Euromonitor International Interview Series: Dharmash Mistry, CEO and Co-Founder of blow LTD
Euromonitor International is pleased to present an interview with Dharmash Mistry, CEO and Co-Founder of blow LTD, the UK’s leading on-demand beauty provider, delivering expert beauty services to the door. With the sharing economy continuing to dominate conversation in business and beyond, the beauty industry has been one of the last revolutions when it comes to on-demand, peer-to-peer transactions. Dharmash Mistry discusses why quality trumps affordability when it comes to beauty, how the supply-side of the sharing economy is just as important as the demand-side, and where the future lies for blow LTD.
You are a venture capitalist and you’ve been involved in many start-ups over the years so why now the beauty industry? What makes beauty such an exciting place to play?
As an investor focused on structural shifts I spent my time first on media on-demand, then products on-demand (e-commerce) and now services on-demand, enabled by mobile technology. Beauty is an obvious choice considering that both the beauty services and beauty products markets are both similar in value. There are over 55,000 salons in the UK; 94% are independently managed. Likewise, when we look at the sheer volume of people, the size of the professional workforce in professional beauty services is around 250,000, almost equal to that of private hire vehicles, which is about 270,000 people. This is a multibillion dollar market, fragmented and ripe for a platform to reinvent and consolidate it. You often see two models at play in each of these service markets – a) the ‘Bookatable model’ e.g. book a salon slot, this is Wahanda/Treatwell in the UK or b) the ‘home delivery model’ i.e. the Deliveroo model – which is us in the beauty industry. In the beauty market, home delivery is all about quality of service, hence all the investments we have made in technology, data, processes, training and reward and recognition programmes. We believe the way we use data will reinvent a market characterised by variable quality to one that we can start to quality-control realtime.
What is it that makes on-demand beauty so in demand?
The key mega trend here is “time poverty”. People are connected 24/7, they are busy and what we deliver is hyper-convenience. 40% of our bookings are out of store opening hours, either on Sundays or early mornings and late nights. On top of that, 30% of our bookings are multi-service bookings. The industry structure is archaic, it is mono-vertical. We have a hair salon over here, a nail salon over there and a massage parlour across the street, but none of these services are in one place, which we know is what consumers need. What we do is look at the journey backwards, starting from the “consumer moment” and this is the moment the need is conceived and where the need comes from. The sharing economy is redefining convenience but it’s not necessarily always about immediacy. Most of our customers actually don’t book on-demand, they schedule their appointments to fit around their timetable.
How does the holistic wellness trend play into on-demand beauty?
We recently acquired Return to Glory, a long-established player in on-demand wellness in the UK, so as of last month we offer massages, waxing, pilates and yoga in the home too. It’s a very simple model of a GBP£1 a minute, so GBP£60 for a one hour session. We are establishing multiple relationships with the same consumer. Our launch services centred on ‘event ready’ e.g. blow dry, make-up and nails; the same consumer wants maintenance, pampering and wellbeing services – hence our launch of massage, waxing, pilates and yoga.
How about the staff, is it convenient for them too? Do they play a part in the wider gig economy?
The supply-side of the sharing economy is just as important as the demand-side.
What we are building is a hyper-curated marketplace, quality controlled to “productise services”, moving away from the random service quality you might find in standard salons. blow LTD has a 95%-97% satisfaction rate at present. Only 7% of applications are accepted, whereas the other 93% are rejected – and today work in many of the traditional salons and spas that are serving customers. This provides a lucrative platform for millennials to earn money. For the staff, it fits into their “always on” lifestyle and professionals can earn 1.5/2 times as much as in a salon.
This model supports the gig economy because staff are not rostered and can fit jobs around their schedule. Staff are paid weekly, although the app allows them to see their real-time earnings meaning that they can increase their workload as they wish. Professionals are rated like Uber; a “viral loop” pay structure where consumer delight is linked to compensation. A real time score is motivating and instils a sense of pride, moreover it is linked to rewards, access to more exclusive jobs and public herogrammes. Our model provides tools to build a career just like any other workplace, for example brand training, kit bags, insurance.
As beauty services are so sensitive and personal in nature, does the physical store act as a pillar of trust? Is having physical stores what differentiates you from other on-demand apps out there?
blow LTD has two physical beauty bars: in Covent Garden and Canary Wharf. For blow LTD, the physical store is about marketing (credibility) and acts as an operating hub to test freelancers – we sweat the store asset in off peak hours to technically test freelancers Monday-Wednesday in batches of up to 40 in three shifts a day in off-peak hours. Beauty is similar to fashion; success relies on credibility and brand trust. Having a physical store hub is a marketing tool and crucial for credibility. blow LTD’s reputation is linked to opinion formers, and a strong PR network, which needs a physical base.
We’ve talked about convenience, but what about affordability? Many of these models have achieved disruption through providing convenience and also undercutting competition, but we don’t see this affordability in services offered by beauty on-demand.
It’s different in beauty, it’s not like with Uber where it’s a homogenous trip; all the driver needs is a licence and the skill of the driver shouldn’t matter. Convenience and quality are paramount otherwise you can’t play in this space. As I mentioned, our pricing model is circa GBP£1 per minute and we focus on the time spent – effectively, what the curated marketplace is selling is the time and skills of our vetted professionals, we provide the brand and processes to deliver consistent quality.
blow LTD sells a “curated” edit of products and brands through its website. Where do you see the future of product distribution in the sharing economy?
Product distribution is a huge area of opportunity for us looking ahead. What we have is a professional sales force and these professionals provide one-to-one services and professional recommendations. Next we are moving into branded services, which will be a first in the UK, once launched. Our investors include Unilever Ventures & GHD/Coty, which can see that what we are building is effectively a new product distribution channel – think of it as the reinvention of the Avon model for the digital world. We are currently working with big players like L’Oréal and Unilever to explore these branded experiences. Professionals will be brand-trained and when services are complete, customers will be handed a product recommendation card, which also acts as a virtuous circle. When the customer goes to purchase online this will give them a discount on branded products and will also bounce back to the service provider to receive commission. The first of these will launch just before Christmas – watch this space.
Does blow LTD have plans for global expansion? Most of these on-demand apps are centred in the UK and US, yet our beauty survey data shows that these are actually some of the smallest markets for professional beauty services compared with emerging markets such as China and Brazil. Would you be looking at any of these markets?
This is true, and we are definitely doing research on markets further afield. However we don’t think in terms of ‘countries’. Countries are irrelevant for us; we think in terms of “mega cities” just like Uber does, because these cities are really where our target customers are: the wealthy and the time poor. Our dimension of scale is city by city, and as globalisation has concentrated capital, labour and spiralled property prices and wealth into a few global mega cities – this, unsurprisingly, will likely be our focus.