Dunzo in talks with investors to raise $100 mn to fund expansion

Dunzo, a home-grown start-up backed by Google offering local delivery services, plans to launch operations overseas such as in Southeast Asia and the Middle East next year, said Kabeer Biswas, the company’s co-founder and chief executive officer.

In India, the Bengaluru-based company is expecting to double its presence to 20 cities, including Lucknow, Calcutta, Kochi, Ahmedabad, and Indore.

“We expect to launch the services there (in foreign markets) somewhere in the middle of next year. There is a team that’s going out there and figuring out the (opportunities) by engaging in conversations with a few local bodies,” said Biswas. “We definitely see the (opportunity) in crowded economies like cities and wherever average order value can be higher than India.” 

To support the expansion, Dunzo is in talks with investors to raise $100 million in venture funding. The capital would also help the four-year-old start-up penetrate into the cities where it is already present, such as Bengaluru, Pune, Mumbai, NCR, Jaipur, and Hyderabad. 

So far, Dunzo has raised $32.8 million in 10 rounds from investors such as Google, Aspada, Alteria Capital, Blume Ventures, and Greyhound Capital, according to data platform Crunchbase.

Dunzo’s app connects users to the nearest delivery partner who can make purchases, pick up items from any store or restaurant and deliver those. This includes dropping off packages when customers are busy, get stuck in traffic, or even end up forgetting about it completely.

Aryaman Tandon, director at management consulting firm Praxis Global Alliance, said hyperlocal players continue to grow globally. World over, he said, this market has matured around trends, including better tech-enabled user experience, improved vendor and delivery network, and innovative payment methods. 

“Innovation is the key to improve delivery speed and customer experience,” said Tandon. “In India, growing internet and smartphone penetration is aiding further growth,” he added.

Biswas co-founded Dunzo with Ankur Aggarwal, Dalvir Suri, and Mukund Jha in 2015. The company, which started over a small WhatsApp group to fulfill random tasks like laundry pick-ups and drops for a small fee, is evolving into a full-fledged local-commerce firm where it sees tapping the offline businesses as a massive opportunity. By the end of next year, it expects to have over 100,000 local stores on its platform, from about 10,000 offline retailers now. 

“We are giving local commerce players a chance to come online,” said Biswas.  

Experts said the products that e-commerce players ship from fulfillment centres can also be sourced from the local stores, and most of the items are available in the cities. 

“Anything that you were buying online is available in the offline world. Why is that it is not coming to you in 30 minutes?” said Biswas, whose firm competes with players such as Amazon, Flipkart, Swiggy, and Grofers.

For instance, Dunzo recently tied up with phonemaker Xiaomi where consumers purchased the company’s flagship phone on the platform that got delivered to them in 25 minutes, said Biswas. “One day is not good enough anymore.”

To achieve speed in terms of delivery, the company is building infrastructure around discoverability of the local stores, logistics and payments. The firm plans to have its own digital payments platform to handle large transaction volumes and increase stickiness with the customers.