The Decline of Dunzo!... What Happened? | Startup Case Study

00:00 - Intro
01:03 - How Dunzo Began?
02:30 - First Funding & Growth
03:12 - First Wrong Move
05:29 - Reliance's Deal
06:40 - What can we learn?
Sources:
/ dunzo-fundraise-mr-bis...
• Delivering to India : ...
inc42.com/features/the-dunzo-...
Dunzo, once a promising startup, now faces the imminent threat of shutting down. The company, founded by Kabeer Biswas, entered the hyperlocal delivery market in India, becoming one of the early players in a landscape where concepts like hyperlocal delivery were novel. Kabeer, inspired by Uber, envisioned an app that could handle various tasks with a single click.
Dunzo's journey began informally as a WhatsApp group where people could request tasks, and Kabeer would personally handle them. As the company grew, it transitioned into a formal business. Sahil Kini of Lightrock became their first investor after receiving a delivery from Kabeer. The subsequent years saw remarkable growth, with monthly orders soaring from 15,000 in 2016 to over 2 million by 2021, marking a 130X increase. However, this growth came with substantial financial losses, as Dunzo focused on gaining subscribers.
In 2020, Dunzo's fortunes seemed to turn as active users nearly doubled, and financials showed signs of improvement. Sensing an opportunity in quick commerce, Dunzo secured a $40 million funding round and launched Dunzo Daily. However, this move proved detrimental. Quick commerce demanded a different infrastructure, relying on the 'Dark Store' model, which required substantial investment. Dunzo faced stiff competition from Swiggy's Instamart, Zomato's Blinkit, Tata's BigBasket, and Zepto, diluting its exclusivity. Despite raising over $400 million, Dunzo struggled to compete and eventually faced a dire cash flow situation.
In 2023, with co-founders leaving and funds depleting, Dunzo turned to Reliance for a lifeline. Reliance acquired a 26% stake in Dunzo for $200 million, providing crucial capital but also securing veto powers over significant decisions. Reliance declined additional funding, leading to a disagreement and further financial constraints. As two co-founders abandoned ship, Dunzo retreated, shutting down quick commerce operations in multiple cities, leaving only seven dark stores operational in Bengaluru.
Dunzo is currently fighting for survival, reverting to its hyperlocal delivery model. Reports suggest that the company's monthly burn rate exceeds 100 Crore Rs, with less than 500 crore in the bank. Without a quick injection of funds, Dunzo faces the possibility of closure.
The lessons from Dunzo's downfall are clear. Startups should be cautious not to lose their unique selling proposition (USP) when venturing into new segments. Dunzo, once the king of hyperlocal, lost its edge when it entered quick commerce, becoming just one among many. Additionally, operational profitability in the core business should precede expansion into new segments. Finally, aligning with the right investors is crucial when competing against well-funded companies. Unlike its competitors with strong backing, Dunzo's reliance on Reliance as a strategic investor with its own agenda may have contributed to its downfall.
In conclusion, Dunzo's journey from a promising startup to the brink of closure underscores the importance of strategic decisions, financial prudence, and maintaining a distinct market position in the competitive startup landscape.
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[@backstagewithmillionaires]

What else do you think led to Dunzo's downfall?

[@YeaHpy-ff1wh]

I disagree when paytm was market leader and had USP OF MOBILE WALLET WHICH LED TO PAYTM LOSE OUT TO UPI AND WAS TOPPLED PHONEPE AND GOOGLE PAY and still paytm had work very hard to stay in competition

[@TarunKumar-ru2xw]

They should have chosen quick commerce which serves the customer at best then hyper local.

[@pradbourne2446]

Unit economics in India can never be high enough for profitable

[@gag_singh]

I guess it was bound to happen.. I was both a consumer and a contributor (through invoice discounting) but in my area, most items they sold were consistently nearing the expiry date and their customer service was virtually non-responsive. On a separate note, last year when I asked them to delete my account/details from their database and provide a confirmation they completely went silent. Despite my numerous attempts to contact them, I never received a reply. For me that was the last time I ever used their service.

