Dunzo is an Indian quick commerce pioneer present in eight cities and planning to expand further next year, and co-founder and CEO Kabeer Biswas speaks to WARC India Editor Biprorshee Das about how quick delivery can enhance the customer experience and inspire brand loyalty.
This article is part of a Spotlight series on quick commerce in India. Read more
- Users prefer selection, quality and price over speed only, and we encourage them to pick slower delivery times so that we can build a robust business model.
- There are 4 shopping missions in mid to high-income Indian households – weekly buying, top-up grocery buying, unplanned events and festival-related buying.
- Dunzo sees a future of building sustainable supply chains across the complete delivery lifecycle - from the time of packaging to the delivery of the product.
WARC: Share with us your brand history. How did Dunzo start? What is the need gap that was identified that made a brand like Dunzo a necessity?
Kabeer Biswas: Dunzo pioneered hyperlocal quick commerce in India in 2016, before the term quick commerce was coined.
We started off by enabling consumers to courier items from point A to point B in the city, to procure anything they wanted from any shop in the city and eventually, we also enabled discovery for both local merchants and consumers through the Dunzo app.
Based on our learnings, we realised that there was a gap in the market for consistently reliable fulfillment of a highly selective but relevant range of daily essentials. This absence creates significant hindrances in a consumer’s daily life. In addition to this, the frequency of purchase is much higher for online grocery shopping versus other forms of e-commerce. The packet sizes are smaller but an average consumer would order from this range of highly relevant SKUs three to five times a week. This led us to launch Dunzo Daily in 2021. From launching Dunzo Daily only in Bangalore in the middle of 2021, we have gone on to cover eight top cities in India in a span of six months.
Is the promise of quick delivery in 10-20 minutes really sustainable? After a point, how will a consumer be able to differentiate between services?
Users are increasingly seeking convenience in their daily life. They want a seamless experience interacting with the offline world and that’s how quick commerce has become a natural extension of the retail and online shopping experiences.
The definition of convenience has also shifted from one to two-day delivery to on-demand, 20-30 minute windows of delivery. Users no longer have to wait to get what they want or need and can access their cities and stores on-demand.
Our differentiator comes from being a brand that truly evokes love for the consumer experience and journey, and this distinct ethos in how we operate and differentiates us.
Our USP doesn’t bank on the promise of delivery within a stipulated time frame nor do we market our brand that way. Our brand promise is to deliver good quality and fresh products at the best price within the shortest time possible. We aim to build a long-term business and provide our users with selection, quality and price, and we stick to the fundamentals of delivering convenience.
Additionally, our understanding is that users prefer selection, quality and price over speed only. We have figured that delivery needs to be done in line with an offline transaction of 30-45 minutes but we are actively encouraging users to pick slower delivery times so that we can build a robust business model.
How do you ensure that brand loyalty and great customer experience are not sacrificed for the sake of quick delivery?
Our USP doesn’t bank on the promise of delivery within a stipulated time frame nor do we market our brand that way. Our high customer satisfaction scores are a testament to that. Dunzo’s brand promise has always been to deliver good quality and fresh products at the best price within the shortest time possible. We aim to build a long-term business and provide our users with selection, quality and price, and we stick to the fundamentals of delivering convenience.
Fortunately, we have been able to maintain our “verb” status that goes by “Dunzo it”. Also, our brand promise is to deliver good quality and fresh products at the best price within the shortest time possible.
Are brands like Dunzo competing with brick-and-mortar stores or is there ample space and opportunity for both to coexist?
Brick-and-mortar stores are here to stay and so is quick commerce. Each has its own audience. We never think they’ll be our competitors. We solve a specific problem for a specific consumer segment that hasn’t been solved previously. Given the scale of India, the marker size is 70 billion.
Many brick-and-mortar stores stock are based on demand in the particular area for SKUs. Sometimes, you might not get the items you want and they might not be available or even stocked in that particular store. Instead of going on a store hunt, you can choose to get it delivered. Even if you’re placing an order with a supermarket, they might take their own time to deliver the order. It won’t be predictable, especially if you want the item to be delivered immediately.
Say you’re stuck in traffic after a busy workday and you need to order essentials – you wouldn’t have the time or energy to stop by the nearest supermarket and surf through options. At that point in time, you can just Dunzo it to your house, it’ll save you both time and energy. Or say you’re cooking or you’re entertaining guests, you’re missing out on some items you need. At that time, you’re choosing convenience to “Dunzo” your items over without having to step out and run errands.
From a logistics perspective, what have been the challenges in setting up quick service? How are you ensuring that it is a smooth process for all customers?
We deploy technology to remove friction at each leg of the supply chain, store operations and last-mile delivery. Our tech is one of our key enablers but looking beyond tech, we wouldn’t be able to have a seamless functioning mechanism without our supply chain executives, store staff and delivery partners, who form the pillars of our logistics and backend. We help our staff work synchronously with tech to let them make faster, better decisions and remove operational bottlenecks, which helps improve the customer experience.
