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Dunzo

Exclusive: Dunzo on its way to 4X revenue growth in FY20

Dunzo

Hyperlocal logistics company Dunzo has filed its unaudited results for the first 10 months of FY20 and when annualised those numbers, it paints a growth story for the firm. Its unit economics have improved drastically in the last fiscal as the company’s operating revenue grew 4.25X to Rs 71.56 crore in FY20 from Rs 16.83 crore in FY19. 

Notably, these are realised revenues but as the company does not recognize the amount payable to delivery partners the final audited figure for operating revenue will be much less. 

Explaining the logic behind the difference, Kabeer Biswas, Dunzo’s co-founder and CEO said, “Revenue recognition and revenue realisation working are two different things. About 90% of the revenue made in FY19, we didn’t recognize as most of the income passes on to delivery partners, thus, there is no need to recognise it. If you go through the revenue recognition number also, we have grown by 4X  year on year.”

For every order that goes to the platform, 20% of it comes as the earning for the order which is a combination of merchant and delivery fees. For example, out of Rs 100 order, Rs 20 comes as realisation.

The company has also increased its expenses significantly to achieve the growth of scale. Dunzo’s annualised total expenditure during the fiscal ending March 2020 amounted to Rs 407.6 crore, ballooning 2.3X from Rs 178.3 crore in FY19. 

Losses grew 2.1X from Rs 158.61 crore in FY19 to Rs 332.4 crore in FY20. Significantly, the company’s balance sheet at the end FY20 sports outstanding losses mounting up to nearly Rs 540 crore as per the annualised figures. 

Dunzo’s biggest cost element was the amount it paid to its rider partners. This expense grew 2.2X from Rs 69.88 crore in FY19 to Rs 152.4 crore in FY20.
In comparison, employee benefits expenditure grew by 73% from Rs 42.2 crore to Rs 73 crore in FY20. 

The company also spent considerably more on customer acquisition and discounted deliveries as these expenses jumped 2.7X from Rs 26.6 crore in FY19 to Rs 72 crore in FY20. 

Admin costs blew up 4.2X to Rs 83.74 crore in FY20 from around Rs 20 crore in FY19 as the company emphasised on achieving greater scale. 

According to Biswas, these expenses cover onboarding and support costs for riders and merchants. It also includes other direct expenses such as payment gateway charges, customer support cost, among others.

It’s worth noting that these numbers are based on projections submitted by the company as part of their regulatory filings and actual figures will be revealed later this year.

Dunzo has also been investing in its B2B business where it enables logistics for hyperlocal retailers. “We asked those merchants to set up a separate delivery port where we provided them with technology and transactions. Here we can run over 1,200 orders per day,” added Biswas. 

The company has also been experimenting with dark stores to help local retailers fulfil customer orders quickly. “We have planned 10 such stores in Bengaluru, Chennai, and Pune by the end of this quarter,” added Biswas.

At present, B2B vertical forms almost 6% of Dunzo’s overall business. Biswas claims that 75% of the business is delivery from local stores and rest from the courier service. About 18% of courier service is B2C, and 7% is B2B.

Dunzo has around 75,000 stores on the platform and the number of deliveries from 2018 to 2019 have grown 2.5-3X. As per Biswas, the company was serving about 2.5 million deliveries but Covid-19 pandemic impacted the volume by 25%.

“Covid-19 has not been great for the overall business but the good part is that people have started understanding our offerings fundamentally and have started buying organically. Even when there are no marketing expenses and discounts, we are growing 2X every month,” added Biswas. “There has been an organic shift in consumer behaviour and they are recognising by themselves how to get their orders at home, rather than us educating them.”

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Dunzo

Exclusive: Dunzo on its way to 4X revenue growth in FY20

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