Creating an Amicable Attitude to Difficult Customers

“A delivery person could do four food orders in the time taken for delivering one Genie item,” Sunder says, adding that compensation has been designed to nudge delivery executives to put the customer first.

Dunzo’s mission now is not to win over every neighbourhood, but win in neighbourhoods that make the most economic sense on its path to finding 25 million transacting customers. These 25 million represent the lowest hanging fruit—digitally-savvy users with significant disposable income. The number isn’t plucked out of thin air either—India is estimated to have around 25 million credit cards.

Different strokes

In foodtech, even competitors revere Swiggy’s preparation. “They go step by step—first pilot something for a long time, and only then roll it out. Measure the data in one or two locations. Swiggy is very systematic,” says an angel investor in a competing cloud kitchen company. Swiggy is hoping this strategy will let it pip rivals who’ve spent years mastering the areas it is only now entering.

But while Swiggy can tap into the large customer base from its food business, it needs to convince people to think Swiggy when they think of essentials. That means competing for mindshare with the likes of Bigbasket and Dunzo.

This will not prove easy. Because in much the same way Swiggy has become a verb for ordering food, Dunzo has done the same with concierge services. In that sense, Genie marks a clash of two verbs: Swiggy and Dunzo.

Building a Positive Company that Gives

Building a Positive Company that Gives

And even as Swiggy has moved to realise the hyperlocal opportunity during the lockdown, Dunzo has seen a surge in both users and usage. Its organic app downloads have shot up 4X since the lockdown, claims Kabeer Biswas, CEO of Dunzo. Order volumes up until 20 April, he says, have organically surpassed the volumes for all of March.

Swiggy, though, would do well to look at Dunzo not just as its competition but, more importantly, as a cautionary tale. Over the past year, rather than trying to maximise its early-mover advantage, Dunzo has been scaling back. While it previously hoped to be in as many as 16-18 cities by 2020, it is currently only in nine. And even in those nine, it has withdrawn from many neighbourhoods as it looks to reduce its cash burn and sort out its unit economics.

Dunzo’s loss per order fluctuates between Rs 18-22 ($0.25-0.31), Biswas had told us in January. To improve this, Dunzo is withdrawing from neighbourhoods where it doesn’t see high order volumes. In Bengaluru and Pune, for example, this helped the company lower its loss per order significantly—to around Rs 10-12 ($0.13-0.16).

“If we don’t get enough orders, that geography is not going to turn profitable unless we charge customers a high delivery fee,” says Biswas. “So, the only way to make money in this business is by driving density. That’s why we don’t want to be in non-dense geographies that are not going to turn profitable.”