[@ElonHusky]

Interesting I only heard about dunzo when this news came out

[@rizwanakhtar08]

when a company fails, you can write an hypothesis for it's failure, to fit the narrative. Dunzo failed while trying new things: people are sayin: Duzno should have focused on it's core offering. If Dunzo would've failed, while just focusing on hyperlocal delivery, same youtuber would've said: Dunzo didn't evolve. If Dunzo would've succeeded in quick commerce, same youtuber would've made a video about the genius idea of Dunzo to continuously evolve. Point is that very easy to write a back story AFTER knowing the result. Zomato, Swiggy are growing while introducing new categories, the same theory doesn't hold true for them.

[@crazystories221]

Your comment does Makes sense. What do you think tho ? Why they failed ? Were they just incompetent ?

[@zdeals_official]

agreed

[@rizwanakhtar08]

​@@crazystories221 Reasons can be multiple. we outsiders can only speculate. The most prominent seems to be lack of funding: Zomato/Swiggy kept on expanding, got funding and are thriving. Dunzo couldn't get funding and is thus struggling.

[@aniketsrivastava7968]

That is so true...

[@user-gb3jq3nm7y]

My opinion is that there is nothing wrong in venturing in new arena, but if you fail to prepare you prepare for failure. In this scenario they did noy understand the depth and need of the new arena and blindly invested to be first in the race which eventually killed the business.

[@user-cn1fx3nc4z]

Reliance is killing the startup ecosystem. Its not a coincidence when Reliance takes over the major stake in the company, the company's downfall starts. We should see the Milkbasket's case study as well, where the founders had to leave and all top management got fired.

[@mdashher114]

So you’re saying basically Dunzo should’ve raised more, lost more and go bankrupt later than now?

[@T-TJ]

Every big company does the same. Microsoft is doing same since its inception and keeping itself top on charts.

[@user-cn1fx3nc4z]

@@mdashher114 not saying that, should have tried more to get some VC rather than Reliance. Wish there could be detailed videos on how Reliance kills startups, thats really scary.

[@user-cn1fx3nc4z]

@@T-TJ I agree

[@srajandikshit7590]

You dont even understand these business models aren't sustainable at all. Its just a cash burning machine.

[@kreativechaos7606]

Reliance preventing from raising funding is the major reason why Dunzo is in this situation.

[@thiskarthik]

Obviously reliance wants to buy the whole business and integrate it with their stores

[@Rohit_Sharma-]

US mein hote toh hostile anti competitive behaviour ka lawsuit face karte

[@DannycageGhostrider]

​​@@Rohit_Sharma-chutiya😂 US me 9% se jyada share hone per hi Vito power mil jaati Hai. Jakar padhaai likhai kar le

[@dhavalsavalia]

@@Rohit_Sharma-Amazon?

[@Rohit_Sharma-]

@@dhavalsavalia woh already face kar rha hai ...with Google and Meta

[@megalomedia]

Interesting story, thanks for sharing! I think the best thing for those startups is to get acquired by a big player like Amazon, Flipkart, or others.

[@guruprasadseeryadavenugopa351]

Not a single delivery app is making money. I am trying to make sense of the business model. If an average product delivered costs 200 Rs, the delivery margin cannot be more than 20rs. Avg delivery distance can be 4-5 km. How are you paying for the driver, his vehicle petrol etc. You could break even at may be putting in a min purchase of say 1000 Rs. I am not sure many such apps can work with such restrictions. The whole ecosystem seems like big bubble waiting to burst. You may have loyal consumers and data, but how can that make up for 1000s of crores loss

[@indian9632]

Dumb money ends up holding the bag, that's retail investors money. Google, Facebook and other ad platforms and also landlords are the real winners.

[@jeevan88888]

It's all a propoganda business which is eventually run and controlled by the top people of silicon valley in US.

[@vinaybhat7670]

They want to capture Consumer Goods sector of cities.....they will launch their own private labels later..

[@warriordk2127]

True

[@rohitk4544]

please do more of these case studies. very helpful for a student like me.

