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If you are a student or an employee working in a different city than the one where your family stays, then this Bengaluru based-start-up will provide you with your basic needs of roti and makan .
If you are a student or an employee working in a different city than the one where your family stays, then this Bengaluru based-start-up will provide you with your basic needs of roti and makan. Most singles and students invariably find it difficult to look for a place that is convenient, affordable and also provides good food. Similar to the co-working concept, the rise of urbanisation has also led to an increase in the co-living market in India.
Zolo Stays has carved a niche in this space by catering to the co-living market. “Earlier, we had a product that was related to educational technology. Sneha and Akhil were working on the product called AugBrain from 2014-15. At that point in time, I was only moonlighting for them. Unfortunately, we couldn’t find a right model for the product. So we decided to start something that could impact more lives, and thus moved on from education to housing as a sector. That’s how Zolo was started,” says Nikhil Sikri, co-founder and CEO, Zolo.
The company has 600 employees spread across five cities where it operates from. Zolo Stays aims at managing entire end-to-end services for its customers. It started operations on the lines of OYO Rooms and ramped up its inventory to almost 18,000 beds. However, the firm decided to change its business model after six months of operations to give more value to customers. From 18,000 beds, they reduced to zero inventory to change its business model to “full-stack,” where the firm takes care of allied customer experiences such as food, DTH, housekeeping, WiFi and community services.
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“We take up (on lease) residential towers from builders like Sobha in their society under our programme, called Zolo Select. We manage their towers and provide all amenities to tenants. This concept did not exist before we arrived. In our “Select” segment we have 40% of occupants who are above 40 years old. These tenants stay away from their families for multiple reasons including work related projects.” It has another model called Zolo Standard. “Under this, we lease out small buildings like G+5, G+4 where premium amenities like pool, club, tennis court, etc, don’t exist. These buildings consist of 50-70 rooms,” says Sikri.
“Fresh graduates normally prefer the Standard segment and the cost comes to an average of Rs 6,000 to Rs 8,000 per month for twin-sharing. On the select side, it is Rs 12,000 on an average. Our rooms are in Bengaluru, Chennai, NCR, Pune and Kota. We have also recently started in Hyderabad. There are a total of 10,000 beds as of now,” explains Sikri. The leased period with the builders are typically between three and nine years, and with customers, the agreement is for 11 months. It takes a month’s security as part of the rental agreement. It provides six amenities food, housekeeping, DTH, WiFi, concierge, repairs and maintenance.
The food provided by the firm is a mix of both South and North Indian, with a slight regional variation. About the differentiator, Sikri says, “Our costs are around 25% lower than industry standards with a very high customer satisfaction score.” Sikri explains that revenues come from the fee that is charged from customers for services and rentals on the property. Over the past three years, the firm says it has helped 15,000 individuals find reasonable and high-quality living facilities across its 80+ properties in five cities.
The paying guest market in India is largely unorganised, with a huge gap in affordable living space. With dirty rooms, and no focus on food, Zolo saw a potential in the market to make it more organised. The PG and hostels market is estimated to be about $40 billion in India, and the market is gro wing at 16-18% per annum. There are a few competitors like Homigo, CoHo, Stanza and StayAbode, etc.
But with more than 10,000 beds, Zolo claims to be the largest co-living space provider in India. Talking about revenue, Sikri, says, “Our annualised revenue run rate today is Rs 85 crore, and we are growing at 15% month on month.” Zolo’s gross revenues increased from Rs 6.2 crore in FY17 to Rs 26.4 crore in FY18. The start-up raised $4 million from Nexus Venture Partners in its Series A round in December 2016. It is planning to raise its Series B round this financial year. The company plans to expand to around 50,000 beds by December 2019, and also start operations in Mumbai.
(Source: DNA Money)