A big picture of the laundry industry in Indonesia

To assess the size of the laundry market in Indonesia, we use a projection method, namely market sizing, where with this method, we use the total population of Indonesian people and based on several factors such as (1) the number of people living in urban areas (urban), (2) the percentage internet penetration in Indonesia, (3) the number of people who are in productive age, (4) the number of people who have used laundry services, filtering the population into the number of potential customers. With the previous projection method and filtering with the factors that have been explained before, we get an estimated market potential of 25 million potential customers for the laundry business in Indonesia where the market potential valuation is around Rp 33 trillion annually.

Using the market sizing projection method earlier, we took data from the Facebook Group of the Indonesian Laundry Association (ASLI) to find the number of laundry entrepreneurs and we have around 132 thousand laundry entrepreneurs in Indonesia alone and this number is still growing today and in the future. Looking at the number of potential customers and the number of laundry entrepreneurs, we can see that there are only a handful of customers that can be served by every laundry not to mention if we see laundry businesses often get together and compounded by the lack of differences between laundry businesses so that laundry business is difficult to grow.

Common Issues in the Laundry Industry & Tips to avoid them

Based on our 10 years of experience in the laundry industry, there are some relatively common problems that we feel will be faced by most laundry entrepreneurs sooner or later. Some of the issues in question are inherent in the nature of the industry, market and business so that they cannot be avoided but can still be overcome while some other problems can be avoided easily but only if we know how. The problems we mean are as follows:

Franchise providers focus on selling machines

Most laundry franchises have a focus on selling machines in addition to perhaps providing training on how to use the machines only. Instead, compare franchise providers and find out their prices and what support is provided and what you need before deciding.

Wrong in choosing tools and machines

We also often hear about laundry entrepreneurs where they choose the wrong tools and machines, usually because they lack knowledge of the laundry business they want to run and don't seek a second opinion. For example, we often hear laundry entrepreneurs who are in a hurry to buy coin machines where the price is more expensive than kilo machines while the business concept turns out to be laundry kilos. The tips here are to learn the business model you want to run and what is needed, then find a supplier or franchise provider.

Large fixed costs & relatively low turnover

If we look at the data previously discussed and we also take insights from our experience, the laundry business in general is difficult to have a turnover of more than 20 million rupiah per month. The problem with this relatively low turnover is that the fixed costs in the laundry business will be large in proportion to the turnover where the financial structure will be like this: (1) Operational Expenditure around 45%, (2) Service Expenditure around 30%, (3) Profit around 25%. Suggestions from us? Entrepreneurs should think about how to reduce these costs, for example, by finding the supplier closest to the factory or increasing their turnover with aggressive marketing.

Unfair competition

Looking back from the market data previously discussed, we can see that the ratio between the number of potential customers and the laundry entrepreneur is low, so it is difficult for this laundry business to have many customers because of the tight competition. Then this is also exacerbated where we can see that one laundry business is relatively similar, there is almost no difference, so what they do is a price war. Our tip is to see if your area has a lot of laundry businesses, what kind of laundry business is there, whether it is relatively cheap or premium and can also be adjusted according to the area. So the point is to build uniqueness so you don't have to have a price war with other laundry businesses.