Do You Know Dunzo’s Business Model and How Dunzo Works?
Tomorrow’s online delivery startup is today’s most preferred app by millions of people in India for its all-inclusive services. You have guessed it right. We are talking about a Bangalore-based startup, which managed to get funded by Google, Dunzo. Entrepreneurs seek inspiration from the Dunzo delivery app business model to craft their own worldwide.
Did you know?
Dunzo refers to “do, over, and finished.”
The success story of Dunzo is living proof that if you are determined to solve your people’s problems, you will succeed. Before Dunzo, people might barely know; they would be able to run all their errands through their smartphones. Grocery to food delivery startups was setting their foot in the on-demand delivery market. While there are still many necessary chores, people have to manage their time to complete them.
Kabeer Biswas was a brilliant man who realized more than recognized such errands and came up with the business model for Dunzo. We elaborate the full story concisely further in the post and how the Dunzo delivery app works, its revenue model, and more. First, let us highlight the insights into Dunzo.
- Type of business: Private
- Founded: July 2014
- Headquarters: Indiranagar, Bengaluru, Karnataka, India
- Area served: Bangalore, Mumbai, Gurgaon, Delhi, Hyderabad, Pune, Chennai, & Jaipur.
- Founder(s): Ankur Agarwal, Kabeer Biswas, Dalvir Suri, and Mukund Jha
- Chairman: Abhishek Venkateshwara
- Industry: Online Consumer Services
- Employees: 900+
- Services Offering: Online restaurant discovery, Packages, Online Ordering, Pick up and drop, Bike Taxi, Grocery Delivery, Medicine Delivery, Laundry Delivery, and Local Couriers
- Orders: 10 lakh orders monthly
- App Downloads: +5,000,000
- Revenue From Operations: Rs 27.5 crore (FY20)
- Total Funding: ~ $950 Million
- Parent Organization: Dunzo Digital Private Limited
- Website: dunzo.com
- Native client(s): Windows, Android, and iOS
Kabeer Biswas, the mastermind behind the Dunzo, is a computer science engineer. He was living in Gurgaon and had a pretty busy schedule. Even after living with modern amenities, he struggled to spare time to run his errands and household tasks. The situation often caught him wondering why there wasn’t a solution to find time for his chores.
After his first startup, Hoppr, acquired by Hike, he got time to think about what he should do next. He shifted to Bangalore, and there again, he needed to find help with his chores. This time the thought hit his mind that there must be other people like him, juggling with their schedule.
So, he decided to build a startup around this problem, helping people complete their daily to-do lists. At first, he started WhatsApping and running errands his friends requested of him. This is how he tested his business model for Dunzo. More and more people began to know about this magical WhatsApp number, getting all their errands done.
Words kept spreading, and requests kept skyrocketing. In June 2015, he hired a few people from an NGO on a part-time basis to complete 70 deliveries in a day. The surge in demand caused him to transform Dunzo from a WhatsApp-based service to an app in 2016. Meanwhile, other co-founders and investors stepped in, which resulted in the massive success of the Dunzo app.
Moral of the story: You must put yourself in your customers’ shoes and experience their misery to create a better customer-centric product/service. Success will automatically come to you.
Dunzo Hyperlocal Delivery Business Model
Dunzo is based on a hyperlocal delivery business model, functioning through a website and mobile apps. It works through a data-driven approach and connects its delivery personnel to the nearest user’s request. You can count on Dunzo:
- If you need something at the office that you forgot at home;
- If you want to buy a dress from a mall and are not in a position to visit there and purchase it;
- If you crave for a pizza, but home-delivery from the outlet is too expensive;
- If you need to photocopy some documents and send them to your manager;
- If fetching dry-cleaning is so crucial for the next meeting in the morning, but you’re too held up;
The list goes on as there is hardly anything that Dunzo could not cross off your to-do list. Whether it’s a 12-year old wanting his friend’s notebook or a 65-year older adult needing medicines’ home delivery, they’re an ideal audience for Dunzo. Its partnered merchants range from restaurants, clothing stores, pharmacies, and other general stores.
Dunzo has also started “Dunzo Bike Taxi” for a fast and cheap commute around the city. If we were to talk about user experience, Dunzo uses Artificial Intelligence to render the utmost user satisfaction and smooth experience.
Did you know?
Dunzo has scaled from 600 merchants in March 2019 to 11,000 merchants in February 2021.
How does Dunzo work?
- Users install the Dunzo App or can order/request from a website.
- A user needs to sign up, choose the location, and can pick a category to order from a Dunzo partner or enter pick and drop addresses for other services within their city.
- Dunzo personnel deliver the order or complete the task in a quick span of 60 minutes maximum.
- For the delivery service, Dunzo will charge a small fee.
- Users can use Dunzo cash or any mode of payment available on the app.
“Owning our logistics and supply chain was the turnaround for us,” says Mukund Jha. Unlike other on-demand food delivery platforms, Dunzo possesses the delivery layer wholly. In contrast, many platforms follow the order-only model and let their merchants or customers take care of the delivery. Dunzo hires delivery drivers and takes full responsibility for delivering the order or completing the task delicately.
Dunzo – Startup Challenges
Not a single startup succeeds without struggle, and Dunzo also confronted hiccups and challenges. At the initial stage, the startup had to tackle funding issues; an inefficient delivery system due to more time taken by personnel to complete the errands; difficulties managing a website and mobile applications; and financial losses.
Dunzo – Competitors
As the market thrives, the startup gains momentum, and competitors start to emerge, and the market becomes more intense. Currently, Dunzo competes against big names like Swiggy and Grofers in the market.
Dunzo Business Model: Revenue Stream
Did you know?
Dunzo reported total revenue of INR 3.5 crores in FY19. INR 76 lakhs was from “revenue from operations” and the balance of INR. 2.7 crores were from “other incomes.”
The reason behind Dunzo’s success is, it has diversified its revenue stream into five significant streams.
- Dunzo earns from delivery charges (the delivery fee may vary from ₹10-₹60).
- A specific percentage commission from the partner’s store.
- And if demand in a particular area increases suddenly, they charge more money; that’s also called Surge Pricing or Demand Pricing.
- The charges for services like pick and drop, home repairs, and getting something from somewhere also differ.
In The Future…
The google-backed delivery startup, Dunzo aims to become a Unicorn and hit the $1Billion revenue business. They may add two new cities to their target this year. Their goal is to hit 20 urban centers by the middle of 2023. What’s more? Dunzo has also initiated to offer 15-minute deliveries for nearly 2,000 commonly sought-after items.
So, the question is,
Does your business deal with the on-demand delivery market and target multiple domains like Food, Grocery, Courier delivery? If yes, it’s high time to get up and level up as the competition in the market is progressively increasing.