Business model

How does Dunzo make money and what is his business model

For its all-inclusive offers, the internet delivery startup of tomorrow is the most chosen app today by millions of people in India. You guessed right. We are talking about Dunzo, a Bangalore-based company that received funding from Google. Entrepreneurs around the world are looking to learn from the Dunzo delivery app business model to create their own.

Dunzo’s success story demonstrates that if you are motivated to solve your people’s problems, you will succeed. People wouldn’t have known before Dunzo; they could do all their shopping using their smartphones. Startups ranging from groceries to food delivery were entering the on-demand delivery business. Although there are still many vital tasks, people have to manage their time to do them.

Did you know ?

“Do, done and done,” says Dunzo.

Kabeer Biswas was a smart man who spotted more than just such races and designed the Dunzo business model. We expand on the full story of the article, including how the Dunzo delivery app works, its revenue strategy, and more. First, let’s focus on Dunzo’s ideas.

Courtesy of Dunzo

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Dunzo’s Biography

  • Type of private enterprise
  • Created in July 2014
  • Indiranagar, Bengaluru, Karnataka, India is the head office.
  • Bangalore, Mumbai, Gurgaon, Delhi, Hyderabad, Pune, Chennai and Jaipur are some of the cities served.
  • Ankur Agarwal, Kabeer Biswas, Dalvir Suri and Mukund Jha are the founders.
  • Abhishek Venkateshwara is the president.
  • Online consumer services is an industry.
  • Employees: more than 900
  • Online restaurant discovery, Packages, Online ordering, Pick-up and drop-off, Bike Taxi, Grocery delivery,
  • Medicine delivery, linen delivery and local couriers are some of the services provided.
  • Monthly orders: 10 lakh App downloads: +5,000,000
  • Operating income: 27.5 million rupees (FY2020)
  • The total amount of funding is $950 million.
  • Dunzo Digital Private Limited is the parent company and its website is dunzo.com.
  • Native Windows, Android and iOS clients

The Dunzo Saga

Kabeer Biswas, the creator of Dunzo, is a computer engineer. He lived in Gurgaon and had a busy schedule. Even after living in a modern house, he struggled to find time to shop and do household chores. Circumstances often caused him to wonder why there was no way for him to find time for his responsibilities.

After his first startup, Hoppr, was acquired by Hike, he had time to think about his next steps. He moved to Bangalore, where he needed to find help with his duties once again. This time, he felt like there must be other people juggling their schedules like him.

As a result, he decided to start a business to help people fill their daily to-do lists. Initially, he started using WhatsApp and running errands for his friends. This is how he put his Dunzo business idea to the test. As word spread about this magic WhatsApp number to do all their shopping, more and more people became aware of it.

The word traveled quickly and the number of requests exploded. In June 2015, he hired part-time employees of an NGO to make 70 deliveries a day. Due to increased demand, he converted Dunzo from a WhatsApp-based service to an app in 2016. Meanwhile, other co-founders and investors stepped in, resulting in the huge success of the Dunzo app.

The moral of the story is that you need to put yourself in your consumers’ shoes and feel their pain in order to create a more customer-centric product/service. Success will come naturally to you.

Dunzo’s Business Model for Hyperlocal DeliveryDunzo operates on a hyperlocal delivery business strategy through a website and mobile apps. It uses a data-driven technique to match delivery workers to the nearest user request. You can rely on Dunzo:

  • If you need something at work that you left at home;
  • If you want to buy a dress in a mall but you can’t go there and buy it;
  • If you’re craving pizza but the cost of home delivery from the outlet is prohibitive
  • If you need to photocopy certain documents to send to your boss;
  • If dry cleaning is essential for the next morning meeting, but you’re too busy;

The list goes on because there’s not much Dunzo can’t check off your to-do list. They’re an excellent audience for Dunzo, whether it’s a 12-year-old wanting his friend’s notepad or a 65-year-old man getting medicine delivered to his doorstep. Its business partners include restaurants, clothing stores, pharmacies and other miscellaneous retailers.