[@user-nx9zu4cu4g]

Just a correction it is not that employees are not receiving salary from last 6 months. It is just that some part of June and July complete are remaining. Rest all months are in track. I have a friend who works there

[@JohnSmith-sl6eg]

😂

[@nandiniv]

It's a humble request to not use terms such as "committing suicide" for companies that have failed to gain profits. Even irresponsible media outlets have stopped using the term, it is quite tone deaf and a company is not a human being who chooses to die by suicide. I am sure there are other hyperbolic terms you can use.

[@krishnakethan]

issues with not researching well on a topic. The reason they had to change their usp was that their usp wasn’t working anymore. People realised that dark store model was way better than hyper local and started shifting there

[@Saurabh____]

They started grocery delivery business then shut it down then again started with hyper local model where they were delivering products from local kiranas at price much higher than there competitors, then again they started grocery delivery by themselves. Multiple pivots within short period. Other businesses kept on working on same idea for 10+ years stable it then move to other businesses eg Zomato

[@akhilchalil1585]

I don't know when people will realize that aggregrator business will not work because you have no control over your the so called "partners." The problem with these startups are that the founders would have setup a detailed plan to exit as soon as they find a buyer. Making the company profitable and running it is never the strategy. They over hire highly paid engineers and CVD level titles. Founders take huge remuneration despite the company being in loss.

[@GopalVenkatesan]

100% spot on

[@selfboss]

Thankyou for your case studies on startup

[@p.v.s.ashishkumar1859]

I like this new type of content property. Keep making such good content ❤

[@AdilKhan-kb3gf]

Great content. Good job!

[@hardik6700]

Nice one. Thanks for sharing.

[@quickSilverXMen]

This is why the US has more startups thriving becoz their angel investors are mostly not devil 😈.

[@DIGITALPG]

You have no idea

[@meghanshagarwal]

Reliance killed dunzo to integrate it exclusively with JioMart and Smart store chains

[@Oceansta]

Yup. Basically paid 200 mill for "26%" but in reality took 100% 😅

[@preranasamant834]

Extremely well edited video.

[@bhoju_]

No

[@k.vishnuvardhanreddy]

Please do a video on Andhrapradesh startups

[@Business4801]

Brother Andhra people will start their startups in Hyderabad or Bangalore😅 Vote for Chandrababu Naidu or Pawan Kalyan 😊

[@srinadhsri]

404 doesn't exist

[@k.vishnuvardhanreddy]

Bro, I am not talking about politics... Everyone has a dream to start their startup in their own Places.

[@srinadhsri]

@@k.vishnuvardhanreddy no clarity on capital itself is an no no for any investor bro....

[@vamsikrishna3930]

Big joke. There is no infrastructure, no ecosystem, no support nothing. On top of that there is huge corruption.

[@salesmanchettiar]

It looks amazing in early days like how Kabeer and his friends were So Confident and Energetic. But I feel bad how young entrepreneurs fail and how they feel in current situation. It's too depressing.

[@NitishKumar-ps9zd]

2 million orders per day is a wrong fact. The highest daily order for swiggy was 2 million. It does 1.2-1.5 million generally. Can’t think of dunzo getting more orders than Swiggy with smaller distribution and presence.

[@maniklalmantri8767]

He said “from 15K MONTHLY orders in 2016 to 2M orders (i.e. monthly) by 2021” 2:40

[@mysore1982]

They took a swanky office in a good location and added fully furnished matching MNC level spending lot of money even before earning 1 rupees profit . Bad money management.

[@tbraghavendran]

They wanted to attract talent.

[@Oceansta]

Yup. Everyone wants an office like Apple or Google but have less than a fraction of a % the resources. Burning cash on stupid things is not good business.

[@TarunKumar-ru2xw]

Hello, they should have focussed more on quick delivery instead of hyper local delivery. When they have options they should have chosen this quick commerce instead of hyper local delivery. Reason : quick delivery serves best to consumer DON'T LISTEN BLINDLY TO THIS GUY AND APPLY HIS LESSONS TO YOUR BUSINESS.

