partners traveled to over 17 countries around the world, visiting multiple facilities and learning from the best players and suppliers.
“In 2020, after pitching our company in the international award for the textile industry, the CINET awards, Washmen was awarded #1 in UAE, #1 in Asia and #3 Globally, an excellent ranking for a business that has been around for only 6 years,” said Rami.
“A bit of anger and frustration helped push me forward, but now it’s all about an obsession and passion for perfection.”