New Dry Cleaning Business Advice

Time2GetFit

Hi Guys,

New year brings new ideas and I'm planning to take the step of setting up a new business in 2014. The idea would be for it to run on a very small scale initially with a very defined customer base and if it was successful scale it up as need dictated.

The idea revolves around the principle of 3rd Party Dry Cleaning. Effectively customers would be leaving their items with me in the morning of Day 1 and I would then drop them off to a local dry cleaner and then make them available for collection to the customer on the evening of Day 2. Drop offs could be done during a 2hr window in the morning and similarly collections for a 2hr window in the evening.

Just wondering if anyone could offer me any points etc and do they believe this is a worthwhile venture? I have still yet to pick a dry cleaner in the area but there a few reputable ones to choose from. Does anyone have any experience of negotiating with a dry cleaner to arrange a wholesale charge to get this work done? If a retail price is €7 for an item would it be reasonable to expect to pay a wholesale price of €3.50? I would be bringing extra business to the Dry Cleaner however is a 50/50 split way off the mark?

I would not require a premises so initial start up costs are minimal (well unless I'm missing something!)

I really am new to this but I'd be very grateful for any advice or comments people could offer!

Thanks All & looking forward to reading your insights!

jimmii

Approach a few dry cleaner see if there is any interest I would have thought the margins weren't big enough for you to take a 50% cut out of their pricing though but it would be a good starting point to negotiate from. You would have to be able to give them a guestimate of how much business you are likely to bring them. I guess your only real start up costs are going to be transport, insurance and advertising. Are you collecting the clothes from the customer or they delivering them to your home address? If you are renting make sure your landlord is ok for you to essentially be running the business from the address if they are delivering them to you.

How big is your customer base and how many items do you think they are going to be getting cleaned each week? Are you going to register for VAT? The dry cleaner owners will have to charge you VAT on your "fee" so that would be cutting into your profit. To make a barely liveable wage you would want to be doing 100+ items at €7 a week.

Time2GetFit

jimmii wrote: »

Approach a few dry cleaner see if there is any interest I would have thought the margins weren't big enough for you to take a 50% cut out of their pricing though but it would be a good starting point to negotiate from. You would have to be able to give them a guestimate of how much business you are likely to bring them. I guess your only real start up costs are going to be transport, insurance and advertising. Are you collecting the clothes from the customer or they delivering them to your home address? If you are renting make sure your landlord is ok for you to essentially be running the business from the address if they are delivering them to you.

How big is your customer base and how many items do you think they are going to be getting cleaned each week? Are you going to register for VAT? The dry cleaner owners will have to charge you VAT on your "fee" so that would be cutting into your profit. To make a barely liveable wage you would want to be doing 100+ items at €7 a week.

Hi jimmii,

Thanks for the comments above. You raised things that I hadn't thought of particularly the vat issue. I'd be planning on the customer coming to me pre work and collecting post work.

I'm not sure how many items but would hope to have 80 customers weekly with an average spend of €12.50. This is planned to be run part time so don't need to make massive money from it.

Hope that makes sense!

Atomico

Time2GetFit wrote: »

Hi jimmii,

Thanks for the comments above. You raised things that I hadn't thought of particularly the vat issue. I'd be planning on the customer coming to me pre work and collecting post work.

I'm not sure how many items but would hope to have 80 customers weekly with an average spend of €12.50. This is planned to be run part time so don't need to make massive money from it.

Hope that makes sense!

So you are going to have the customer make their way to you to drop off their dry-cleaning as their middleman, have them collect it from you the following day, and charge them more than they'd pay just dropping by the dry-cleaners themselves?!

Nice work if you can get it!

jimmii

Atomico wrote: »

So you are going to have the customer make their way to you to drop off their dry-cleaning as their middleman, have them collect it from you the following day, and charge them more than they'd pay just dropping by the dry-cleaners themselves?!

Nice work if you can get it!

No the plan is to charge them the same as if they went direct but save them the trip.

Atomico

jimmii wrote: »

No the plan is to charge them the same as if they went direct but save them the trip.