[@chandreshmittal123]

Basically they did not have any business model from the start. Founders must understand that there is a diff between doing business and doing marketing. Business is all about profits, rest all is just marketing!

[@varunsauryaboy]

Thanks Pankaj

[@madhu619]

Okkkaaayyyyyyyyy so that's why dunzo says 'couldnt find a delivery partner' since some days, every time I tried to book dunzo for delivery...

[@pyroindia88]

Interesting... thanks

[@megharoy8487]

Great video! Your narration style is engaging. Consider breaking down terms like "dark store" and delving deeper into their workings(trust me a lot of people don’t know how it works). Exploring topics such as USP (Unique Selling Proposition) and its significance in startups would add valuable insights for your audience. Keep up the good work!

[@divyaalok5538]

Awesome

[@rohitnayak9952]

Please make a video on the MLM business model ❤?

[@PS-oj5xo]

Dunzo has not made payments to merchants/vendors in huge numbers in Chennai. Around one month payment is pending to stores in Chennai from September 23. One by one stores are swithching off in Chennai. No response from their staff as most have left Dunzo. No proper response. They have taken money from customers for the item and the delivery charges. They have received the item from store owners and not paid for the item delivered to the customers. Store owners are affected by this. Hopefully, all the pending payments will be paid

[@ROSUJACOB]

No,thanks❤.

[@anilvarmas]

Very well presented. Thank you 🙏

[@shanmugasundarama509]

The biggest lesson is whom to trust and when to trust

[@madrasman8883]

I think we should give the new idea some time. Reliance strategy could go right. Let's see. Focus on core and in home city is not a bad idea

[@jaaj6607]

Hey Please make video on Strategic Investor

[@chandlerfreeman1633]

Superior content quality, only regret I have is most Indians will be oblivious about this companies with worst business model, worst job security and short life because of language problem 90% of Indians don't click on English language videos(that simple)

[@santoshsanthanam]

Nicely done. Would have been good to know what are they spending 100 cr/month on.

[@Oceansta]

Exactly

[@PRI10M]

One of my best friend recently got a job in Dunzo. I feel sorry for him.

[@shrirambhandari1463]

Very well researched and well presented.

[@drblahblah929]

Mota bhai invested in dunzo to buy dunzo. Reliance bought 25% stake but they will end up getting more than 60% stake in few months with cost less than that of 25% they invested initially.

[@hgsgknnnmmlolb]

Dunzo, the name me looks ⚡

[@chandureddim4327]

I really do not understand difference between Hyper local delivery vs quick commerece ? even though there might be negligable difference itself. I think going to Quick commerece is not a bad decision. Some one if know clear cut difference between them. Please feel free to. thank you

[@shre6619]

Hyper local is using existing shops (existing infra) to fulfill orders. Here, customer chooses the cheapest provider, quick commerce is time-based, within 10min/30min that type

[@badrivenkata6694]

Hyper local delivery means u tie up with kiranas or retailers and when a customer places a order on the app u just deliver it to customer meanwhile u don't hold any inventory. Inventory is held by kirana or retailer and u earn comission on every order delivered meanwhile u bear the delivery cost apart from this u earn ad income many brands would want to do advertisement with u bcoz customers are coming on ur platform. In USA instacart is such model . Here in india dunzo . Meanwhile In quick commerce there are 2 type of model .one in which u open the dark store ( area where common people arent allowed area where sku are maintained just like a store room where only staff is allowed ) and u hold the inventory which is mostly within 3 km range and u deliver the order by urself and u don't pay any comission and u have ur margins just like dmart . U earn when u sell a product u do make ad income bcoz customers are coming on ur platform. Example zepto .. The second model in qcom is where u ask sellers to sell on the platform just like Amazon and sellers will hold the inventory u just open dark store near customer within 3 km range and u help sellers with inventory management and u earn comission whenever order is delivered meanwhile u bare the delivery cost . U do make ad income . Example blinkit .

[@jeevan88888]

Go do some research.

