Dunzo Business Model: How the Hyperlocal Delivery App Works

Introduction

India’s e-commerce landscape has drastically changed since the pandemic. Today, we are witnessing a rapid rise in quick commerce businesses that offer hyper-local doorstep delivery. 

This fast-growing Q-commerce and online shopping business focuses on lightning-fast deliveries, often within minutes or under an hour, and has taken the industry by storm. 

Dunzo, a leading hyperlocal delivery app, has become a multi-million dollar company, spearheading this rapid growth. In major cities, Dunzo delivers fruits and vegetables, meat, pet supplies, food, and medicines. It also had a separate service to pick up and deliver packages within the same city.

Want to know how Dunzo cracked the code to hyper-local delivery, balancing orders, technology, and customer satisfaction? 

Then, read along as this blog explores the business model and strategies behind Dunzo’s success. These insights can help you build an app like Dunzo.

What is Dunzo?

Dunzo was founded in the year 2014 by Kabeer Biswas, an alumnus of the NMIMS, University of Mumbai. 

Dunzo is a hyperlocal, on-demand multi-delivery service app that delivers groceries and home essentials. Its delivery services are active in eight major Indian cities: Bengaluru, Delhi, Gurugram, Pune, Chennai, Jaipur, Mumbai, and Hyderabad.

Dunzo charges a small delivery fee and delivers edibles, snacks, home essentials, and groceries to its users. 

Dunzo also offers pickup and drop-off services. For instance, if you forgot your laptop in your office or some important files at home, Dunzo can get them to you on demand. 

In January 2022, Reliance Retail spearheaded a US$240 million funding round for Dunzo, investing US$200 million for a 25.8% stake.

Despite raising over US$450 million, Dunzo faced financial difficulties and stiff competition, leading to downsizing and layoffs in 2023 and 2024. 

By January 2025, the app and website were shut down, and CEO Kabeer Biswas departed. Reliance, Dunzo’s largest shareholder, reportedly wrote off its US$200 million investment due to the company’s failure to scale.

How does Dunzo work?

Dunzo’s workflow can be broken down into several stages. The roles of various stakeholders like the Dunzo app user, the vendors, and the delivery partners are listed below:

1. The users place an order:

Users open the Dunzo app or website and specify the service they need. This could be anything from picking up a package to delivering food or even running a quick errand. 

They input the pickup and drop-off locations, provide details about the item or task, and may include photos or specific instructions.

2. The Dunzo app processes the request

Dunzo’s platform receives the request and uses algorithms to identify suitable delivery partners near the pickup location. 

Factors like proximity, availability, past performance, and vehicle type (bike, car, etc.) are considered.

3. The role of delivery drivers:

Dunzo notifies nearby delivery drivers about the user’s request, providing them with basic information about the task and location.

The delivery partners can choose to accept or reject the request. If accepted, the drivers are assigned to the task. If rejected, the platform looks for other suitable delivery partners.

The delivery drivers use the app’s navigation features to reach the pickup point. The user can track the driver’s real-time location on the map.

For package deliveries, the delivery partner might verify the item’s contents and condition, sometimes using the app to take photos for documentation.

Lastly, the delivery driver confirms the pickup in the app, which notifies the user.

4. Delivery:

The driver arrives at the drop-off location and confirms the delivery in the app. This might involve a signature or photo as proof of delivery.

If payment is due, the user can pay through the app (using a linked card or wallet) or, in some cases, with cash.

Both the user and the DP can rate and provide feedback on their experience. This feedback helps Dunzo maintain service quality.

5. Post-Delivery:

If there are any issues with the delivery (e.g., damaged item, incorrect delivery), the user can contact Dunzo’s customer support through the app.

Dunzo’s platform relies on several key operational components. For instance, real-time tracking constantly monitors the location of delivery partners, providing users with up-to-the-minute updates. 

Sophisticated matching algorithms pair user requests with the most suitable delivery partners, considering factors like proximity, availability, and past performance. 

Secure payment gateways process all transactions seamlessly. Also, a dedicated customer support system addresses queries and resolves issues for both users and drivers. 

