Zeel: Massage on Demand
Massages have long held the benefits of improved blood circulation, reduced stress, and heightened mental alertness. Now you can enjoy these benefits at the comfort of your own home.
Zeel, launched in 2012, is the first company to offer same-day, in-home massage. Recently surpassing more than 1.5M appointments, Zeel has been named one of the “Best Entrepreneurial Companies in America” by Entrepreneur and is now recognized as “One of the fastest-growing companies in the United State” by Inc. Magazine. Here is how the company is disrupting the $15B US and $80B global massage market.
Figure 1: Screenshots of Zeel’s mobile application
Value creation
Convenience: With Zeel, clients can get their massages anywhere, anytime. Massages can be delivered to homes, hotels, workplaces, and events across the United States in more than 100 cities. Via Zeel’s easy-to-use mobile app and online website, clients can book massages 7 days a week, 365 days a year, with start times as early as 8 am and as late as 10:30 pm. Clients can also book their sessions in as little as an hour or up to a month in advance.
Quality: Zeel vetted only top licensed massage therapists across the country. To date, the platform has over 11,000 licensed massage therapists listed on its platform. These therapists are also trained by the Zeel team to offer the highest levels of customer service and experience.
Variety: Zeel allows clients to book various types of massages including Deep Tissue, Swedish, Prenatal, Sports, and Sleep.
Trust and safety: The Zeel team conducted background checks and in-person interviews of all massage therapists before they are listed on the platform. In addition, these massage therapists are also required to have a license in their state of practice and are insured a minimum of $1M. As a result of this protocol, Zeel accepts less than 50% of therapist applicants. During the COVID pandemic, Zeel also launched Zeel Shield, a comprehensive program of health, safety, and hygiene guidelines. As part of this program, all therapists are required to complete a daily wellness check before they can use the platform.
Value capture
Clients pay Zeel a base rate plus tip. Zeel then keeps 32% and subsequently, therapists keep 68%. The base rate varies by location (e.g. 60-minute massage might cost $166 in Denver but $182 in New York). Zeel also automatically places an 18% tip on all bookings.
Scalability & Sustainability
It is clear that Zeel has enjoyed tremendous growth since its inception (available in 100 US cities, covering 70% of the US population) but can it sustain this scale? To answer this question, we further explore the 4 unique characteristics of Zeel and the massage market.
Network effects: Zeel enjoys both same-side and cross-side network effects. First, the number of reviews and ratings of Zeel’s platform allows it to generate significant same-side network effects. As the number of reviews and ratings increased, users also became more likely to use the platform. Second, Zeel is also able to leverage cross-side network effects where users and therapists attract each other where more users attract more therapists, and vice versa.
Network clustering: When looking at the structure of Zeel’s network, we see that the network is fragmented into local clusters. That is, therapists in a particular city only care about the number of clients in that city. This makes Zeel more vulnerable to local competitors across the different cities they operate in. In fact, Zeel has been facing intense competition from challengers such as Soothe and Unwind.me. These challengers can easily break into Zeel’s fragmented market precisely because they do not have to take on Zeel’s countrywide network.
Risks of disintermediation: Zeel’s business model opens up itself to the risk of disintermediation. On one hand, clients can easily bypass Zeel and connect directly with the therapist for their future bookings. On the other hand, the therapist, after obtaining sufficient clients from the platform, also has very little incentive to continue using Zeel’s platform. To minimize the risk of disintermediation, Zeel does not give out the therapist’s contact information until the booking has been made. However, even with this mechanism in place, Zeel is still prone to disintermediation once trust has been established between clients and therapists after the first initial sessions.
Vulnerability of multi-homing: Zeel is vulnerable to multi-homing. Therapists do not have to work exclusively on Zeel and they have no incentive to do so. Zeel provides no additional bonuses for therapists to be listed exclusively on the platform. As such, it is in the favor of the therapists to have a full-time/part-time job at various spas across the country or be listed on other platforms such as Soothe. As for clients, the cost of adopting an additional platform is essentially negligible.
Looking at these 4 characteristics together, I am impressed by how far the company has come, particularly the scale it is able to achieve. I, however, remain doubtful that Zeel can continue to sustain its scale much further. Most notably, Zeel’s network is fragmented into local clusters, the company is exposed to the risks of disintermediation, and it is also vulnerable to multi-homing. To continue to thrive, Zeel must rethink its business model. It should explore new ways to enhance its value, change its value capture strategy, and seek ways to reward the therapists to incentivize them to be exclusive on the platform.