[@abhishekhebbar1911]

Good video 😊

[@manulgupta1038]

It's a classic shark strategy from reliance, Mukesh Ambani plans for the future. Buy a minority stake with veto rights at a high valuation during a time of crisis in a company, make sure it falls and then bail out the company and buy a majority stake at a much cheaper valuation/ let it die and bail out. Reliance retail is his next Jio project till his foundation for RE is laid out.

[@amandhingra4947]

Sources in description would be great

[@backstagewithmillionaires]

sources are there now. - Pankaj

[@saiprayastha7141]

There is a saying instead of drinking milk while running it's better to drink water while stable

[@dhirajreddy3767]

Love how well you have summarised this business case study in under 8 mins Bravissimo 🎉

[@bawabro]

Trust me, Reliance saved them, they just kept burning cash and as a premium member of Dunzo, I didn't even knew they moved into the other segment until I watched this video. 10 years later, these guys will thank Reliance

[@latestmoviesandflixz5456]

The biggest problem with the current startup ecosystem is instead of creating a value they are desperate to create a Buzz about their product. That is where their businesses fail. The first and foremost thing any business should do in order to last longer is to create value and then go for valuation.

[@poojaroy6572]

I was in Dunzo’s growth marketing team and had left the company in early 2023. I’ve seen the massive downfall, the condition of the employees were unbearable

[@ROSUJACOB]

Love you Pooja❤

[@karthikvijay]

Not agree with the point where you say don't lose USP or edge and add something new. Swiggy was synonym for food delivery, started doing the quick commerce and survived(at least for now). Zomato also expanded to b2b vertical with hyperpure. And many other startups are doing the same. The downfall of dunzo has to be thier wrong execution. They executed horribly

[@dyaneswarsai1477]

It was a very good company…. Sad to see it go down

[@dfunlovingguy2575]

I used Dunzo service once in Bangalore to send an ID card, 15 kms (max) they charged me close to 270 or 280, never I used their service again. They could work on optimising the delivery cost.

[@Magician_Tonight]

Here's the mistakes summed up :- 1. Do not loose your USP. 2. Firstly prioritise achieving constant profitability before expanding the business into new avenues that fundamentally require more cash burn initially since your probably won't be able to survive that time period.

[@commonsense1019]

In india founders just want a exit n build something else rather than making it better n its the core of such failures.

[@pawansoni160]

I humbly disagree with your point/lesson no. 2 that "You should first be operationally profitable in your core business". An example of this is Amazon. Amazon is what it is today because of its services such as Amazon Prime and AWS and not its E-Commerce market business. Sometimes you have to venture out and try out other things if the hand you've been dealt with is not the right hand. 😇

[@fangdog29]

Prime was for Amazon's product delivery from the beginning. The rest got added as it's capabilities grew - aws itself started as a means to monetize rarely used computing power that Amazon gained because of its e-commerce business.

[@ishantripathi9707]

sources please. PS: nyc video

[@backstagewithmillionaires]

sources are there now in the description - Pankaj

[@GreatestManOfWorld]

Make a video on Maharashtras goal for 1 trillion dol. Gdp till 2028 and same about UP dated till 2027

[@hey.akshat]

I'm coming !!!!!!!!

[@prince_warhero]

All these companies think you press 1 click in app and everything happens. These founders forget there is humans involved in the process. They do your deliveries so treat them as people and not bots. They face poor conditions to make your business run

[@sago22]

Biggest learning : Never ever make an agreement with the devil. Either today or tomorrow you will end up handing over your soul to the devil. It does not matter how much you raise the question is from whom you raise the money.

[@mapa5497]

If Reliance Retail was a strategic investor in Dunzo, couldn't Reliance have helped Dunzo as opposed to creating dark stores?

[@user-vh7dy8ht6v]

A chrony bully has stepped on its toes

[@zaynkevlogs6827]

Reliance has helped to kill the dunzo too

[@tbraghavendran]

Seems that Reliance wants Zepto to succeed.

[@ajoykarnati6104]

I never heard of this Dunzo?

