Key facts
- Instant househelp startups collectively spent $14-15 million in May, a 25% increase from April.
- Companies like Urban Company, Snabbit, and Pronto are offering significant discounts to acquire customers.
- Despite increased spending, order growth was modest, suggesting demand has not significantly accelerated.
- Urban Company's net average order value for InstaHelp fell to Rs 140-150 in May.
- Snabbit's net average order value declined to Rs 120-130 in May.
- Urban Company's CEO stated a focus on market share over short-term profitability for its InstaHelp service.
The instant househelp sector is experiencing a significant increase in cash burn as key players like Urban Company, Snabbit, and Pronto reintroduce aggressive discounting strategies to capture market share. In May, their combined monthly spending rose by 25% to $14-15 million, a notable jump from the $10-12 million spent in April. This renewed focus on customer acquisition follows a brief period in April where platforms increased prices due to labor shortages. As supply normalized, competition intensified, prompting a return to heavy promotional offers.
Urban Company's InstaHelp service processed approximately 1.2-1.3 million orders in May, while Snabbit handled 1.1-1.2 million, and Pronto recorded around 800,000-810,000. Despite the increased order volume, the aggressive promotions have impacted average order values. InstaHelp's net AOV fell to Rs 140-150 in May from Rs 180-200 in April, and Snabbit's declined to Rs 120-130 from Rs 160-180. Pronto's net AOV remained relatively stable around Rs 100-110.
Urban Company's CEO, Abhiraj Singh Bhal, has indicated that the company is prioritizing market share over short-term profitability for its InstaHelp service, even if it means matching "irrational" competitor pricing. This strategy contributed to a substantial increase in Urban Company's losses in the March quarter, which jumped 57-fold to Rs 161 crore. Pronto reported a burn of Rs 23 crore in May, or approximately Rs 290 per order.
The intensified competition and spending occur as startups in the emerging 10-minute home services market chase scale. Pronto recently secured $20 million in funding, doubling its valuation to $200 million, while Snabbit raised $56 million in April at a $350 million valuation. A Morgan Stanley report noted a decline in Urban Company's monthly active user share in May, although its app download share increased.