Dunzo Business Model [Mini Case Study]

In this chaotic world, what folks prefer the most is “Promising delivery services at nominal charges.” This is possible with advanced innovations in mobile applications. And one such firm that has achieved this is “Dunzo.” It is a hyper-local-on-demand delivery service launched in India. In this article, we will throw light on the “Dunzo Business Model.”

A Brief Overview of Dunzo

Before jumping into the details of the Dunzo Business Model, let’s have a quick view of the key highlights of Dunzo.

Working Strategy

Dunzo is helpful in case you want your product delivered to your doorstep or if you want to send some product to someone else. That’s why it is called a “hyper-local multi-delivery service.” In this section, we have thoroughly described the working strategy of the Dunzo business model.

Dunzo-Merchants Partnership

Dunzo Merchants are the local businessmen that have a contractual partnership with Dunzo. This partnership helps both parties to enjoy multiple benefits. The merchants use the Dunzo platform to execute their business. It means they receive orders from customers for various products or services through the Dunzo app. The products may include a vast array of products like groceries, medicines, cooked food, apparel, etc. Dunzo provides the necessary technology and support for these merchants to manage their orders, deliveries, and payments efficiently. In return, Dunzo earns a commission on each transaction made through its platform. Partnering with local merchants helps Dunzo to offer a diverse range of products and services while supporting local businesses simultaneously. Thus, Dunzo Merchants are an essential part of the Dunzo ecosystem!

Technology Driven Platform

Dunzo’s platform is built on advanced technology, including machine learning algorithms and real-time tracking capabilities. This technology enables Dunzo to offer fast and efficient delivery services while also ensuring a seamless user experience for customers. Dunzo is constantly innovating and improving its platform to meet the evolving needs of its customers. The company regularly introduces new features and services, such as subscription-based services and partnerships with other companies, to enhance the user experience and stay ahead of its competitors.

Is Dunzo B2B or B2C?

Now a bigger question for the common folks is- whether Dunzo is B2B or B2C.

The answer is “both.” 

Although, primarily it was a B2C (business-to-consumer) company. Because it provided a hyper-local delivery service to consumers through the Dunzo mobile app. 

Recently, it also launched a B2B (business-to-business) component by offering delivery services to small businesses like grocery stores, pharmacies, and restaurants. It immensely helped them with their delivery needs at affordable prices.

Dunzo for Business

It is the latest platform launched by Dunzo which allows businesses to use the Dunzo delivery services for their own customers. It enables not only faster deliveries but also seeks to provide democratic omnichannel business for the merchants. Thus it creates flexible earning opportunities for the partners.

Dunzo Delivery

This is an integral part of the workflow of the Dunzo Business Model. 

Steps-

Here is how it works.

Step 1: App installation

You need to install the Dunzo app.

Step 2: Order placement

Here, you place an order for the products or services on the Dunzo app. You can choose products from different categories like groceries, medicines, food, clothes, etc.

Step 3: Pick up the order

Once your order gets confirmed, a Dunzo delivery partner is assigned to pick up the order from the merchant or service provider.

Step 4: Order delivery

The Dunzo delivery partner delivers the order to your specified address. In this process, you can track the delivery of your product in real time in the Dunzo app.

Step 5: Payment

In the final step, you pay for the order you placed through the Dunzo app. Dunzo accepts multiple payment options like credit/debit cards, UPI, net banking, Paytm or PhonePe wallets, etc.

Types of Delivery Options in Dunzo

The delivery charges depend on the type of delivery. Usually, it ranges from Rs.10 to Rs.60 based on the total value of the order to be delivered, the distance to be covered, and the type of delivery you choose. 

There are three types of delivery options available in Dunzo-

• Express Delivery: Within an hour
• Same-Day Delivery: Within 24 hours
• Scheduled Delivery: up to 30 days in advance.

Dunzo Delivery Partners

Dunzo has a distributed workforce of delivery partners, known as Dunzo Delivery Partners, who operate in multiple cities across India. These partners work on a flexible schedule, using their vehicles or bikes to deliver products and services to Dunzo customers.

