Google-backed Dunzo scales revenue 1.6x in FY21, reduces losses by 43%

Google-backed delivery and e-commerce company Dunzo has scaled revenue of about 1.6x in FY21 while serving as an essential service during an ongoing pandemic. Dunzo had seen its revenue from operations grow 35X to Rs 27.5 crore during FY20.

Dunzo has also reduced cash burn by 43 per cent and used its distinct first-mover advantage to establish its dominance as a Q-commerce platform in the Indian market.

Dunzo has scaled its GMV (gross merchandise value) by about 65 per cent in FY21, on the back of organic demand, with more than 90 per cent of users signing up to the platform organically over the last year.

Dunzo’s gross merchandise value (GMV), the total value of transactions through the platform including delivery fees, stood at Rs 590 crore in FY21 compared to Rs 360 crore in FY20.

The firm’s net loss was Rs 338.3 crore in FY20.

This is driven by a significant behavioural shift with Indian consumers. They are adapting to more frequent, small-sized purchases compared to larger, monthly purchases for everyday products and consumables.

“We believe competitive pressures will go up, but being the team that created the category and led the market allows us to push innovation forward on behalf of our users,” said Kabeer Biswas, CEO and co-founder, Dunzo. “We expect folks to mimic what we do, and we will continue to out-innovate on behalf of our consumers as we go forward.”

As a result, Dunzo has been able to drive advertising and marketing expenses down 86 per cent YoY (year-over-year) to Rs 9.9 crore from Rs 48.2 crore.

Combined with a reduction in operational costs, Dunzo is beginning to display operating leverage and has cut overall burn by 35 per cent in FY21. The EBITDA (earnings before interest, taxes, depreciation, and amortization) has reduced from Rs -327 crore to Rs -212 crore.

Continuing its growth story in FY22, Dunzo expects growth to be fuelled by its Quick Commerce segment –in the last quarter alone (Q1FY22), Dunzo witnessed nearly 2x quarter-on-quarter growth. The GMV for the first quarter of FY22 is reported as Rs 267 crore compared to Rs 142 crore in the first quarter of FY21.

According to an industry report by Redseer, the addressable market for quick commerce is projected to be over $75 billion by 2025, creating a multi-billion dollar opportunity for Dunzo.

In the coming weeks and leading up to 2022, Dunzo will be deploying over 300 micro fulfillment centers across 700 neighborhoods in the country, facilitating deliveries in under 19 minutes. Expanding and deepening its Dunzo Daily offering with the top 2,000 SKUs (stock-keeping unit), Dunzo will scale its services to the top 20 cities in India in the next 18 months.

Dunzo’s sharp focus on scaling its consumables category across Bengaluru as a first step has helped it create a replicable playbook for its next 20 cities. It has also set the industry benchmark with high user retention rates and frequency, with users transacting more than 2 times per week. As Dunzo continually improves its unit economics, it has reduced its expenses per rupee of operating revenue earned from Rs 13 in FY20 to Rs 6 in FY21.

Dunzo is betting big on the rapidly-growing online grocery market in the country. The firm is offering its ultra-fast grocery delivery service Dunzo Daily in Bengaluru, through which it delivers essentials in 19 minutes.

Dunzo Daily has witnessed unprecedented demand from users, growing 25 per cent week on week. Leveraging mini-warehouses strategically located across each neighbourhood in the city, Dunzo is able to match supply and demand to ensure lightning-fast delivery and a seamless ordering experience through its app.

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