Urban Company: Learnings from multi-market expansion

Summary

Venturing into non-native markets is exhilarating but the road less travelled is also full of challenges. While Indian SaaS businesses have established a strong international presence, especially in the US, consumer-facing businesses are now expanding into newer markets. Urban Company is one such case in point. It has a growing presence in markets outside of India — namely the UAE, Singapore and Saudi Arabia. It also launched and has since closed its operations in Australia and the US. Urban Company’s multi-market journey is a valuable case study for consumer-facing businesses eyeing overseas markets. 

For a business thriving on its home turf, scaling globally is often a natural next step. But conquering new geographies demands a strategic overhaul — businesses have to rewire, rethink, and even repurpose their offerings for a fresh audience. 

Urban Company’s rise in India has been nothing short of remarkable. Its evolution, from a full-stack home services provider in Indian cities to an international platform, offers a treasure trove of lessons for entrepreneurs embarking on similar journeys. In this candid chat, Abhiraj Singh Bhal spoke about the opportunities and challenges of multi-market expansion.

What sets this company apart is its laser focus on cultivating strong relationships with individual customers. While internationalisation is often embedded in the DNA of businesses focused on enterprise customers, B2C companies need to take a more nuanced approach. They must adapt to the local culture and unique preferences of consumers in each market they enter. 

Among Urban Company’s international markets today are the United Arab Emirates (UAE), Singapore, and the Kingdom of Saudi Arabia. It also went to, and subsequently shut down, in Australia and the United States. Abhiraj sees each of these markets as a learning opportunity, the maturity of business expansion built over time.

‍

Beyond India

Urban Company’s international expansion began in Dubai. In 2018, the company was present across eight Indian metros. Abhiraj was looking for the next city to expand into when a conversation with a Dubai-based investor stuck with him. 

The investor suggested expanding into Dubai, “the ninth metro of India”, and Urban Company’s international expansion began in the second half of 2018. The expansion worked reasonably well, giving the company the confidence to explore other markets. 

Within the next two years, Urban Company launched in Singapore and Australia too. While the Singapore expansion was inspired by its cosmopolitan Asian character that felt similar to Dubai, the foray into Australia was driven by a more personal reason. One of Urban Company’s early employees and leaders was moving to Australia permanently, and it seemed like a good time to test the waters in a completely new geography. 

For both of these markets, though, the timing clashed with the onset of COVID-19 and its associated lockdowns. Eventually, the lockdowns and labour shortages made continuing in Australia unviable, and Urban Company pulled out of the market in 2022. “We basically struggled with supply given the COVID-19 induced labour shortage in Australia, and multiple lockdowns creating a start-stop situation for the business…It was a tough decision,” recalls Abhiraj. 

Many of these early bets were, in a way, a precursor to launching in any tech startup’s most coveted market: the US. So around the end of 2021, armed with learnings from its other markets, Urban Company launched in the US. 

UC gave the market everything it had — meaningful investments, a strong leadership team, founder bandwidth, and adequate focus from the technology team back home in India. Over the next two years, they iterated fast, eventually building an offering which was better than offline alternatives, at a significant 30-40% discount. Despite this, they failed to see consumer traction in line with their ambitions. Looking back, Abhiraj says it’s a rare instance when it’s hard for him to pinpoint what they could have done differently to win in the market. 

“The bar for a consumer internet startup to win big in the US is very high,” he says. “The product or service needs to be a new paradigm for consumers. Being better and cheaper is not enough to win big, might be good enough to create a mid-sized outcome — that was my takeaway.” The company pulled out of the US market in 2023.

The other large market that Urban Company is still new to, but excited about, is the Kingdom of Saudi Arabia. It is partnering with a reputed local company which is helping navigate the cultural nuances of a market with immense long-term potential.

These experiences have led to a renewed focus on India. Both metropolitan and tier-two cities in India have shown traction for Urban Company in the last few years, prompting a strategic shift towards deeper domestic penetration.

The 0 to 1 journey

The shift from a company’s native market to a new one needs a new playbook across B2B and B2C businesses. But for a consumer-facing company, the product-market fit, or building strategic advantage, requires careful consideration of the culture, labour markets, micro pivots and multiple customisations. 

But PMF cannot be an endless iteration. How does Urban Company evaluate its PMF across different markets? How does it decide pricing in different markets? 

Abhiraj has a few pointers: 

• Have an upper cut-off limit: Whether it is a new category launch or expansion into a new market, earmark your risk capital and set a time until when you should have hit PMF. For Urban Company, this was a risk capital of $ 8-10 million (depending upon the market) over two years.
• Find the killer SKUs: In Urban Company’s case, the categories they operate in are largely unorganised. In such cases, it is important to understand the unmet local consumer needs, cultural and language nuances, and building market winning SKUs, which help you gain early inroads and establish product market fit. 
• Strong local leadership: Find and empower leaders who understand the local nuances and cultures. The combination which worked for UC was a strong country manager who had previously worked with UC in India, supported by an empowered team largely hired locally. 

‍

Understanding customer behaviour

The core aspects of business-building may remain constant but in the world of consumer-facing businesses, cultural nuances become the secret weapon. They can make or break your success story.

Abhiraj recounts how, in one of its recent partnerships in Saudi Arabia, their creative for a manicure-pedicure service featured an Arab woman at home wearing a full burqa. However, their local joint venture partner pointed out that women typically wouldn’t wear a full face covering at home.

There are other cultural quirks of different markets worth paying attention to:

• In countries such as Dubai and Singapore, there is a greater acceptance of do-it-for-me, compared to Australia, which has a more do-it-yourself market.
• While the beauty services segment does well in India, Dubai and Singapore, it received no traction in Australia and the US, where women do not like the idea of getting beauty treatments done at home. Stepping out of the home in developed markets, driving to a salon, etc. were also not major challenges. 
• In Australia and in the US, customers mostly do not like to be at home when a cleaning professional does their work.

Urban Company’s success in adapting to different markets, their willingness to learn from setbacks, and their current focus on maximising domestic potential, all provide valuable lessons for founders aspiring to go global.

Abhiraj believes there is still immense untapped potential in the Indian B2C market. That is why entrepreneurs should carefully evaluate their reasons for moving to non-native markets. 

“Be very very sure about why you want to internationalise. Do not do it until you have done high-quality justice to the India opportunity,” is his advice to founders. 

‍

#PMF #crossborder #B2C #culture #adapting