Ah right, course. Still though, you'd need to have enough customers closer to the OP than their local dry cleaners to make it worthwhile. Then again, he is saving them time that would be spent possibly queuing in the dry cleaners, parking, etc.

Would be a volume game I'd say, as the margins are surely pretty small on the dry cleaners side.

Would be worth giving it a test run though OP.

Time2GetFit

jimmii wrote: »

No the plan is to charge them the same as if they went direct but save them the trip.

And at hours the dry cleaner isn't open eg pre 830am.

jimmii

Its all going to come down to how many people actually use the service and what rate you get with the dry cleaners. If you end up using a few dry cleaners I would imagine it will be a lot more than part time hours especially when you consider people will be dropping off and collecting all the time. You'll need to be in a whole lot more too people aren't going to want to be going back and forth with their dirty clothes because you weren't in when they went round or something. If there are any large offices near you then you could set up so that people drop their clothes off with you in the morning and they are ready for collection at their offices when they are done. Make sure your covered insurance wise the last thing you want is for someone's expensive dress or suit to get damaged then find out its not covered by your home insurance or the dry cleaners insurance.

Time2GetFit

jimmii wrote: »

Its all going to come down to how many people actually use the service and what rate you get with the dry cleaners. If you end up using a few dry cleaners I would imagine it will be a lot more than part time hours especially when you consider people will be dropping off and collecting all the time. You'll need to be in a whole lot more too people aren't going to want to be going back and forth with their dirty clothes because you weren't in when they went round or something. If there are any large offices near you then you could set up so that people drop their clothes off with you in the morning and they are ready for collection at their offices when they are done. Make sure your covered insurance wise the last thing you want is for someone's expensive dress or suit to get damaged then find out its not covered by your home insurance or the dry cleaners insurance.

Yeah I understand insurance will be a major thing and haven't even got to that stage. I'm also exploring the scope of having a secure receptacle at the location so effectively it doesn't have to be manned all day every day.

I don't fully understand what you mean by end up using a few dry cleaners? I would have thought partnering with one dry cleaner would make most sense and would then allow me to negotiate a more preferential rate if the volume was there.

jimmii

One would definitely be best assuming they can handle the additional load. Have you approached any dry cleaners yet? No point really going any further unless you can find someone interested.

Time2GetFit

jimmii wrote: »

One would definitely be best assuming they can handle the additional load. Have you approached any dry cleaners yet? No point really going any further unless you can find someone interested.

No not yet-just wanted to get an idea of any pitfalls before going in and also wanted to get an idea of wholesale vs resale % margins. I've seen post offices and newsagents offering this service previously so they're must be dry cleaners who are interested in this sort of 'deal'.

jimmii

I'm sure there are I think most places are willing to give up something when you look at all the deal sites everyone seems to be doing them. It could definitely work but I think you'd need to give it a trial to really get an idea of how well it works as you're unlikely to find anyone who has done it before.

Time2GetFit

jimmii wrote: »

I'm sure there are I think most places are willing to give up something when you look at all the deal sites everyone seems to be doing them. It could definitely work but I think you'd need to give it a trial to really get an idea of how well it works as you're unlikely to find anyone who has done it before.

Thanks-think a toe in the water trial is what's required to get a feel for the demand........if any!

modmuffin

As a potential customer, why would I use your service over the local dry-cleaner?

To me it seems like a labour intensive headache of a job that is unlikely to succeed.

How important is the morning drop-off?
Eg If I need something dry-cleaned I will generally drop it off an evening approx 1 week before I need it and collect it 2-3 days later.

If I was stuck I would bring the items to work and avail of a same day service either on the way to it close to my work.

It is only more convenient if it saves me significant travel time ie 10-15mins each way (which is unlikely unless you are in a rural area, in which case you won't have the bolume of customers.)

I would also feel less comfortable dropping my suit into a random persons house than direct to a dry cleaners. I would think there is a higher risk of something going missing etc (which happens!)

Also, if I was a dry-cleaner I would only do a deal on the basis of significant volume being delivered.

