Dunzo — Get it dun!

It’s 12 in the midnight and all of a sudden your belly screams for food and got nothing in your fridge, who do you wake up and if so you did wake them then imagine you are damned. Or take another scenario, suppose a pack of visitors coming to your place and no time to do grocery. This is a perfect nightmare.

You can take a break for all your worrying imaginations because it’s the 21st century and is possible with one touch on your screens. Dunzo is an app where it is at your service round the clock to pick your food from the restaurant and do groceries to medicines. Dunzo has a very clear business model. They charge you for the convenience they offer you of being your concierge. That’s it.

Dunzo it!

Dunzo is the panacea for the urban Indian, who is pressed for time to run errands. Bengaluru-based hyperlocal services startup Dunzo has become a social media star with its witty and relatable campaigns, which has certainly won a lot of fans. Coupled with multiple funding rounds to acquire new users, it didn’t come as a surprise when it claimed to be doing over 2 million deliveries every month. But that growth has come at such a great cost that even Dunzo’s funding spree may not be enough for long.

Essentially, Dunzo is passing on the entire revenue from users to its runners as commissions and is relying on commissions from merchant partners to make most of its revenue.

Most of the time, the orders the company will see will be fairly mundane, like dropping off a forgotten charger or keys, picking up medicines, groceries, dry cleaning, etc. and stuff like that, but every once in a while, they do get requests like this.

Okay, let me explain using a few points so that I can detail things out a little bit:

1. The primary objective of Dunzo is to get your “tasks” done! Whether it is picking up your clothes from the dry cleaners, or dropping off a cheque in an ATM cheque drop box, Dunzo will do it all for you. That is what the basic use case is.
2. The different categories that you see on their app have been put up based on the percentage of orders the business sees in these categories. For example, if 10% of the orders were coming in for “medicine pickup from pharmacies”, they decided to make it an independent category prominently displayed on the main page so that customers can find it easily and the company sees a better conversion rate by providing customers with overall better experience.
3. For different categories, they do charge their partner sellers a certain percentage of the overall cart size. Typically, it is 10–12% of the delivery value.
4. For medicines, in Gurgaon, you would see everything (right from the category icon to the overall list) is Apollo Pharmacy. Stands to reason that Apollo Pharmacy is paying over the regular sales commission to Dunzo for this exclusivity.
5. Dunzo charges a base delivery charge (typically Rs. 30, however it is subsidized for some of the product categories). And then there is a distance charge, which is in the range of Rs. 10/km. This enables them to ensure that the delivery partner gets a fair share to keep him happy, and at the same time, the company is left with a good chunk.
6. The company drives its costs down by a combination of different strategies. For product categories, they will show you options based on delivery partner availability. The entire process is completely automated and tech-driven, with the very rare need for human intervention. This means that a small support infrastructure can handle much heavier traffic of concurrent orders. Optimizing partner selection and delivery routes. Using Dunzo bike rides to complement package-delivery revenues.

Hyper-convenience startups in India have not witnessed much success. Most of them have either folded or completely changed their strategies to suit the complex market needs. But one startup managed to do what others couldn’t, so much so that it caught the fancy of Google.

Dun dun dunzo!

With a fleet of more than 4,500 runners and averaging a quarter of a million transactions a month, Dunzo helps complete everyday tasks such as buying medicines, groceries, picking up or dropping off laundry, purchasing cigarettes, delivering potted plants, and dropping off house keys and mobile phones to owners that may have left them behind someplace.

Through a data-driven platform, Dunzo connects a runner located nearest to the user. The runner’s activity can be tracked from start to finish. Users can edit tasks through chat, and even send relevant images for specific purchases or requests. Direct online payment options through Dunzo Cash or other digital payment providers seal the deal for the user, who can finish up to 10 tasks at a time on Dunzo in a couple of hours at best. This convenient, daily-task management app caught the fancy of Google.

Founder Kabeer Biswas believes there are a few aspects that have helped Dunzo differentiate from the competition and eventually create a niche as a leader in hyper convenience.

“Dunzo can be called a self-completing to-do list. The biggest benefactor here is the customer, and we aim to provide a smooth experience for the user on the platform.”

Dunzo is the first Indian startup to have bagged direct funding from Google, part of the Internet behemoth’s plans to diversify its interests in India’s growing startup ecosystem.

Why Google invested so much in Bangalore based start-up Dunzo?”

1. Every task at Dunzo collects data on both of the users and the merchants.
2. With its operations spanning Bengaluru (a couple of years) and Pune (just at the end of 2017) — Dunzo has tons and tons of data.

3. At Dunzo, just with one request — three different search indexes get triggered to understand the user intent & request fulfillment (supply + delivery).

1. There is an inbuilt algorithm for surge pricing.
2. With more years in operation — Dunzo will have real-time data on stock inventory.

In addition to Google’s $12 million investment, Dunzo has been funded by Blume Ventures, Aspada Investments as well as some angel investors.

The failure of several hyper-convenience startups such as Dazo, Opinio, Eatlo, and Spoonjoy made investors wary of venturing into this space. So what made investors confident of backing Dunzo? Karthik Reddy, managing partner at Blume ventures, which is one of Dunzo’s primary investors recalls that his company first invested in Dunzo based on positive word-of-mouth reviews, the database of nearly 7,000 users that were hooked to the product and the team’s single-minded, user-centric approach.

“Consumer internet products take a while to build a product in India, but they have to remain nimble to the way users are responding. Dunzo managed to do this effectively over its course, which led us to invest in them, even in a tough market space,” says Reddy.

Biswas started off by running errands for friends through WhatsApp. By 2015, Dunzo was completing around 70 tasks a day. Now, traffic on the platform is consistent for up to 22 hours, with the highest number of requests coming in between 5 p.m. and 11 p.m. Biswas says 55% to 60% of transactions on the platform are made by women. Bangalore is its highest volume market, where Delhi, Gurgaon, Noida, Pune, Chennai, Mumbai, and Hyderabad are growing fast.

Earlier, Dunzo runners would take up to 45 minutes to complete a task, but thanks to a fast and effective data-driven platform, the average running time has been brought down to seven minutes per task. Dunzo continues to keep user convenience at its core and its strategic industry alliances are proof of the same.

Fintech startup Simpl is one of the payment providers on Dunzo. Unlike other digital payment providers, Simpl allows a user to make multiple purchases with one tap and sends a consolidated bill once in two weeks. Biswas said that nearly 35% of Dunzo’s transactions are repeat purchases, so a payment option like Simpl makes it easier for customers to transact on the platform.

Nityanand Sharma, the cofounder of Simpl, says,

“Platforms like Dunzo, Uber, Airbnb among others are highly intelligent, with a strong user-centric business model and aim to make customers’ lives easier. Where they run into trouble is the last leg of the user experience — payments. This is what we are addressing, with the goal of making payments as intelligent and intuitive.”

The startup is also keen on venturing into bike-sharing, which will allow Dunzo partners to transport users to a destination. Although motorbike taxi services in India have experienced a roadblock in the past, Biswas is hopeful of working with the government to enable large-scale bike-sharing in the near future.

The company has been raising funds continuously said that it has seen 40X growth in the last 18 months clocking in over 2 million deliveries every month. The company might even plan an international expansion in the next two years.

“While other on-demand service providers get a bunch of merchants and vendors on to their platform, and then ask the customer to figure out how they want to use these services, our focus is different: you tell us what you want to be done and we will figure out how to do it,” says Biswas.

Hope you enjoyed this writeup! If so, share your views, guidance or suggestions in comments.