14 highlights
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But while Dunzo may be cool, the hyperlocal delivery space it operates in is becoming very competitive. It is up against the likes of Swiggy, Walmart-owned Flipkart, BigBasket and Zomato.
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Besides, in July, Dunzo confirmed a massive data breach in which personal information of users was exposed. Though it was quick to clarify that payment information like credit card details had not been compromised, user confidence did take a hit.
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The latest financial statement, for the fiscal year ended 31 March 2019, and a valuation report dated 20 March show losses ballooning to Rs 332.4 crore in fiscal 2019-20, up from Rs 168 crore in 2018-19. That’s almost a crore a day.
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However, a confident Kabeer insists the company has managed to stem the burn and turn profitable in EBITDA (short for earnings before interest, taxes, depreciation and amortization) terms in many pincodes in two cities—Bengaluru and Pune—that it operates in.
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In many ways, Dunzo is an outlier. It picks up and delivers anything and everything, from dry cleaning to pen drives forgotten at home. It has remained ‘horizontal’ in a space where almost all others largely operate as ‘verticals’, with the likes of BigBasket and Grofers focusing on groceries and essentials, Zomato and Swiggy dealing mainly with food deliveries.
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Multiple analysts and investors we spoke to said that the B2B space is what Dunzo should focus on to ensure profitability.
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Dunzo for Business, launched at the end of 2018, involves partnerships with a clutch of companies including Lenskart, Decathlon and Bounce, where Dunzo acts as a delivery partner.
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At present, the B2B vertical comprises about 8% of the operating revenues of the firm.
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In the hyperlocal business, the key to becoming profitable is heavily dependent on increasing order volume. More orders translate to larger commissions and more revenue.
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Most of the costs are fixed, from the commission a platform charges from merchants and consumers to the salaries of the delivery personnel.
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This means utilization of resources is key.
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Like many others, Dunzo had to deal with getting the service infrastructure in place, alongside building the platform. Anand says that in the US when Amazon was building its first market (books), it was able to leverage the US Postal Service’s ability to handle volume and its reliability. In India, to deliver an experience that will satisfy customers, private companies would also have to build the infrastructure.
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The key to achieving any metric of profitability for Dunzo will depend on multiple factors, including how it manages to reduce delivery time and ensures its delivery partners can carry larger volumes in a limited time frame. This means more tie-ups with local businesses and big brands will be vital.
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The partnership with Google, say analysts, will help Dunzo leverage its tech stake in the hyperlocal space and also help the search giant make a splash in the food delivery business, if and when it chooses to do so in India, thanks to the logistics infrastructure built by Dunzo.