How Dunzo Achieved 40x Growth in India in Two Years

Dunzo is a hyperlocal delivery app which faces competition from big names like Swiggy — but in some places like Bengaluru, the Google-funded startup’s name is practically a verb. “I’ll Dunzo it to you,” is a common phrase. Founded in 2014, it started off as a small WhatsApp group and gained so much popularity that it had to be scaled into a full-fledged business. In January 2021 Dunzo raised $40 million (roughly Rs. 290 crores) from existing investors including Google, Lightbox, Evolvence and others, after seeing a massive surge in usage during the COVID-19 pandemic. It also claims to have grown 40x in the last two years and that it is currently growing 10-15 percent month on month.

During the COVID-19 crisis last year, average order values increased almost 4x times, Dunzo told Gadgets 360. The primary growth rate in perishables goods and fruits and vegetables has seen 3x growth compared to pre-COVID.

Expert opinion: Sanjesh Thakur, Partner, Deloitte India says, “The online food delivery and the restaurant delivery segment has seen accelerated growth due to the pandemic where a lot of first time consumers ordered food online.  If you look at the trends globally, the percentage of orders fulfilled by the online delivery companies is increasing as more and more consumer are ordering food from the comforts of their home while watching their favorite show on Netflix etc. ”

We spoke to CEO and Co-Founder of Dunzo, Kabeer Biswas to know a bit more about the company’s overwhelming success story and its future plans.

CEO and Co-Founder of Dunzo, Kabeer Biswas

1. What was the initial conceptualization process behind Dunzo? When was it that you finally decided you wanted to start Dunzo?   

I was living in Gurgaon at the time and I had a pretty crazy schedule. Living with all the modern amenities, I still struggled to find time to do chores and other tasks around the home. I used to often wonder if I could save time and get a ride at the push of a button, why wasn’t there a solution or an easier way for to me find time for my chores?

Dunzo was essentially a way for me to cut down my own to-do list. After my first startup Hoppr got acquired by Hike, I had some time on my hands to think about what I wanted to do next. That path brought me to Bangalore and my need to find help with my chores became that much more urgent. I figured there were other people like me and so I just started Whatsapping my friends in town and asked them to let me know what they needed and I would get things done. Soon, my WhatsApp was flooded with requests from friends, friends of friends, and a bunch of strangers who needed stuff done around town. These tasks included everything from delivering food and medicines to picking up flowers and party supplies. Word got out about this magical WhatsApp number where you could send your to-do list and get things done at the tap of a button, no questions asked.

One day I happened to make a delivery to Sahil Kini of Aspada (Lightrock) who had heard about Dunzo from a friend. He continued to order on Dunzo and we continued to deliver. That eventually led to our first investment at Dunzo. During those days I also met my co-founder, Dalvir Suri. Our two-member team expanded again when Mukund Jha (CTO) and Ankur Aggarwal joined Dunzo. As the number of requests scaled our need to scale the product also became crucial. After a series of rejections from the VC world, we (Dunzo) secured an investment from Google, its first investment in the Indian startup ecosystem I believe.

For us, funding was the outcome of having a product that consumers were able to use in their everyday life. It was solving for a real need. It wasn’t about getting the money first and then having a great idea. We tried and tested everything before we got any sort of investment and I think that has helped us to create a sustainable journey.

2. What is your growth rate been like last year? 

Dunzo has grown 40x in the last two years, operating at two million monthly orders and growing 10-15 percent month on month. We believe that building efficiency across the supply chain and consistently driving an exceptional experience for our customers has contributed to our growth and journey. At this point we have one of the fastest delivery turnaround times in the world, averaging at 28 minutes at under a dollar.  

As we map our 2021 strategy rooted in a year of sustainable growth, and pushing for profitability across our fastest-growing cities such as Mumbai, Chennai, and Pune. With a GMV (gross merchandise value) growth of 2X over the past year, we are now a ~$100 million annualized GMV business. This growth in 2020 stems from strong organic user demand and gross margin profitability.

3. Were there any operational challenges (or any other challenges) that you faced when starting Dunzo?  

Logistics is one of the greatest challenges in India and for a commerce/logistics company, building a strong supply chain and creating sufficient demand is the biggest hurdle. It’s a chicken and egg problem that every hyperlocal delivery platform is trying to solve. Ultimately, the idea is to deliver anything at the most efficient cost and time without compromising the quality of experience. As a company, we at Dunzo want to ensure that our three stakeholders – the merchant, the partner, and the user, have equally exceptional experiences. Working to solve for the merchant leads to an easier process for the delivery partner, and finally creates a winning experience for the user.

