How Dunzo Works: The Dunzo Hyperlocal Delivery Business Model & How You Can Replicate It

Imagine you have a severe craving for a pizza, but you also need to stock up your medicines. Suddenly you remember to pick up your laundry for an important meeting. Wouldn’t it be just beautiful to do it all on a single platform? Yes, that is what Dunzo is.

Dunzo Business Model Structure

Dunzo is an on-demand delivery platform that has transformed the way people shop, transfer goods, and commute. Talking in business terms, Dunzo is an exemplary model of a two-sided network. One side of the network, we have customers and, on the other hand, are the merchants. Dunzo acts as an online marketplace to connect customers and merchants.

Dunzo’s Journey

This amazing Bangalore-based startup was founded in 2014 by Ankur Agarwal, Dalvir Suri, Kaber Biswas, and Mukund Jha. They started taking orders on WhatsApp and attracted a lot of early adopters. But as the business and the customer base increased, they switched quickly to an omnichannel model, marking presence with the Android app, iOS app, and website. 

  Funding

• Dunzo raised the first round of funding in March 2016, US $650,000, from Aspada Ventures, Blume Ventures, accompanied by Mr. Rajan Anadan, Managing Director of Google India.
• They received $12 million in a fresh round from Google as a first direct investment in December 2017.
• Raised $45 million from latest investment from Lightbox ventures, 3L capital, in October 2019
• Received additional funding from other sources and has a total funding of around $81 million now.

Dunzo Business Model : Revenue Stream

Dunzo has diversified its revenue stream into five significant streams.

1. Commission Rate– Dunzo charges a specific commission from the partner store per order; this commission rate can vary from 15% to 30%.

2. Delivery Charge– Delivery charges range from Rs. 10 to Rs. 60 depending on the distance and the order value.

3. Surge pricing/ Demand pricing– If the demand in an area increases suddenly, then surge pricing is applied for that area.

4. Service– Repairs, home service, etc.

5. Miscellaneous Category– In the words of Biswas, founder of Dunzo, this is called #kuchbhi request. The charge of these categories is decided on the task description. Here is some example of #kuchbhi request:

a.      Take a 20-second video of my house under construction, to ensure the work is going well.

b.      Take a picture of my daughter’s school project.

c.      Get me my jacket from home.

Dunzo Business Model : Customer Segment

Being in a Hyper-Local Delivery (HLD) Business Dunzo leverages a huge Target Segment. An ideal customer for Dunzo can range from a 65-year older man looking to get his medicine delivered on time to a 12-year old schoolboy who wants to get his friend’s homework notebook.

Dunzo Business Model : USP

“Owning our logistics and supply chain was the turnaround for us,” says Mukund Jha. Unlike other on-demand delivery platforms, Dunzo owns the delivery layer wholly.

While most of the competitors get a bunch of vendors and merchants on the platform and then ask their customers to find a way around the services, Dunzo owns the full responsibility to deliver the order on the customer’s doorstep.

Dunzo’s Business model is very agile and quickly evolves to changes when they see a large portion of customers is repeatedly assigning the same task; they launched a ‘repeat-task’ button.

 What is in the Future for Dunzo?

Recently, Pepsico has tied up with Dunzo to enhance the last-mile delivery of its food brands. This initiative has been launched as a small pilot project in the city of Bengaluru. The company is scheduling to expand service in northern and western regions of India as well. Dunzo co-founder Kabir believes that partnership with the FMCG giants is the way of the future for Dunzo Expansion. In case you are looking to start an on-demand delivery marketplace business with live tracking like Dunzo, sign-up here, and our product consultant will reach out to you instantly.

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