Urban Company's Product-Led Makeover: Can It Outgrow Its Services DNA?

Urban Company’s transformation from the services-first to a product-services mix is more or less complete.

Just as the Gurugram-based company is getting ready to list on the public bourses, it is also undergoing a massive shift.

The turn began in 2023 when after a decade of being a services company, Urban Company ventured into consumer durables with its Native line of water purifiers and smart door locks. This proved to be a precursor to the company’s growing focus on creating its own products — not just to sell to consumers but also to offer its professionals.

Next on the cards, as per sources close to the company, is its own line of air conditioners or ACs. While officially, Urban Company did not comment on whether it is indeed launching an AC, our sources indicate the maiden product will be ready by December this year or early next year. This would coincide with the company’s listing plans, and the new ACs are likely to be available in the market before summer 2026.

“This might just be the beginning. I wouldn’t be shocked if they launch more products in the coming months including other home appliances,” said an industry insider who follows the company closely, without disclosing the name.

Other sources indicated that the final call on the launch of ACs is yet to be taken and the company is playing things cautiously, not least due to a pending litigation over its existing water purifier products.

We can trace Urban Company’s plans to expand into ACs to the changes in its AC servicing and repairs model. For instance, service professionals have been provided with Urban Company-branded equipment to check AC status and monitor issues in AC functionality.

This twin-pronged product strategy indicates a clear shift in the key vertical for Urban Company. As per service professionals, the company’s utilisation of AC repairpersons takes a hit outside of the summer months.

To make up for this, it is bringing in its own ACs, which will be installed by the same repairpersons who are currently listed on Urban Company’s platform for AC repairs.

Does this mean the Urban Company that eventually lists will be completely different from the one that we knew till last year?

The First Signs Of The Shift

Founded in 2014 by Abhiraj Singh Bhal, Varun Khaitan and Raghav Chandra, Urban Company began as a full-stack online marketplace connecting service professionals with individuals.

Since 2023, Urban Company has been in the news for its Native line of products. Its water purifiers have been well-received in the market, though customers do complain about the premium pricing of the products.

Defending the pricing, Urban Company had claimed at the time of the launch that it would be creating a water purifier that would require minimal servicing. It also said that its history of servicing water purifiers and the data collected about the most typical and common issues helped it create a product that would not require any service or maintenance for the first two years.

Two years later, a similar strategy seems to have been applied for ACs. In fact, in its IPO papers Urban Company has claimed. “We regularly make investments in new product and service offerings, new geographies and technologies, and expect to continue such investments in the future,” the company added in its DRHP.

A big factor for this shift has been the problems faced by Urban Company in its service model. Essentially, the company, which started out as Urban Clap, became known for on-demand at-home services such as salon services, plumbing and home repairs, paintjobs, cleaning among others.

Like so many other platforms in India, Urban Company built up the supply side by roping in gig workers or service professionals, as the company calls them. But given the skill demands of jobs such as repairing high-voltage devices, personal treatments and actual manual labour involved, these professionals were often trained by the company and upskilled before being brought on.

Eventually, these professionals were onboarded to the app and then had to adhere to the strict working code offered by Urban Company, which led to a lot of friction and even public protests as we have reported in the past.

Coincidentally, Urban Company’s foray into products came at a time when such protests were growing more frequent and louder. But there is a fundamental difference in running a product business and a services business and after its shift in 2023 to consumer durables, we can see the impact on the P&L statements.

Financials Make It Clear

As per its recently released FY25 financial report, the sale of products generated almost a quarter of revenue.

In FY25, the startup’s revenue from selling products stood at INR 304.2 Cr, a 27% of the startup’s overall revenue. In fact, this was the startup’s fastest growing revenue stream, growing at a pace of 72% on a YoY basis, whereas its revenue from services which continues to bring the majority of the revenue, grew by 29% to INR 840 Cr in the year under review.

This is primarily because the average ticket price is much higher as compared to the service prices, and secondly, the gross margin of selling an electronic appliance in India is somewhere between 15% – 20% or even higher in some cases, thus allowing the startup to turn profitable quickly in this segment.

It is pertinent to note that Urban Company has tied up with a third-party manufacturer for the production of the water purifiers, smart locks, and it will use this same strategy for its ACs.

Insiders believe that Urban Company is playing to its strengths as servicing of water purifiers was one of the most demanded services. The company understood the problems of the consumer, and learnt the recurrent issues in the highest-selling RO water purifiers and then launched the product.

“Over the past few years, we have repaired and serviced over a million water purifiers. One pain point we constantly heard from customers is why water purifiers need filter changes and servicing every few months. We decided to address this problem head-on with our new range of Native water purifiers,” cofounder Bhal had said during the launch.

Incidentally, at the moment when it comes to UC’s handyman services, the air conditioner category servicing is among the top demanded services in the country, especially in North India, where ACs have become a necessity with temperatures soaring as high as 48 degrees Celsius.