4. Is there any particular incident that is monumental in Dunzo’s journey?  

Dunzo’s mission resonated stronger than ever in 2020. We have been amazed by everything merchants and users have started to depend on the platform for. We truly believe we are writing a playbook for how hyperlocal businesses can be built with sustainable unit economics and capital responsibility. As a team, we are more focused than ever to enable local merchants to get closer to their users and remain operational during these difficult times while always doing right by the customer.

2020 had its ups and downs but the sense of achievement we as a team feel in being able to do our part for local economies – whether it is local businesses coming online for the first time, delivery partners being the sole earning members of their families, or the elderly couple that can access their city without dependencies – has been the driving force for our mission in 2021. We want to use these learnings to drive the next wave of growth for the merchant and gig economy across the top 10 cities in India.

5. Could you help give a sense of how far Dunzo has come? From when it began to where it is now. 

With any business that’s setting out to create a new market or industry, it’s important to think about driving long-term and sustainable growth. Until March 2018, we had negligible marketing and operational spends. We were a team of 40 serving around 60,000 monthly transactions back in 2018. To achieve transactions in the millions, which we’re at today, we needed to expand into new cities, build a steady merchant marketplace, secure a constant stream of supply (delivery partners), acquire new users, and build technology that could drive and keep up with the scale, in each of the 300 micro-markets we’re present in.

The other challenge is that businesses in India behave differently depending on the pin code they’re present in. We, therefore, need to custom design the service to cater to each geo’s demand. So launching city after city, without addressing profitability at a micro-market level, can burn more in the long-term. The impact of the initial investments is becoming more visible month on month.

We have scaled from 600 merchants in March 2019 to 11,000 merchants in February 2021. 80 percent of all commerce transactions on our platform are from our partnered merchants, on which we make commissions on every order. Going forward, we want to build an unparalleled customer experience that is irresistible in nature and solves real use cases in commerce, courier, and commute.

6. What was it like sailing through the COVID-19 crisis? Did you see a fall in business or an unexpected surge? How did you deal with it?    

The first and most important action we took was to ensure the safety of our team, our partners, and our merchants. Only by ensuring their wellbeing, would we have managed to exercise precautionary measures for users. Keeping that trust and safeguarding partners during these uncertain times was one of our key initiatives. We rolled out preventive and proactive safety measures for Dunzo partners very early on. This included safety gear, precautionary checks, and a new insurance policy that specifically covers them for coronavirus-related expenses and guaranteed pay in case they need to be quarantined.

We also introduced ‘No Contact Delivery’ for partners and users as well as order queuing at merchant stores to prevent crowding and maintain social distancing. To thank and appreciate our partners, we launched a tipping feature on the app in a record amount of time, a feature that users have been generously using. We also got the opportunity to work with several community-driven initiatives such as Caremongers India, homes for the elderly, and homes for children by procuring essentials for the underserved parts of the community who may not have access to smartphones or other technological resources. These were some of the major steps we took to take control of the situation and ensure the safety and wellbeing of our community.

Due to the evolving circumstances, numbers changed every day in demand and supply, however, we have seen a significant increase in the average order values, almost 4x to be more precise. The primary growth rate in perishables goods and fruits and vegetables has seen 3x growth compared to pre-COVID. The share of consumable goods on the platform has also doubled and we’re going to be expanding our catalogue to cater to the demand.

7. Any advice for young Indian entrepreneurs out there? 

Nothing worth doing is easy. That’s what Karthik Reddy of Blume Ventures told me in the early days of Dunzo and it has really been the essence of our journey.

8. What are the big plans for the future?     

India has 600 million monthly commerce transactions, 90 percent of which are still offline. At Dunzo, we aim to digitize the majority of offline transactions that are happening locally and driving commerce for the micro-economy. By doing so, we want to enable local, offline merchants to be a part of the digital marketplace and be able to withstand the pressure from large e-commerce companies.

9. What is the employee strength? Is Dunzo hiring currently?     

We are at about 900 employees across eight cities. We are always looking for hungry, curious, and passionate people to join our mission.