No one knows business which model is better long term. And that’s the most honest thing I can tell you about business strategy.

Take Zepto. When they started with their opex-heavy model: local dark stores, pre cooked food, delivery workers almost working like full time employees, always on standby so that they can do 10 min delivery, everyone was like “This is it! Absolute control over the delivery experience. 10 min delivery. This is how you win food delivery!”

They launched Zepto Cafe. Scaled it super fast. Launched it as a separate app. Mostly frozen food in 10 minutes. Zomato followed. Swiggy followed. Standalone companies popped up everywhere trying to copy the model.

Fast forward to today. Zepto’s prepping for IPO and guess what? They’re scaling down ZeptoCafe. Suddenly the “future of food delivery” doesn’t look so futuristic when you need to show profitability to public market investors.

So was Zepto Cafe a good model or not? Nobody knows. And that’s the point.

This same thing will playing out with Snabbit vs Urban Company.

Snabbit’s going full opex heavy - positioning workers (they call them experts) close to high demand areas, treating them almost like full time employees with insurance, providing e-bikes for female staff. They’re promising 10-minute service for daily chores.

Thanks to this model they will have high worker utilisation, low travel dead time, defensible density economics. A stricter ETA forces operational excellence; builds a habit loop around speed and reliability. Though I would argue Urban Company is pretty reliable too.

This is again a case of classic counter positioning. Urban Company operates the light touch marketplace model. Mostly freelancers, mostly low-frequency but high-ticket services like beauty, furniture and electronics repair. They can’t suddenly position their freelancers to fulfil 10 min delivery. For that you need even stricter SOPs, more control over the service workers, and the ability to have more control over their work hours and availability during those hours. Snabbit is going mostly after the home services market.

When Homejoy started (more than a decade back ago), they went after the services market and got destroyed by platform leakage. If someone’s coming to your house every day and the marketplace is taking a cut, what happens is that the supplier builds a relationship with the customer and the transaction moves offline. There are actually 2 cases when this happens:

  • High frequency, regular matching between the same supply and demand
  • High ticket size item where the take rate as an absolute value is way too high (this is your airport trip where the driver asks you to cancel your ride and then take the transaction offline)

Why would you pay platform fees for someone you see daily? You wouldn’t. You’d just get their number and pay them directly.

That’s why Uber works so well. You can’t build a relationship with your driver. It stays transactional.

(A friend wrote that Namma lets you favourite drivers now, so that you can get matched again with the same driver, which is possibly the worst feature you can implement as a marketplace.)

I have discussed this concept in detail in my ‘Marketplace for therapists’ post.

Yes, Snabbit experts will cover several adjacent buildings, not one home. And you can ensure that a customer rarely gets the same person two days in a row, so bilateral trust never deepens enough to go off app. But if service quality is similiar and you are happy with someone who you have got allocated 3/4 times, you might want to take that relationship offline.

Yes, these workers will stick to the platform till they keep earning ₹40k per month, but we have all seen how gig economy workers’ earnings drop over time once you stop subsidising the supply cost and cut your incentives.

There are other assumptions too:

  • Higher utilisation of experts
  • Repeat orders from customers (so that for incremental transaction you are at least not spending on demand side incentives)
  • Median distance travelled remains low, people use the e-bikes to travel fast to their next gig

Is Snabbit model better than Urban Company’s? Who knows.

What I do know is that when you counter position against an incumbent, timing is everything. You want to hit them when they can’t respond - like when they’re about to IPO.

Think about it. Urban Company has spent years building a lightweight marketplace. Their entire P&L, their processes, their margins - everything is optimised for that model.

Up front costs (relocation subsidies, insurance, e-bikes) are fine for a young startup because they’re baked into the model. For Urban Company, they just can’t increase opex when they have to IPO.

If they suddenly try to match Snabbit’s 10-minute promise, they’d have to:

  • Change how they manage supply (from freelancers to quasi-employees)
  • Restructure their entire margin profile
  • Figure out how to position supply near demand
  • Turn part-time gig workers into full time zone based employees

Ride hailing and food delivery has tried zone based supply in the past. It helps in higher utilisation when there is predictable high demand. It also costs you more because unless you have a differentiated fleet who is paid more supply is not going to sign up for the same price, without any added incentives.

By formalising workers with eKYC, insurance, and rapid response safety, Snabbit gets ahead of upcoming gig worker regulation. If laws tighten, Urban Company might face issues while Snabbit will be already compliant.

And if Urban Company is thinking about IPO this year, no way they’re making that change now. Yes, they have launched Insta Help, but I assume it is still more of an experiment than changing their entire company. Similiar to how Swiggy and Zomato launched separate 10 min food delivery apps instead of reinventing their entire company to optimise for that delivery SLA.

Counter positioning is about adopting a model that would destroy the incumbent’s economics if they copied it. So they don’t copy it.

But just because you can counter position doesn’t mean your model is sustainable.

Remember Zepto Cafe? Everyone thought 10 min food delivery is the future until Zepto needed to show better numbers for IPO.

Zomato parent Eternal has already ended its Quick 10 min delivery pilot

The same thing could happen to Snabbit. Sure, they’re treating workers well, providing insurance, keeping them in specific zones. But is this sustainable? Can they maintain high utilisation? If there is high utilisation between the same supply and demand, will there be platform leakage?

What really matters isn’t the model itself - it’s where the company is in its funding cycle and what narrative they need to sell.

A challenger who has the capability to counterposition and win marketshare? Sure, why not take an opex heavy approach. A pre IPO company like Urban Company and Zepto? Maybe not.

And this is why I am assuming there will be a lot of entrants in this 10 min services space, like 10 min food delivery a year back.

tl;dr Perception of business model success = Where you are in the funding cycle × Whether incumbents can afford to copy you.