Dry cleaners are very accessible lately with some newsagents now offering a similar drop-off & collection service to the one you have described.

I don't mean to rain on your parade, just think there are easier ways to make a few quid!

RainyDay

Can't see it working if you expect customers to come to you, just not enough value-added for the customer. The only way to make it work would be to arrange to drop off and pick up from large employers. people don't have to go out of their way. If you can pick up 10 or 20 items a day from a single location and drop them back the next day, that adds value for the customer, and you might be able to shave enough off the dry cleaners price if you bring a good chunk of business.

Atomico

I have actually heard of a startup doing this exact concept over in the States, I only read about them earlier this week or last week. Will try to think of their name, but if you do a google and add 'techcrunch' into your search, you should find them.

Personally I don't know if it's a runner in a country like Ireland with a very small population, this startup in the States will be targeting cities with the same population as the entire island of Ireland (and more). There is a dry cleaners around every ninth or tenth corner in most towns and cities in Ireland and I don't know if the market would be there.

Also as mentioned, the idea of dropping your clothes off to a third party isn't all that appealing imo (especially if they are nice / expensive items like a suit and sensitive material, which they inevitably will be).

percy212

Yep. I have heard of something alone these lines too but it was more like a personal concierge service i.e. you will do anything for a customer, post a letter, drop off or pick up dry cleaning or packages, pay bills, do grocery shopping, take pets to vet etc etc. I would use it. Its great for people who don't have time or um, a 1950's style housekeeper/secretary/slave. The service definitely exists in NYC.

Atomico

percy212 wrote: »

Yep. I have heard of something alone these lines too but it was more like a personal concierge service i.e. you will do anything for a customer, post a letter, drop off or pick up dry cleaning or packages, pay bills, do grocery shopping, take pets to vet etc etc. I would use it. Its great for people who don't have time or um, a 1950's style housekeeper/secretary/slave. The service definitely exists in NYC.

Yep exactly, tonnes of them are popping up in the US. I think Agent Anything is the one you are thinking of. Exec is another..

'Prim' is the name of the one I was thinking of! I knew it had a clever name

Then Washio seems to be another one, exactly what you're proposing OP: http://techcrunch.com/2013/11/22/washio/

Time2GetFit

modmuffin wrote: »

As a potential customer, why would I use your service over the local dry-cleaner?

To me it seems like a labour intensive headache of a job that is unlikely to succeed.

How important is the morning drop-off?
Eg If I need something dry-cleaned I will generally drop it off an evening approx 1 week before I need it and collect it 2-3 days later.

If I was stuck I would bring the items to work and avail of a same day service either on the way to it close to my work.

It is only more convenient if it saves me significant travel time ie 10-15mins each way (which is unlikely unless you are in a rural area, in which case you won't have the bolume of customers.)

I would also feel less comfortable dropping my suit into a random persons house than direct to a dry cleaners. I would think there is a higher risk of something going missing etc (which happens!)

Also, if I was a dry-cleaner I would only do a deal on the basis of significant volume being delivered.

Dry cleaners are very accessible lately with some newsagents now offering a similar drop-off & collection service to the one you have described.

I don't mean to rain on your parade, just think there are easier ways to make a few quid!

I hear what you're saying regarding convenience. The location and the target audience will essentially mean all my potential customers will walk passed my door to leave the premises and walk passed my door when they arrive home. Hence I think the convenience element coupled with competitive pricing could make it a runner.

I understand initially people may be less
comfortable handing over items to a third party but a promotion at cost may help with that. Also I dot know if a customer wiping feel less comfortable handing garments to me ahead of a newsagent.

Also I'm glad your raining on the parade because that way I have to consider the pitfalls rather than convince myself 'it just has to work'!!

ironclaw

Atomico wrote: »

Then Washio seems to be another one, exactly what you're proposing OP: http://techcrunch.com/2013/11/22/washio/

Have to say, that is an impressive service. But home collection even in Dublin would be massive transport costs. You'd probably want two vans, North and Southside, and I can only imagine the fuel bills. Interesting all the same.

jimmii

That reminded me of an article I read the other day about "The Hailo for Laundry" these guys are going to be operating in Dublin so might be tough to compete.