Dunzo has also launched “Dunzo Bike Taxi” to provide a quick and inexpensive way to get around the city. In terms of user experience, Dunzo uses artificial intelligence to deliver maximum customer satisfaction and a smooth experience.

Did you know ?

Dunzo’s merchant base has grown from 600 in March 2019 to 11,000 in February 2021.
How does Dunzo work?

  • Users can either install the Dunzo app or order/request through a website.
  • A user must register, select a location, then select a category to order from a Dunzo partner or enter pick and drop addresses for other services in their city.
  • Dunzo personnel deliver the order or complete the task in less than 60 minutes.
  • Dunzo will charge a nominal fee for the delivery service.
  • Users can pay with Dunzo cash or any other method offered on the app.

Dunzo’s Unique Selling Point

Dunzo business model

technolab.com

“Owning our logistics and supply chain was a turning point for us,” says Mukund Jha. Unlike other on-demand meal delivery platforms, Dunzo completely owns the delivery layer. In contrast, many platforms adhere to the order-only paradigm, leaving delivery to their merchants or customers. Dunzo hires delivery drivers and takes full responsibility for the delivery of the order or the delicate execution of the task.

Dunzo – Getting Started Obstacles

Not a single startup succeeds without hitches and hurdles, and Dunzo was no exception. Initially, the startup struggled with funding issues, an inefficient delivery system caused by longer delivery times for staff, difficulties managing a website and mobile apps, and financial losses.

Dunzo – Opponents

As the market grows, the startup gains traction, competitors arise, and the market becomes more competitive. Dunzo currently competes in the market with well-known brands such as Swiggy and Grofers.
Revenue streams in Dunzo’s business model

Did you know ?

In the financial year 2019, Dunzo recorded total revenue of INR 3.5 crore. INR 76 lakhs came from “operating income”, with the remaining INR. 2.7 crores from “other income”.

Dunzo’s success can be attributed to the fact that he split his income into five separate revenue streams.

  • Dunzo receives money via delivery charges (which can vary between $10 and $60).
  • A pre-determined commission percentage from the partner’s store.
  • And if the demand in a certain place suddenly increases, they charge more money; this is also known as Surge Pricing or Demand Pricing.
  • Fees for services like pickup and drop-off, home repairs, and getting something also vary.

Here’s what his workflow looks like:

The user installs the application.
If a user needs an item to be shipped from one location to another within the same city, the user can book it through the app.
Dunzo personnel will come to the pickup location and deliver the item to the appropriate destination. All of this is completed in a short period of time, usually within a few hours.
Dunzo will charge a nominal fee for the delivery service.

How does Dunzo make money?

This is how Dunzo makes money.

1. Delivery Charges – Dunzo charges a minor fee for each delivery. Delivery charges can vary between Rs. 10 and Rs. 60, depending on the total value of the order to be delivered and the distance to be covered.

2. Commissions — For each order received, Dunzo charges a commission ranging from 15% to 30% to the linked sellers.

3. Services provided – Home services, maintenance tasks, etc.

4. Surge Pricing – Surge pricing is another source of revenue for Dunzo. When there is an increase in demand, the price increases to meet the increasing demand.

Other sub-categories – Apart from the various services it provides such as food delivery, grocery delivery and other services, there is also a category within the company that handles all other types of requests, called #kuchbhi requests. Here are some examples of such diverse requests:

Photographing my son’s school assignment.
Take a quick video of my house being built to confirm everything is going well.
Please bring me my white shirt from home.
So that’s Dunzo’s business model. If you want to build an app like Dunzo, now is the time. On-demand hyperlocal delivery business models are gaining traction.

In the near future…

Dunzo, a Google-backed delivery startup, aspires to become a unicorn and generate $1 billion in revenue. This year, they can add two new cities to their target list. Their goal is to reach 20 urban areas by the middle of 2023. And there are more. Dunzo recently started offering 15-minute deliveries for around 2,000 popular items.

So what is the question?

Do you operate in the on-demand delivery industry and target many areas such as food, grocery and courier delivery? If so, it’s high time to stand up and level up as the rivalry in the market keeps expanding.