Below is my view of defining the market size for Laundry Inc Inc. leveraging the four different cuts of market data:
The Demand
Understanding the market demand is defined by the overall laundry businesses which are operational currently in the US which also extends to the Laundromat consumer. The demand for our product is based on providing a competitive advantage to Laundromat's that look to provide a better experience and piece of mind through allowing the ability to pay for laundry service through a smart phone application, receive real time status on what stage of the cycle the laundry is at, provide a level of security which leverages a lock mechanism on the machine (people cannot remove laundry), and allow data analytic to understand utilization of its capital (washers and dryers) to understand trends and high/low usage times to possibly define change to reflect this information.
The Addressable Market Size
When looking at the total addressable market for our product, a starting point is based on the current Laundromat market and where it stands today. The Laundromat market size is approximately $4b in annual revenue with flat growth due to home washers and dryers usage growth, the emergence of drop-off and pick-up laundry, and dry cleaning services. With this, the projected industry growth is predicted to be flat to a reduction of .5% annually. Current total laundromat businesses across the US tops over 22,000.
Realistic Opportunities versus Competition
When researching whether competing solutions were offered by any possible competitor, we could not find such a solution and approach to mimic Laundry Inc Inc.. There were aspects of our business idea that were offered by various companies which are considered possible competitors. 1st the payment option via a smart phone application could not be identified, but alternative payment solutions were via credit card swipe payment and blue tooth with Google Wallet. Another aspect to our business model is providing real time status of washing/drying cycle through a smart phone application which is a product offering for a washer machine and dryer for home use which allowed you to control the cycle via your phone. Lastly, the security feature is something which currently is not provided by any competitor. With this, our real opportunity is substantial as such a solution does not exist for Laundromat businesses and is dependant on industry acceptance.
"Winnable" Market Opportunities
In terms of winning market opportunities, our product is targeted to a specific Laundromat market segment. This target market is focused on mid-to-higher end Laundromats which are located in a specific location which are not as cost sensitive in providing the lowest laundry service cost possible. This mid-to-higher market segment can be viewed as people with discretionary income who are located in a metropolitan area where a high population of Laundromat users reside and willing to pay the incremental costs through higher customer service. Of the 22k laundromats across the US, we can assume 30% of the addressable market would identify the return on investment through the incremental costs associated with the product.
In terms of winning market opportunities, our product is targeted to a specific Laundromat market segment. This target market is focused on mid-to-higher end Laundromats which are located in a specific location which are not as cost sensitive in providing the lowest laundry service cost possible. This mid-to-higher market segment can be viewed as people with discretionary income who are located in a metropolitan area where a high population of Laundromat users reside and willing to pay the incremental costs through higher customer service. Of the 22k laundromats across the US, we can assume 30% of the addressable market would identify the return on investment through the incremental costs associated with the product.
I liked your break down of the market from the largest to the winnable market but I was wondering what the 30% estimate was based upon. Did you determine that 30% of laundromats are located in metropolitan areas with sufficient disposable income or is 30% just a gut feeling?
ReplyDeleteI was going to ask the same question as Dave. I still am slightly concerned with Laundromats not wanting locks on their machines because that would lead to less usage of machines and in turn less profits (which in turn may limit the true addressable market). Otherwise, excellent breakdown of your team's market sizing.
ReplyDelete