Dunzo Digital Private Ltd., a delivery startup backed by Google and operating in eight Indian cities, aims to double the amount of capital it has raised so far to extend its reach across the country and become a $1 billion revenue business in the next two years.
The app, which connects low-cost couriers to thousands of individual merchants, has lured Indians with its rapid delivery of items ranging from groceries to parcels in traffic-clogged cities. The Bengaluru firm has so far raised about $140 million to date and aims to tap investors for roughly another $150 million in 2021.
Dunzo was founded in 2014 and started out as a WhatsApp service, before becoming an app where customers typically pay about $6 per order.
It’s tapping into growing Internet usage and accessibility in India, where tech and consumer startups are flourishing as the number of smartphone users nears 1 billion. E-commerce has been the quickest growing channel for fast-moving consumer good products in recent years, and now accounts for about 5% of all such sales, according to Jefferies.
Delivery Competition
Dunzo and other food delivery services have also seen Covid-19 drive competition as a second wave of infections sweeps India. Competing firms riding that boom include food-delivery app Swiggy, which said Monday that it’s raising $800 million.
The growing imposition of state-level restrictions “is a negative development for consumption in general” but web-based retail will likely get a “boost,” Jefferies analysts, including Vivek Maheshwari, wrote in a report Tuesday.
“You make 20 cents an order — the only way to make this business works is at scale,” he said. Still, “it’s important to be extremely disciplined in your geographical expansion, because you could suddenly start losing money everywhere.”