Efficient delivery operations

Dunzo’s delivery operations are designed to be efficient and cost-effective. The company uses a network of delivery agents who are trained to handle a variety of products and services. The agents are equipped with advanced technology, such as GPS-enabled smartphones, to optimize their delivery routes and minimize delivery times.

Revenue Sources (How does Dunzo make money?)

We have described some of the major revenue sources of Dunzo in the following points-

Commission Fee

As you have read that Dunzo partners with local businesses, known as Dunzo Merchants. Therefore, it charges a specific amount of fee from the merchants to offer products and services to the customers. Dunzo earns a commission on every transaction made through its platform. The commission fee or the transaction fee may range from 15% to 30%. The commission rate varies depending on the type of service and the merchant’s partnership agreement with Dunzo. For example, the commission rate for food delivery may be different from the rate for grocery delivery or medicine delivery.

Delivery fees

Dunzo charges a delivery fee to customers for each order, which contributes to its revenue. Based on your location and order value, the delivery charges or chipping fee may vary from Rs.10 to Rs.60.

Advertising

Do you know that you can also advertise your products on the Dunzo app? Dunzo offers advertising services to local businesses, enabling them to promote their products and services on the Dunzo app. This generates revenue for Dunzo through advertising fees.

Dunzo Bike Taxi

Dunzo operates a two-wheeler taxi service, known as Dunzo Bike Taxi, which generates revenue through fares charged to customers.

Subscriptions

Dunzo offers a subscription service, known as Dunzo Plus, which provides various benefits, such as free delivery, no peak pricing, and faster service. This generates revenue for Dunzo through subscription fees.

Uptick Charges

This is also called Uptick cost or Surge pricing. Dunzo uses it when the demand for any specific product rises in a specific location. Although it works for a short period it is quite effective to generate revenue.

Other Sources of Revenue (#KuchBhi)

Apart from delivery services, it also offers services related to miscellaneous requests. This is popularly known as “#KuchBhi requests.” Here are some examples that the company advertises. 

1. Take a picture of the child’s school project.
2. Take a short video of your house under construction to track its progress.
3. Bring your white shirt from home.

Is Dunzo profitable?

For the current fiscal year, Dunzo is not profitable. Although it earned revenue of $6 million (Rs.54.3 crore). But its losses soared to $56 million (Rs.464 crore). Still, Dunzo is in high spirits with its good market valuation of $775 million (Rs.6365 crores).

It is backed by numerous strong investors such as-

• Reliance Retail: owns a 25.8% stake in Dunzo
• Google: owns a 20% stake in Dunzo

Marketing Strategies of Dunzo

Here are some key elements of Dunzo’s marketing strategy:

Social media marketing

Dunzo leverages social media platforms such as Facebook, Instagram, and Twitter to promote its brand and engage with its audience. It increases the awareness to spread daily posts through a tale of comic characters Harri and Dunya. These characters are dressed in Dunzo gears and represent the thoughts of Dunzo’s customers and partners in day-to-day life. The company shares updates, promotions, and user-generated content on its social media channels to keep its customers informed and engaged. Dunzo uses these two comic worlds for marketing on social media-

1. Shikari on Harri
2. Dunya ki Duniya

Meme Marketing

Memes have emerged as one of the effective sources to grab the attention of the public while delivering the message. If you scroll down the Instagram page of Dunzo, you will see ample interesting and funny memes that advertise the products in an entertaining way.

Usage of Bollywood references

Using famous phrases and dialogues from Bollywood has proved to be an efficient way to draw people’s interest. You will get everyday notifications from Dunzo that advertise its products by intertwining the lyrics or dialogues of Hindi films.

Referral marketing 

Dunzo encourages its existing users to refer their friends and family to the platform through referral programs. The company rewards both the referrer and the referred user with discounts and other incentives, which incentivizes users to share their positive experiences with others.

Overall, Dunzo’s marketing strategy focuses on building its brand, engaging with its audience, and driving user acquisition through a mix of social media marketing and meme marketing.

Conclusion

The Dunzo business model revolves around connecting customers with local businesses, providing convenient delivery services, and charging commissions and fees for these services. Apart from its headquarters in Bengaluru, Dunzo has also established other offices in various cities across India. Such as Delhi NCR and Hyderabad. These offices serve as regional hubs for Dunzo’s operations and support functions.