Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

Delivery firms use Artificial Intelligence to scale at faster clip

  • Once dismissed as a failure, the hyperlocal delivery market in India is expected to grow to 2,306 crore by next year, as per a report
  • Technology has enabled Dunzo to show dynamic pricing to users and match right delivery partners with customers

NEW DELHI : About four years ago, a relatively unknown service was trying to carry out various tasks people had through WhatsApp groups. The service continued this way for about a year, while the founders slowly worked on an technology to build a more formalized version of itself.

Today, this service is called Dunzo, an app that’s known for carrying out rudimentary tasks for consumers. Not only that, Dunzo has evolved into food delivery, bike taxis and grocery deliveries too. And it uses sophisticated machine learning (considered to be a subset of artificial intelligence, or AI) algorithms to make all of this possible.

The app wants to do pretty much anything that requires you to go from point A to point B, said Mukund Jha, chief technology officer and co-founder of Dunzo. At the moment, it carries out about 2 million monthly transactions and hopes to grow to 7 million by the end of the year. In fact, Jha says the company has grown by 30 times in the last 18 months, by adding more cities to its portfolio and possibly new services.

“We chose to focus on one city (Bengaluru) for a very long time, going deeper into the city in ways that wouldn’t have been possible if we launched city after city fast. This enabled us to have a strong foundation or a strong base, something that would act as a blueprint for future city launches," Jha said.

At the moment, users can use Dunzo to deliver packages locally, order food, buy groceries and more.

Dunzo, though, is part of a bigger ecosystem that was once dismissed as a failure —the hyperlocal delivery space. Of course, the biggest success in this space so far has been Swiggy, which raised a billion dollars back in December 2018. Swiggy, which started with food delivery space, forayed into the hyperlocal market with the announcement of Swiggy Stores in February 2019.

“In the last 12 months, Swiggy has grown 3X with over 1,00,000 partner restaurants on-board across 200+ cities. Our partners have also seen tremendous growth in Swiggy’s contribution to their business," said a Swiggy spokesperson.

Dunzo, on the other hand, is a Google-backed startup that raised $12 million back in 2017.

Another example of a startup that is trying to use technology to monetize the hyperlocal space is Scootsy. The Mumbai-based startup was acquired by Swiggy back in 2018 and recently announced a partnership with Future Group’s premium food store, Foodhall, in April this year.

At the time, the company said Scootsy would deliver products from Foodhall in Mumbai first, eventually expanding to Delhi and Bengaluru later in the year.

But while Swiggy and Dunzo are success stories in the hyperlocal space, there have been plenty of failures as well. Services like Russsh and many others have done business for a while and shut down. “Given that it was a self-funded business, we couldn’t offer great discounts like the other emergent players, and to achieve success in a developing service market proved daunting. Building a solid business such as ours became a heartfelt endeavour with a focus on scalability and sustainability," says a letter to users on Russsh’s website.

Swiggy and Dunzo though have put in a lot of work on the technology end as well. According to Dunzo’s Jha, the company doesn’t just provide merchants a dashboard to put up their products, input pricing, etc. It also has technology to show dynamic pricing to its users and tries to match the right delivery partners with customers—trying to ensure that the partner who will make the delivery is well aware of the neighbourhood from where the order is coming, and the store from where the order is being placed, among other details.

Swiggy, on its part, acquired a deep learning and object recognition startup called Kint.io earlier this year.

While a lot of startups in this space had to shut shop in 2016-17, many have survived and are growing strong. Swiggy represents the food delivery space and is evolving with time, while the grocery delivery space includes names like BigBasket,and Amazon’s Prime Now.

Grofers was another service in this space, but the company moved to an inventory and warehousing model a while back. Dunzo, on the other hand, is more of a full service platform, dabbling in multiple arenas.

According to a report by market research firm Ken Research, the hyperlocal delivery market in India is expected to grow to 2,306 crore by 2020. With AI helping these companies, the projections may just be realistic.

Close