Moreover, selling a product directly to consumers increases the likelihood of them choosing the same company for associated services, thereby enhancing customer retention and unlocking additional revenue streams from existing customers.

“Their AC servicing is growing fast. So it makes a logical bet for them to enter this space with a product. At this pace, moving ahead the startup will add more home appliances products under its belt,” sources close to the company added.

The Product Pitch For Professionals

While on the consumer front, Urban Company seems to be a fairly new entrant to sell products, the startup has been selling products and tools to its service professionals for some time. It began with beauty and cleaning products but has expanded into tools and machinery as well.

In addition to charging an onboarding fee from the service partners to remain on the platform and taking a commission cut after each job, Urban Company also charges for the tools that it provides to its service partners, positioning it as a service to ensure service uniformity.

Urban Company procures products directly from original equipment manufacturers (OEMs) and authorised distributors and sells products under its own ‘Native’ brand, ‘Elysian’ and ‘Crave’ brands or through exclusive arrangements with brands such as ‘Go Tile’ and ‘Azi-Clean’ to its service partners.

In the year ended March 31, 2025, the startup generated INR 188.2 Cr of revenue, a 27.2% higher than INR 147.9 Cr in FY24 by selling products to its over 48,000 service professionals.

The company is gradually bringing in more tools with a higher ticket price for its service professionals, and this approach is likely to form the bedrock of Urban Company’s air conditioner after-sales service model.

After speaking to AC service professionals, Inc42 has learnt that earlier this year, the startup launched a new tool named Copilot for its AC service professionals. Branded as an Urban Company product, the Copilot displays status of the gas in the ACs as well as its model number and other details.

While some service professionals claim the product doesn’t always work properly and shows the wrong reading at times, they also cannot proceed with the job till they scan the Copilot’s QR code to activate the repair process.

This results in added friction at the repair site.

Some AC technicians on Urban Company have publicly called out the practice of forcing the Copilot on professionals. Some also alleged that UCs Copilot is priced between INR 4,000 to INR 5,000, but there are cheaper alternatives.

“We don’t have any say. They just ask to buy tools every year, and we have to. If we don’t we will be delisted from the platform,” said one of the AC technicians in Delhi NCR region, adding that the company facilitates loans to help repair professionals and technicians buy these products.

Inc42 was not able to ascertain the tenure or nature of these loans. Questions sent to Urban Company did not elicit a response.

Urban Company Takes The Twisted Path

The shift in Urban Company’s model is interesting because it shows that not all business models can simply scale up with gig workers. It also highlights an interesting conundrum for Urban Company — how long can it juggle the disparate service and product business needs. At some point, it would have to take the call to find the right lane.

That said, this evolution is still in its early stages, and it goes without saying that scaling a product-led business presents a different set of challenges altogether.

Services largely demand workforce training, operational efficiency and superior customer experience. Being a retail or durables brand requires completely different expertise — in supply chain management, manufacturing, inventory management, hardware quality assurance, and after sales service.

These gaps are more visible when entering the mature AC space, where deep-pocketed players such as Voltas, Carrier, Blue Star, Havells, Godrej, and dozens of other brands already command a healthy brand recall. They also have years of experience when it comes to building out distribution networks, channel partnerships and manufacturing scale.

Urban Company cannot yet boast of these. So in that regard, even with a high profile AC launch, it would be years before the company is able to match some of the legacy players. We also don’t know how well Urban Company is positioned to iterate on products.

Its water purifiers have not seen a model update since launch from what is clear. However, the durables category is built around yearly refreshes, minor spec bumps and a stratified product lineup. “Since this business is comparatively new, the company can’t assure that we will be able to achieve similar results or grow at the same rate we did in the past,” UC says candidly in the DRHP.

Moreover, Urban Company’s brand identity is closely associated as a service company, something that will be hard to shake off overnight.

Changing consumer perception from being a trusted service provider to appliance manufacturer will take years of consistent product performance, marketing investment and brand repositioning – something that will cost money.

Adding to its growing troubles, Urban Company is also facing civil suits from competitors. In its IPO paper, Urban Company stated that KENT RO, one of the most popular water purifier brands in India, has filed a civil suit against Urban Company alleging that Native brand water purifier infringes KENT’s patents and has further sought for a permanent injunction against Urban Company from manufacturing or selling the water purifiers. The case is still pending, but its verdict could determine Urban Company’s product strategy.

Inc42 has further learned that while sales of its RO water purifier has picked up the momentum, Urban Company’s smart lock offerings are facing stiff headwinds, with customers choosing better known alternatives such as Godrej.

The transition to a product company is not a mere extension of Urban Company, but a massive transformation in the company’s core DNA. For a startup heading towards IPO, such a shift adds another layer of complexity, when perhaps keeping things simple is the right approach before a public listing.

Edited By Nikhil Subramaniam

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