“During the pandemic-led lockdown we realised that these unorganised retailers were the backbone and the most reliable. Of this, unorganised players like local kiranas, or mom-and-pop stores, comprise 95 percent. The reason we are gross margin positive is because there are enough old geographies where we go and generate enough gross margin for us to be able to pay for new geographies, where our scale is lower,” he says.Ībhishek Chauhan, Associate Partner, RedSeer, says close to 75 percent of the retail industry is run by the FMCG and grocery segment. “As you scale, the amount of money you get in you bottomline as EBIDTA is significantly higher. When the scale gets to Rs 200, you lose 0, and at Rs 300 it goes to -Rs 5 per month, and “the numbers keep going up in your favour”. Citing an example, Kabeer says if your scale is Rs 100, you possibly lose Rs 10 every month. He explains that a large scale is critical to reach gross margin profitability. That is when we stepped in as logistics partners.”

“Most employees had gone back to their hometowns or villages, meaning stores did not have the bandwidth to cater to standalone walk-ins let alone the surge in demand. Kabeer says Dunzo used its larger supply chain and provider tie-ups to ensure that stores also received supply, which helped their consumer base. The delivery startup now has an average delivery time of 20 to 25 minutes. By September, the number touched 15,000 across cities, with its merchants seeing a 150 percent increase in revenue during the lockdown.

Prior to the COVID-19 pandemic, in January, Dunzo had onboarded 600 merchants. It wasn’t just about helping kiranas gain customers, but also assist with day-to-day activities such as inventory management, stock-keeping, delivery, and 24/7 support in the language of their choice. COVID-19 accelerated the effort to help kiranas compete in the digital marketplace, maximise their reach, and grow business online. Dunzo put in place a merchant-first strategy and focused on onboarding small merchants 18 months back. Thus, while the costs are high, the revenue per order increases,” Kabeer says. When the AOV grows, the unit economics start making sense. A larger selection on Dunzo led to a growth in the average order value, which now is north of Rs 400. “All merchants realised that they had to keep online the primary channel to grow their business. Partnering with merchants helped Dunzo grow phenomenally. How Dunzo’s merchant-first strategy can give it a much-needed edge over other e-grocers How Dunzo did itĭunzo had clear plans: it would not focus on reducing costs/expenses it would work to increase revenues.

Internet money gross beat bank