We fulfill the promise to our customers by optimising each step in the process. While each SKU we sell has a digital journey which reduces operational turnaround time, the process from receiving an order at the mini-warehouse to packing it and keeping it ready for pickup by the delivery partner runs like clockwork and is completed in less than three minutes. By this time, the delivery partner has arrived at the store, he/she scans the order code, receives the delivery location on the map and is off to delight the customer.
There is always the question of safety in the race to deliver on time. How are you ensuring that you take the best care of your delivery agents?
Partner safety and delivering good quality products are of utmost priority to us. We will never incentivise a partner to deliver the order quickly at the cost of safety. We never have and never will.
If we fail to meet the delivery within the promised time, we keep our users informed. They can see a live tracker on their order and know when their order will reach them. We strive to perfect every part of the order delivery experience to keep improving our actual versus our promised time to our customers.
The constant communication enables us to provide a superior customer experience with orders. It also gives delivery partners time to reach the location safely as per the route. We have a comprehensive order fulfillment process right from the moment the order is placed, until the time the order is delivered, to provide the customer with a seamless ordering experience. We learn and grow with our customers. Based on the feedback received, we continue to implement various tech interventions, project management techniques and operational process improvements to ensure we meet our delivery commitments.
How have environmental concerns and rising fuel prices impacted the brand?
We encourage customers to opt for zero delivery fee orders, which take slightly longer than around 20 minutes to deliver. This allows us to batch orders together for delivery in one trip, which is possible for multiple small orders. Batching orders for delivery in a common micro market enables less fuel consumption and emissions.
Additionally, the warehouses on our platform are strategically located in neighbourhoods where the distance between the customer and the warehouse is minimal. This enables us to have shorter trips to the final point of delivery.
We are cognisant of fleet electrification targets set out by various state governments as part of their EV policies and are working closely with some of them on innovative ways to increase their adoption amongst our delivery partners. In terms of investing in EVs and fleet electrification, we plan to run pilots soon regarding EV efficiency, cost savings and safety for our delivery partners and expect favourable results. Dunzo may also announce fleet electrification targets in the near future once our pilot is successful.
We envisage a future of building sustainable supply chains across the complete delivery lifecycle, ie from the time of packaging to the delivery of the product.
Tell us about some successful marketing efforts. What was Dunzo’s media mix like and what were some associations the brand tried to make?
Dunzo has always looked to create content that is relatable and insight-based. We’ve felt that to stay top-of-the-mind in a flux of new-age media and advertising, you need a creative strategy that captures and intrigues the audience alike. While the recent print ads created buzz using nostalgia of the good ol’ board games we used to play as kids, the campaign #FridgeKaKyaKaamHai teases the absurdity of owning a fridge when you can get fresh vegetables on Dunzo.
With Dunzo Daily now present in multiple cities across the country, the media mix for this campaign was pivoted on high decibel platforms like print, television and OTT, which opened doors to a wider genre of people. IPL is undoubtedly one of the biggest events in the country and it brings together such a wide variety of audiences, from families to Gen Z, and offers a unique opportunity for a brand like Dunzo. The campaign was floated with more than 60% of the media being digital, while the rest was distributed among other media channels.
How does the quick commerce in India behave differently from the West, where consumers are not really happy about paying extra for quick deliveries? What’s the potential for the category in India?
Other than a few high-value users, users in India don’t like paying too. We have to build our product experience in such a way that they’re encouraged to pick up slower delivery options for lower prices. This makes it a viable business model to scale for millions of urban Indian consumers.
From our experience, we’ve observed four different shopping missions within the mid to high-income Indian households – weekly buying, top-up grocery buying, unplanned events and festival-related buying.
Weekly buying users usually tend to add the groceries with less shelf life and which are needed for regular consumption. When they purchase these lower-shelf items, most of the buyers tend to opt for add-on products along with their order, making it a top-up purchase event.
Whereas unplanned event purchases are indulgent and ad-hoc purchases, for example, a sudden house party or a certain mid-week craving. The unplanned and top-up purchase events account for 70% of the consumables purchases and are a big target cohort for the QC industry.
Festival-related buying is pretty straightforward. In a diverse country such as India, there are smaller festivals that are celebrated across different states. This event translates into the need to buy specialised items that are consumed/cooked during that time and season.
With the advent of grocery and essentials-focused e-retail players, consumers have found a more convenient solution to these otherwise highly cumbersome and time-consuming offline transactions.
From a go-to-market perspective, the first port of call for any quick commerce player is the Tier 1 cities with around 20 million households in the mid to high-income range. This is the segment that is highly mobile, educated and has the purchasing power.
Individuals falling into this category have the ability and willingness to pay for convenience and reliability in the long run. For the long-term sustainability of the business, being the number one player within this segment of consumers is key.