Next-Day Delivery Will Be Dead In 5 Years: Co-Founder, Dunzo
While speaking about popularity and fame, he pointed out two things and said, "One is we always made sure to offer an exceptional quality of service which has to be better than everybody else's. The second is that the brand didn't get created by marketing, it got created by the word of mouth"
What does Dunzo mean? Co-founder and CEO, Kabeer Biswas simply put and said, “We live in India, where the cities are so difficult to navigate. Can you build a product that actually goes out and makes the city feel a little magical? That's literally the place where the name Dunzo comes from right? We will get it done for you.”
The convenience of hyperlocal delivery ensures that essential goods are delivered to customers’ doorstep without much hassle. In the last 3-4 years, this has become a most preferred method to access high-priority products quickly at your comfort. The whole mechanism has pushed companies to introduce innovative solutions and gave birth to quick commerce businesses such as BlinkIt, Zepto, Zomato, Instamart and more.
Started in 2015 over WhatsApp with no plan, Bengaluru-based Dunzo is an instant delivery app and hyperlocal task management startup. For Kabeer Biswas, Co-founder and CEO, Dunzo, the idea was simple, consumers want things instantly and it is important to get them delivered as quick as possible. In 2021, it attracted all the attention and fame as it became the first startup in India that Google directly invested in. In January 2022, Reliance Retails bought 25.8 per cent stakes for $200 million. The company aimed to use the capital to expand and also to introduce its B2B arm.
Here are the excerpts of the conversation with Kabeer Biswas, Co-founder and CEO, Dunzo discusses the brand genesis and journey, what has been the core focus and its future plans. He also candidly shared his view on how the whole space is expected to shape up.
What is Dunzo’s story?
The broad reason for us to exist is we have always believed that Indian cities can be more convenient. We started off sometime in 2017, I realised that there were two big uses, one was people plan to ship stuff out in the city and the second was that they wanted to go out and buy something from local stores. Fundamentally, we figured that all the great user experiences and net promoter score (NPS) that we were getting right were coming from the fact that we own logistics. Logistics became a very core part of the business.
In 2019, we could see that these two use cases are working. However, there was one problem, the retention wasn't that high. The reason why people used to shop from us is that we used to deliver quickly. But the reason why they did not shop was selection, which means every time they wanted something it was not available. Price and quality also became major concerns. Since we had a lot of local stores listed, we couldn't control this. We also looked at what people were buying, out of those 200,000 items that people are buying every month, about 2500 to 3000 items were very high on Pareto (the principle which denotes that 80% of the effects come from 20% of the causes). At that point, we realised that we needed a first-party version of this and set up our own store, so we took out a couple of stores in 2019 in Bengaluru. Then COVID happened.
During Covid times, we were the only people who were actually delivering for local stores. We saw this huge surge of traffic so we selected a three times surge of traffic within 60-90 days. There was nobody, there was no Zomato, no Swiggy, nobody doing this. We went ahead and started scaling that. Honestly, we also had a responsibility towards the cities that we were present in then. We did that in 2020 and realised that the experiment is working. Around that time, Gopuff in the US and Getir in major parts of Europe took off. In early April-March Zepto launched and then Swiggy also launched Instamart.
In 2022, it was going well so we decided to scale it across the country. In the last 6-8 months, we have scaled it across eight cities. The overall business does close to about half a billion dollars of GMV, closing about 10 million transactions a month.
Dunzo's B2B Biz
The B2B business has much higher retention because merchants want this a lot more than the customer. In the second one, people were buying from local stores. In local stores, we realized that setting up our own warehouses was a better way to go ahead and drive that behaviour.
Fundamentally we are a logistics business since that is the core of it. We use that to enable other categories. We have enabled our stores to do that and we also enable a marketplace. Like every other local store in the country will go ahead and be listed on Dunzo when we prioritize it.
When you order something from Amazon and it comes in the next day, it should not happen because the item is somewhere in a nearby store. They can deliver it to you in 15 minutes because we enable them to do so. Over the next five years, that's the biggest thing to be able to achieve, to ensure that next-day delivery doesn't exist at all in this country, at least for your most important needs. There are many like Zepto and Swiggy that have also started this. But I think there are still a lot of areas that haven’t been tapped yet and there is potential there.
At some point, the goal is that every local store should be able to deliver to you in 45-60 minutes, and we believe in 5 years' time next-day delivery will be dead.
Strategy To Capture The Huge Market
We have all looked at how big the market is and understood that it is massive. This is a market which has multiple sizes of retailers. The challenge is to make the unit economics work. In food delivery, the unit economics can be given, there is a 25-30 per cent margin and if you manage the average order value, you can survive easily. But here, one has to be very innovative regarding the business model to be able to create a market. We are a form of retail. People will buy these items through one more means. This is that one more means. The local stores will start having a more localized selection.
We are the closest channel from intent to consumption. If you have an intent to consume something, we can make you consume it in 15 minutes. That is magic.
We're in the business of making sure that the instant requirements of customers are delivered to them. We have always wanted to build an SOV(share of voice) which was different Out of some of the things which we really care about is diversity. We believe that if we have diverse opinions on the team, your product and your experience as a business are usually better because we are catering to a lot of customers and the customers are diverse. If that is not reflected in your team, then it will go ahead and show up on your product.
Running a company is a very thankless job. From afar like it looks very cool to offer probably but it's a very thankless job. I don't think any fundraising is easy. It just looks very easy from the outside. Everything that's wrong is your problem. Validation comes whenever money gets raised, you believe by somebody external is validating the process.
Sustaining For The Longer Run
For the next nine months, we are focusing on two major areas. One is to be able to drive a much higher operating leverage out of our existing business. In 2023 we will go out and launch in more cities,
Customer behaviour and expectation change much more rapidly than you can keep up with. There is a quote from Jeff Bezos, “At some point, Amazon will fail, but it is our job to delay it as far as possible.” The only thing that you have a real sustainable advantage around is to make sure that you execute better.
At Dunzo, if we have an idea we test it out. It can be the most outrageous idea in the world but we will test it.
Dunzo’s Biswas candidly respond when asked to share a piece of advice and said, “No, we don't give advice, philosophy and advice are overrated. we prefer to learn by doing.”
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