End notes:
“Zeel Massage Review,” BusinessInsider, August 13, 2019
“Zeel Launches Zeel Shield for Enhanced Health & Safety Standard,” BusinessInsider, May 13, 2020
“Soothe versus Zeel: Which on-demand massage service is the best,” CNET, November 13, 2019
“Zeel Brings On-Demand Massages to Your Home, Office, Hotel, or All Three,” AlleyWatch, September 10, 2019
“Zeel Named To The Inc. 5000 List For The Third Consecutive Year,” BusinessInsider, September 09, 2019
Great article Max. One thing that comes to mind after looking at Zeel’s business model and the current economic climate is how well they would do during the pandemic as social distancing norms would, in my mind have hit them fairly hard. How do you think their performance was considering all the the factors you mentioned under scalability and sustainability with COVID added on top?
I had never heard of Zeel before, so a very interesting read! It sounds like Zeel is doing a lot to protect customers with the background checks/ interviews of the massage therapists. I wonder what Zeel does to protect therapists? Going into someone’s home that you do not know could be a very risky endeavor. Personally, I think I’d feel a little uncomfortable about this. I also wonder where in someone’s home these massages occur?
Seems like a great niche platform. My main concern though is the cost for a massage, which seems to me will limit the scale of the platform and make multi-honing high. There is likely a large potential segment of the population who would be interested in massage services, but will look to new lower cost options, such as The Now Massage ($80 for a 50min massage) which is rapidly expanding locations and building a lifestyle/wellness brand. “Self-care is a necessity and not a luxury” is their philosophy. They also offer a subscription model and have the ability to upsell with additional spa services.
Great post Max! It is good to know how much Zeel has scaled in a short period. I would be curious to know who you think are a bigger threat to them – local salons who start allowing online bookings (given this sector has local network clustering) or larger personal care startups.
I have never heard of Zeel before, thank you for sharing this!
To your point related to the risk of disintermediation, I wonder if the platform has implemented other features that add value to users in both ends. It would be interesting to chat with a therapist and learn about the challenges/needs they frequently face, and figure out if the platform can tackle those in a way. If you have any thoughts on this I would be very interested in reading them.
Finally, I really liked the way you organized the blog. The way you structured it makes it very clean and easy to read.
This post was a great read, Max! I have worked for Zeel’s on their website and content over the past few years so I can offer some insight on how they’re managing during Covid-19.
Before Covid-19, Zeel’s app brought in only about 75% of revenue. Revenue from corporate wellness contracts brought in the remaining approximately 25%. Corporate clients included: Comcast, Match.com, Zappos, Fox Sports, Facebook, Tinder, WeWork, Twilio, Thrive Global, AngelList, Pfizer, Hyatt, Four Seasons, Cooley, Hilton, Rosewood, Stamps.com, Hawke Media.
When Covid-19 hit, fear of touch obviously skyrocketed and revenue plummeted. Solution: Zeel networked together individual 1099 providers, and aggressively negotiated contracts with new and existing corporate partners to offer remote wellness via zoom. Their first deal was with Comcast, who signed on to buy 50 hours of online yoga and meditation for remote employees. Existing corporate clients and some new ones signed on, which slowly started to bring in revenue.
Zeel also got a call from a renowned large multinational corporation. The company, whose name is not yet disclosed, expressed concern for their exhausted factory workforce which was working 12-hour days of hard labor packing boxes and loading trucks. This company asked Zeel to send therapists to their distribution centers in remote parts of the country. Zeel networked together providers in specified rural areas to meet the needs of this new corporate client. But the next challenge was that it was against public health guidelines to be less than six feet from anybody. To overcome that hurdle, Zeel offered self-guided stretch in-person. The signing of this contract ensured that the last thirty minutes of each of the company’s 40 thousand laborers would be spent on a mat, six feet apart from a Zeel therapist, mask-up, stretching. This one contract brought in about $5 million over a ten-week period, which shored up Zeel’s finances and allowed us them keep their doors open during the pandemic.
Zeel has returned to 70-80% of demand and revenue is increasing month over month. (At-home massage became permissible by law over the summer 2020 months on a state by state basis.) Nonetheless, Zeel is far from making a full recovery. Possible explanations for this include childcare issues for therapists and fear of infection transmission during appointments. Finally, the publics’ acceptance of welcoming strangers into the home for massages, on the consumer side and on the provider side, may be permanently reduced as a result of the pandemic. So Zeel is looking into new verticals…New verticals would utilize the existing Zeel app and the existing framework for booking appointments.
This is truly amazing! Thank you so much for your great insights Cristina!