Finally, data analytics plays a crucial role in optimizing operations, improving matching efficiency, and identifying areas for continuous improvement.

Key Features of the Dunzo App

Are you looking to create a successful on-demand delivery app like Dunzo? Consider incorporating these key features:

User-Friendly Interface: 

Dunzo’s success largely comes from its straightforward and intuitive design.

Even if you’re new to app-based delivery services, navigating Dunzo is simple. Its simplified design helps users place orders without hitches, making the experience smooth and pleasant.

Diverse Product Categories: 

Dunzo isn’t just about food or grocery delivery. 

Whether you’re looking for groceries, pet supplies, essential medicines, or just craving your favorite dish, Dunzo has got you covered. What’s more, the app doesn’t restrict you to specific stores.

Real-Time Tracking: 

With Dunzo, every order comes with the advantage of real-time tracking. 

Leveraging the power of GPS and advanced algorithms, users can monitor the progress of their delivery, ensuring they always know when their order will arrive.

Integration with Local Vendors: 

The Dunzo app seamlessly integrates with neighborhood stores, showcasing their products and offerings. 

This gives users many choices and helps local businesses expand their reach without needing their own digital platform.

Secure Payment Gateway: 

The app provides users with multiple payment options, from credit/debit cards to e-wallets and even the traditional cash on delivery. 

Furthermore, Dunzo adheres to high-end encryption standards. Hence, the user data remains safeguarded against potential breaches.

Offers and Discounts: 

Every customer loves a good deal. So, Dunzo frequently offers its users promotions and discounts. Furthermore, for those loyal app users, Dunzo offers additional perks and benefits on every order.

Advanced Search and Filter Options: 

Dunzo offers a vast array of products and services. Hence, sometimes, finding what you’re looking for can be daunting. 

However, Dunzo’s advanced search and filter functionalities enable users to swiftly locate their desired products or services, whether they’re filtering by price, category, or even retailer ratings.

An Overview of Dunzo Business Model

Dunzo business model centers around providing on-demand hyper-local delivery.

The Dunzo app or the ordering website basically acts as a bridge connecting users with a network of delivery partners.

This Dunzo ordering platform is the cornerstone of the organization’s operations—enabling users to request a wide array of services, from simple errands to complex tasks, all within the confines of their city. 

Here’s a closer look at key aspects of their business model canvas:

• Dunzo’s Target Market

Dunzo’s primary customers are individuals and businesses seeking quick, convenient, and accessible shopping solutions. These include busy individuals who have no time to travel to a grocery store.

Since Dunzo is all about providing convenience, it acts as a one-stop shop for everything hyper-local, saving users significant time and effort.

• Key Activities: 

Dunzo’s core activities include developing and maintaining its robust technology platform(the mobile app and ordering webpage), which is crucial for seamless operation. 

They are also responsible for recruiting, onboarding, and managing their network of delivery partners.

Dunzo is also responsible for matching user requests with the most suitable delivery drivers, facilitating real-time tracking of deliveries, and providing communication channels between users and delivery drivers. 

Additionally, Dunzo must process payments securely and provide customer support to address any issues. 

Dunzo develops and runs engaging marketing campaigns and promotional activities to scale up. It creates engaging content (including videos, memes, and stories) on platforms like Instagram, Facebook, Twitter, and YouTube and runs targeted ad campaigns to reach specific consumer demographics.

Dunzo also generates customer loyalty through:

• Referral Programs: Here, existing users get incentivized through discounts to bring in new users. 
• Promotional Offers: To attract new users and generate buzz around festivals, special events, and the holiday season, Dunzo offers discounts and promotions.
• Loyalty Programs: Dunzo rewards frequent users with exclusive benefits and discounts to foster loyalty and reordering.
• Partnerships: Dunzo collaborates with other vendors, like restaurants and food retailer,s to offer bundled deals or cross-promotions.

• Key Partners: 

Dunzo’s on-demand delivery ecosystem relies on several key partnerships. Merchants, including restaurants, stores, and pharmacies, are crucial to the network and provide the desired goods and services. 

The delivery partners themselves are essential partners—as they carry out the deliveries and provide on-the-ground service. 

