Hyperlocal delivery startup Dunzo is slowly scaling back operations in different parts of the cities it operates in to cut costs and optimise its delivery fleet.
The Bengaluru-headquartered firm has rolled back operations in parts of Bengaluru, Mumbai and Gurugram over the past 2-3 weeks, according to three people familiar with the company’s operations.
It had also rolled back from Noida about three weeks ago. While there is anticipation that Dunzo services will be resumed in Noida as well as the other cities, no specific timeline is known.
The company has revamped its strategy to control its ballooning losses and improve unit economics even as it has a good amount of money in the bank. Dunzo had raised $45 million in October in a round led by Lightbox Ventures.
“The attempt is to run a much denser and better business. And not everything,” said one of the people cited above, requesting anonymity.
The company also sent emails to its customers informing them that it will be suspending operations in parts of Bengaluru such as Anjanapura, Annapurneshwari Nagar, Banashankari Stage 4-6, Bikasipura, Bommasandra and Electronic City.
Even in Mumbai, Dunzo is said to have rolled back from Ghatkopar, Andheri and a few other areas with deliveries now being done only in Powai.
Dunzo did not respond to queries sent by Entrackr.
This move reflects Dunzo’s strong focus on prudent spending of their newly-raised funds rather than recklessly burning cash to acquire and retain customers as they are locked in a battle with Swiggy through Swiggy Stores and Swiggy Go.
Similar to Dunzo’s parcel moving service, the Naspers-backed company had launched Swiggy Go. Entrackr had exclusively reported on this in July.
“Dunzo’s suspension of operations is temporary until demand in some of those areas increases. The idea is to optimise the utilisation of riders by having them work in high-demand areas and shorter distances,” added one of the people cited above, requesting anonymity.
“Their priority is to improve unit economics.”
Dunzo’s move to improve its unit economics is much needed for the company. The five-year-old company had lost 222X more money than its operating income during the fiscal year 2019. It had recorded a loss of Rs 169 crore in FY19 for a meagre revenue of Rs 76.6 lakhs.
Kabeer Biswas, the chief executive of Dunzo, told TOI in October that the company expects to achieve city-level profitability in six months.
He also said that they have been able to bring down the loss per delivery from Rs 142 to around Rs 30 as the firm scaled up from 40,000 monthly orders in January 2018 to 20 lakh monthly orders as of October.
