In an interview with Mint, Biswas shares how he plans to shape his hyperlocal business, increase its sustainability beyond the top metros, and how Swiggy’s foray into the same space impacts their business. Edited excerpts:
How sustainable do you think is the hyperlocal business beyond metro cities?
We think of ourselves as the cheapest and fastest way to move something from point A to point B. It will reach in 30 minutes and hopefully at $0.50 and if we can achieve that in top 25 cities -- that’s actually cheaper than any other way to do it.
Cities are all about moving stuff -- we want to be able to enable all the local interactions. Once you put out the layer and the network, you basically have to add accesses for different kinds of uses. Going into all directions to get more traffic, we have built for users and merchants, and we will build for large businesses.
On the delivery partner side, today we have people on bikes and a few on bicycles. As we have more density, we will have more cycles and people walking--all of this, till we have drones. We might have started off with a one use-case, but the idea is to add more and more use cases so that a user doesn’t have to step down to get something because most likely it can be done in under Rs. 20.
How many cities are you present in now, and how are the cities beyond Bangalore performing?
It takes around 3-4 months for us to get all the operations right in every city before we start marketing. Until then, it’s just organic growth in cities such as Hyderabad. We are present in seven cities right now. Next quarter, we will start pushing growth in Hyderabad. There's no point acquiring users before getting it right. We should do about 2 million orders this month. Last month ended at 1.6-1.7 million orders with Bangalore contributing 40% of it.
Has food and grocery overtaken package delivery, which was Dunzo’s core business initially?
Packages form 30% of the business, but we are profitable on this--only delivery fee and no competition. People transport is 10% of the business--only in Gurgaon and coming soon in Hyderabad, and 60% of it retail buying. Commute is break-even, and we lose money we retail. Food is 10% of our business.
How do you compete with Swiggy and Zomato on food as the former looks at foraying into hyperlocal?
We don’t really compete with for food delivery. For us food delivery forms 10% of our business and we use it an activation mechanism for first-time users to come on-board and start using other services. There is a lot of scope with other retail outlets. In a neighborhood, only 10% would be food outlets, the remainder of 90% also need to come online -- that’s the opportunity we are looking at -- build a fairly more sustainable
How do you think Dunzo will be impacted as Swiggy slowly forays into hyperlocal give their massive user base and presence in over 150 cities?
In India, one has to gradually educate users about all use-cases on a platform. In fact, our first 15-20 days for a new user is to make sure they navigate across different use cases. Just launching a feature on the product doesn’t mean one will get traffic. It’s a nature of users in this country. Also, there is no winner-take-all market in this country, so I am glad there is another player going at it -- it leads to category education.
What are your plans for the next 6-8 months?
By the end of this year, we are looking at eight-odd million monthly transactions in about nine cities and the next year we want to get to 25 million monthly orders. The focus is to deliver at the cheapest possible cost. Right now our top 10 users transact 22 times a month.
We don’t think it’s a demand problem. It’s just about deploying capital efficiently. If we pull off bringing these transactions online, we will most likely be the largest commerce company in the country because no one will have the depth of scale in the number of transactions. Even if out average order value is 1/5th, we will end up doing five times more transactions. We should most probably get there in about two years. In a couple of years time, we should get to being a bigger commerce business than an Amazon and a Flipkart put together.
What other categories are you looking at?
Everything. At some point, people should be able to buy books as efficiently--electronics too. Not white goods as such because they can’t be transported on a bike. But other than that, (we should be able to add) anything that can be delivered on a bike.
Would you be open to an acquisition?
If you can’t raise money, you have to be.