Third-party payment processors and gateways are also necessary for secure transaction processing. While technology providers support the platform’s infrastructure and back-end.

How Does Dunzo Make Money?

Before diving into the specifics of building an app like Dunzo, it’s important to understand how Dunzo makes money. 

This insight into their revenue model will help you make the right choices for your own app’s business model and revenue strategy. 

So, here’s a breakdown of Dunzo’s key revenue streams:

Delivery Fees: Dunzo charges a fee for each completed delivery, typically ranging from ₹10 to ₹60. The exact amount depends on the order value and the distance the delivery partner travels.

Commissions: Dunzo partners with various hyper-local vendors and earns a commission on each order placed through the platform. This commission usually ranges from 15% to 30% of the order value.

Service Fees: In addition to deliveries, Dunzo offers a range of other services, such as home repairs and other specialized tasks. These services generate revenue through separate service fees.

Surge Pricing: During peak hours, Dunzo implements surge pricing on deliveries. This means that delivery fees are increased to balance supply and demand, generating additional revenue during busy times.

Kuch bhi  Category: Dunzo’s unique “kuch bhi” category allows users to request almost anything, from simple errands like retrieving a forgotten item to more complex tasks like taking photos or videos. This anything-goes approach generates revenue from a wide range of unconventional requests.

Build an app like Dunzo with Deonde

Deonde’s no-code, SaaS-based, white-label platform makes building an app like Dunzo easier than you think. 

Start by defining your niche and target audience. Then, use Deonde’s services to select an intuitive UI/UX template. 

Seamlessly integrate essential features like in-app search, order placement, real-time tracking, secure payment integration, and in-app communication. 

Deonde’s powerful backend tools empower you to set up sophisticated matching algorithms, efficiently manage orders and delivery partners, and configure real-time notifications. 

You can also connect your Dunzo-clone with external APIs for payments (e.g., Stripe) and mapping (e.g., Google Maps) as needed. 

Lastly, thoroughly test your Dunzo clone and deploy it on the Google Play and App Store in less than a week!

Visit Deonde’s website today and discover how Deonde can help you bring your vision to life.

Conclusion 

This exploration serves as a practical guide for aspiring entrepreneurs who want to build and make money through a Dunzo-like app. 

Platforms like Deonde offer powerful no-code solutions for such entrepreneurs, simplifying the development process. 

While Dunzo’s story is cautionary, it also underscores the enduring potential of the hyper-local on-demand delivery market. 

By understanding the key elements of Dunzo’s model, both its successes and its missteps, and by leveraging the accessible technology of today, you too can pave your own path to success in the dynamic world of on-demand delivery.

With the industry poised for continued growth, now is the perfect time to capitalize on this opportunity. So, if you’re ready to launch your own Dunzo-like app, contact Deonde today and kick-start your own on-demand delivery app business.

FAQs

1: What is Dunzo and How Does it Work?

Dunzo is an online grocery delivery company that supplies food products, fruits, vegetables, pet supplies, and medicines in major cities in India. The app enables customers to order items from local stores and restaurants or request pickup/delivery of packages. Delivery partners complete these tasks within a promised timeframe, typically under 45 minutes.

2: How does Dunzo Make Money?

Dunzo generates revenue through multiple streams, including customer delivery fees, commission fees from merchant partners, surge pricing during high-demand periods, and premium subscription services like Dunzo Premium.

Dunzo also makes money through partnerships with local businesses and markup on products sold through their dark stores (Dunzo Daily).

3: What is Dunzo Business Model?

Dunzo operates on a hyper-local marketplace model that connects three key stakeholders: customers, delivery partners, and merchants. 

Dunzo’s primary focus is on last-mile delivery logistics, and it utilizes a network of delivery partners. The company leverages technology like route optimization to streamline delivery routes and improve delivery timing while maintaining quality service through its platform.

4: How is Dunzo Different from Other Delivery Services?

Dunzo distinguishes itself by offering multi-category deliveries beyond food and groceries, including services like pickup and drop-off of forgotten items, documents, or packages. Dunzo’s USP lies in its “anything delivered” approach, quick delivery times, and user-friendly platform that integrates local businesses into its business ecosystem.