[@malikt1387]

Dunzo lost their USP because of easily receiving big fundings

[@sunitization]

Zomato swiggy I have heard. I never heard dunzo

[@nbaua3454]

Bro.. Never shack hands with sharks.. they are always in a mood to get you..😅😅😅

[@tbraghavendran]

There may be other reasons too.

[@viru4990]

Why everything related to banglore fails? 🤔😅

[@neoloaded]

What does Reliance gain from Dunzo's demise?

[@lawyermahaprasad]

Ambani Mamu game kar diye

[@raibhilo]

Profit par dhyan nahi de to business kaisa?

[@Ccyt954]

Dhandha karo hi maat ❤

[@Harshit-yy1oe]

Yooo what..!!🫡😂😂😂

[@storiyaantv8827]

"THIS IS WHAT EXACTLY HAPPENED"

[@NITISHBHATT008]

So Reliance saved them from going into more losses.

[@anirudhverma8461]

wow, Ashneer Grover predicted thia 1.5 years ago. He calles 19 min delievery system worthless and capital intensive.

[@agaashagaash6320]

5:20

[@user_909]

dunzo failed because they provided refund . even person gets order and raise the ticket for expired date and others they provided refund without any verifications

[@avinashshool]

Because Modi is busy with Adani right now. Ambani could have ask the fund from PM care fund and run dunzo in efficient manner.

[@praveenkumars9111]

Competition burns money Blue ocean earns money

[@aatifnazar8203]

so sad to hear this

[@Daily_doses_j]

Reliance either is smarttokill the company or it is stupid to waste 200 million dollars

[@fangdog29]

They'll simply take over the company for pennies on the dollar by blocking all other stakeholders.

[@Nnss-yb6vb]

The real reason I smartphone Before jio there was no cheap Internet And smartphone are not widely used This is the biggest reason And smartphone technology was not developed either

[@vitsboy46]

Cash flow cash flow cash flow

[@yosup125]

for the algo

[@muthu7280]

They didn’t had a better CFO! No sense of cashlow and invest ROI

[@mannujr.685]

Once dunzo didn't refund my money which was Rs113😂... I cancelled just after few seconds but still.

[@Oceansta]

What's the breakdown of Dunzo's expenses? * They don't own the vehicle * Delivery partner costs are one of the lowest in the world * Fuel costs are high in India but not that high that the entire business model is brought down to its knees * Backend and software overheads also cannot be the reason. * They don't have any plant and machinery to run or maintain. So why were they losing ₹8 on every ₹1 they were making?

[@fangdog29]

Infrastructure. Payroll. It's a manpower intensive industry

[@Oceansta]

@@fangdog29 is delivery partner the biggest expenditure?

[@fangdog29]

@@Oceansta I wouldn't be surprised if it is. The network of delivery partners is what makes dunzo. Just like the Uber driver network is what makes uber.

[@voiceofhok8662]

Reliance want to become Monopoly

[@Chaos_rider_666]

Excluding jio Reliance is the worst thing happened to our nation 🤦

[@quiteintresting1916]

🤣🤣🤣 good... The co founders are painful

[@navadeep.ganesh]

Just remembered - I have to pay them 20rs for the amount tipped on my last delivery after which I uninstalled.

[@tbraghavendran]

Tipped?

[@navadeep.ganesh]

​@@tbraghavendran Yeah, one can incentivize the delivery person using tips in the app if happy with the service.

[@aalaptube]

Oh wait, why does this sound like a stuck record? Have heard this 1 years ago, and theres this new video saying the same thing? Have you run out of topics?

[@user-lg5df8br7d]

Reliance and adani is destroying Indian businesses. They are also making the politicians dance on their music.

[@JohnSmith-sl6eg]

Dunzo, the name itself is so Dumbo 😂

[@kennylobo7300]

Bad advertising campaign . Disposing your fridge for 45 minute grocery delivery is ill logical

[@jigargandhi1654]

Valuation scam hota hai to cheat investors

[@fangdog29]

The valuation is done by the investors. Not by the founders/initial investors.

[@karanjoshi2662]

Technically most startups end up failing