Google-backed Dunzo allows users to buy, pick up or deliver any item

There’s something common between the Harry Potter world and Bengaluru-based start-up Dunzo. In the magical world you spell “Accio” to summon things to reach you and in the real world you can get such errands carried out via the latter. 

For Nimit Khurana, a Bengaluru-based start-up professional, the task management app helped him take a breather from his busy schedule; it first came to his rescue when his wife once had forgotten to carry the house keys, only to realise it while returning from work in the evening. Khurana, who was busy with back-to-back meetings, downloaded the Dunzo app and sent his set of keys to his wife via the service. Since then he has been regularly using the app for food and grocery deliveries on weekends.

A similar situation had triggered the launch of Dunzo when CEO and founder Kabeer Biswas was working in Gurugram and realised that he was spending most of his weekends running errands, significantly cutting down on the time he spent with family, friends or doing the things that he loved. “This was how the idea started — and today, that’s still our vision,” says Biswas, who moved to Bengaluru in 2014 and launched Dunzo in January 2015. He was later joined by Mukund Jha, Ankur Aggarwal and Dalvir Suri as co-founders in September 2015.

Product concept

Basically, it is a start-up through which you can either buy, pick up or deliver anything by paying a delivery fee. Once you raise a task, the app connects you with the nearest available delivery executive, known as partner, to pick up or deliver items for you. The services are currently available in Bengaluru, Pune, Gurugram, Delhi, Hyderabad and Chennai. The delivery fees vary by city and charged on a per km basis. 

Revenue model

Dunzo acts as an intermediary between users and delivery partners. “For a given transaction, part of the delivery fees paid by users are passed on to the partners as a payment for running the transaction. We generate revenue from tied-up merchants or Dunzo-verified stores and from user fees,” explains Biswas. 

Being Google’s first direct start-up investment in India, the company has so far raised around $15 million from various investors. After the Google investment, the company’s monthly transactions have spiralled up from 65,000 to nearly 1 million in just a year. According to reports, the start-up is in fresh talks to raise about $6 million from investors, including Google.

From left: Dunzo co-founders Dalvir Suri, Mukund Jha, Kabeer Biswas and Ankur Aggarwal

Opportunity

Karthik Reddy, managing partner at Blume Ventures, which had invested close to $2 million until the Google-led round, says currently India is at a nascent stage of personal task management but as consumers have slowly started valuing time, solutions like Dunzo come into play.

Using its data, Dunzo has identified 12-15 million people who could be served through its services and use the app about 10 times a month.

Looking at the market for such services swell, Bengaluru-based Swiggy is  preparing to launch its local commerce services in December. The food-tech company will be tying up with supermarket chains, pharmacies, meat shops, pet stores and others to kick-start the services. Its revenue model would also be based on a delivery fee system.

With the aim of becoming a horizontal on-demand logistics player, Dunzo is targeting growth of around 60 times this year and scale to newer markets.

Fact box:

Founded: 2015
Funding: 
March 2016: Raised $650,000 in funding led by Aspada Investment Advisors and Blume Ventures
Nov 2016: Secured $1.2 mn from Aspada, others
Dec 2017: Raised $12.3 mn in a round led by Google
Nov 2018: Raised $1 mn in debt from Alteria Capital
Area of operation:  Errand-running



Expert Take

Devangshu Dutta, Chief Executive, Third Eyesight

Consolidation & expansion, a challenge
 
Like any other business, Dunzo-like start-ups face their own set of challenges, which change with maturity in the market. In Bengaluru, where they are now reasonably well-established, it’s about ensuring that there is enough money to go into their own and their riders’ pockets while scaling up, whereas in a new market it’s all about getting customers and providers on board, which is far more capital intensive.

In a new market, you’re spending on acquiring credibility, whereas in a more mature market it’s about driving up utilisation, the number of transactions while driving costs down.