Washerly twitter
washerly website

Time2GetFit

jimmii wrote: »

That reminded me of an article I read the other day about "The Hailo for Laundry" these guys are going to be operating in Dublin so might be tough to compete.

Washerly twitter
washerly website

I really don't see how a Hailo style laundry service could be successful in Dublin.

The beauty of Hailo is it provides an 'immediate' for something that usually has to be pre planned or at the very least advance notice.

Also there are so any taxis out in the market that the customer can usually get one in under 5 mins. I don't see how this model can work without a large number of staff around the city who will pick up at a moments notice unless like Hailo this company puts you in contact with a dry cleaner in the area who are willing to pick up from your location and then these guys take a % of the transaction value.

But maybe I'm way off!

jimmii

Surely the way you walk out and get a taxi in 5 minutes is similar to the way you can just take your clothes to the nearest dry cleaners. I assume this isn't the whole of their business and possibly just an addition to an existing dry cleaning business. Being able to just load up the app and click for a collection and have the clothes back in 24 hours would appeal to a lot of people. Until Hailo style apps were launched I doubt many people thought there would be a demand as it was easy to walk outside and get a taxi anyway.

percy212

Since that business is not in operation yet, its not really a competitor They are using the word "hailo" but its just a pickup and delivery service.

If you provide a good service it will be used OP. Incentives like free branded laundry bags, old fashioned chinese laundry brown paper and string wrapping, and feel good branding e.g.'folded like your mammy did' might work on the busy and hip.

Time2GetFit wrote: »

I really don't see how a Hailo style laundry service could be successful in Dublin.

The beauty of Hailo is it provides an 'immediate' for something that usually has to be pre planned or at the very least advance notice.

Also there are so any taxis out in the market that the customer can usually get one in under 5 mins. I don't see how this model can work without a large number of staff around the city who will pick up at a moments notice unless like Hailo this company puts you in contact with a dry cleaner in the area who are willing to pick up from your location and then these guys take a % of the transaction value.

But maybe I'm way off!

modmuffin

I would use the washio model with the mobile app, collection & 24 hour return, professional service etc a lot sooner than the drop-off-to-your-house-and-collect-it-myself-model

If you think about it, your USP is convenience (ie you are closer than the local dry cleaner).
Washio's app, collection & 24 hour return is way more convenient than your proposal.

hfallada

Who uses a dry cleaners anymore?(I know people still use them). But a dying industry as very few new clothes are dry clean only anymore. Most Irish consumers switched from dry-clean only to washing machinable items. My local dry cleaners is open from about 7.30am to about 8pm. Why would I bother with your service OP, if I only have a tiny timeslot to collect my clothes compared to my dry cleaners.

One thing you have taken into account is the nature of dry cleaning. Some stains can be removed with dry cleaning. How are you a middle man be able to distinguish between a removable and non-removable stain?Also I know people who have sued dry cleaners over them ****ing their curtains. Are you going to pay for the dry cleaners mistakes?

GarethM

hfallada wrote: »

Who uses a dry cleaners anymore?(I know people still use them). But a dying industry as very few new clothes are dry clean only anymore. Most Irish consumers switched from dry-clean only to washing machinable items. My local dry cleaners is open from about 7.30am to about 8pm. Why would I bother with your service OP, if I only have a tiny timeslot to collect my clothes compared to my dry cleaners.

One thing you have taken into account is the nature of dry cleaning. Some stains can be removed with dry cleaning. How are you a middle man be able to distinguish between a removable and non-removable stain?Also I know people who have sued dry cleaners over them ****ing their curtains. Are you going to pay for the dry cleaners mistakes?

I agree with the above - not sure how many people still use dry cleaners. What I would definitely make use of is an ironing service! A few of the high power steam irons at about 200 EUR a pop and you're good to go. Charge per black bag or weight - sorted.