Why did Dunzo failed?
Dunzo was one of the pioneers in executing hyper local delivery at scale, considering they started way back in 2014. They had customers, experience, tech, fleet of delivery guys. Lastly and most importantly, a down to earth founder in “Kabir Biswas” I am simply not able to wrap my head around the fact that while Zepto and Blinkit are doing so well , why couldn’t Dunzo replicate the same in Q commerce segment? What do you guys think could be the reason behind their demise? Just pivoting from hyper local to Q commerce can’t be the reason!
I am not an expert but perhaps COVID happened to dunzo. Blinkit started more recently while dunzo was there in 2019. During lockdown many delivery partners went to their hometown thereby rendering their fleet non-functional.
KeyCurrant4
Stealth
2 months ago
Blinkit started recently? Bro it was started in 2013 as Grofers while changed its name to “Blinkit” in 2021.
Also bro you need to read more, their user base increased from 27 lakh to 51 lakh during Covid peak.
And even for a minute, we accept your argument, then it should have equally impacted the likes of Instamart , Zepto and Blinkit.But it didn’t.
Did I offend you in some way? Please Try to avoid personal comments like "you need to read more". You asked, I answered, and if you already know about this topic then what's the point of asking?
As I mentioned in my post itself , I am not claiming to be an expert.
I wanted to write some points regarding this topic but your overall tone suggests you know it all.
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Edocsil
Stealth
2 months ago
Investor fuck up.
Reliance made a "strategic investment" in them. Then when Dunzo was trying to raise a round shot down all termsheets they got, and they had to adhere to it because Reliance became their largest investor.
They have bullied Dunzo into shutting shop and then will takeover all their tech assets for a throwaway price in a distress sale when they declare bankruptcy.
Dirty dirty trick by Reliance.
Dunzo was so ahead of its time and my favourite player in the segment.
Sad to see them lose out for such a shit reason.
KeyCurrant4
Stealth
2 months ago
Finally a sensible answer!Thanks for this info buddy.
So as to summarise Motabhai took control and effed up the entire company.
Any insight into what are they upto now?
Edocsil
Stealth
2 months ago
Relaunching Jio Mart on the back of Dunzo's hardwork.
Assholes honestly, itna paisa hai toh khud banao na pura tech.
Pains me to see startups being taken away from those who built it painstakingly.
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sundaydogparkenjoyer
Stealth
2 months ago
Top kek!!!🤣🤘🏽
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Getting investment from reliance seems to be one of the top reasons.
Some other reasons:
1. Underestimating how hard it will be to get funding in the current market.
2. Product team was the king here which is not a bad thing, they built a pretty good app and backend but I think they tried to solve a lot of problems like inventory management with wierd tech solutions instead of simple solutions in the real world which didn't end up working.
KeyCurrant4
Stealth
2 months ago
Thanks for chiming in buddy!
Can you elaborate on the “weird tech solutions”?
Transition to quick commerce absolutely didn’t work
The others were way ahead of them, they made that change and it never paid off
But that’s not all
Quick commerce also ate into their core pure bike delivery play
And finally, Reliance. They assured Dunzo would get funded, but everytime Dunzo would go out and get capital, Reliance would reject saying the valuation isn’t attractive. Didn’t let them survive.
EarthDragon
Stealth
2 months ago
Well founder was far far away from being down to earth 😂😂
KeyCurrant4
Stealth
2 months ago
Is it?
StingyBulb79
Stealth
2 months ago
Dunzo had a pretty good tech. What happened was the classic case of 'kill by microservices' and losing both early engineers and key talents to companies like zepto. Infact, part of Zepto's early engineering talent is from Dunzo. Product team was the best set of folks to start with but then they ended up making analysts across the board as PMs which bloated the decision making. Engineering and product titles were bloated. The final straw was excessive spend by the business team on opening up dark stores in expensive locations, throwing all the money to IPL with a makeshift CFO in the US unaware. Clearly, the CEO is at fault for not recognizing this early.
KeyCurrant4
Stealth
2 months ago
That’s the answer I was looking for!
Thanks buddy!
StingyBulb79
Stealth
a month ago
Blaming it on an investor is also very defensive. If a company is doing good, why would an investor want to kill it and not reap returns on investment ? Look what blinkit has done for zomato. Fact is dunzo never prepared for a war chest and kept on raising funds every 6 months. They hired too many MBAs. Every city had an MBA from ISB or a top IIM. Because of this, the company lost its appetite to innovate which created hyperlocal space in the first place. I personally saw many good business leaders leave just because they were pushed to a corner on any new fancy foreign MBA hire. All of those folks are doing great, leading similar companies in Europe, leading swiggy, etc.
Dunzo is the Nokia of quick commerce - introduced hyperlocal delivery for the first time, and others copied to launch successful businesses.
sundaydogparkenjoyer
Stealth
2 months ago
I agree, just like "Google it" it was "dunzo it" sad.
HonestBass
Stealth
2 months ago
Motabhai intentionally gave them a higher valuation. Dunzo's founders didn't realize the main goal of reliance and got excited getting higher valuation.
Once their funding dried, they started looking for more investors and they were getting investors but at lower valuation, reliance holding one of major stake didn't give their go ahead for lower valuation and THAT'S HOW MOTABHAI ATE DUNZO...
LokiPen
Stealth
2 months ago
One of the main reasons was their customer support was the worst.
Hence they were destined to fail, it was just a matter of time.
Why is nobody talking about the cost of each order? It was not cheap to use dunzo for a meager 5km delivery.
Reliance - biggest reason for their failure. Their funding from reliance stopped them to raise further because of a clause. Reliance wanted them to sell their entire stake at lower price and founders refused.
iamthebest
Student
2 months ago
The one thing I remember about Dunzo is that they provided me Watermelon of approx 2-3 kgs per day just at ₹9 with the orders. They offered it and I took that offer and slowly everyone in my hostel started ordering from Dunzo. My all hostel fellows felt bad when they came to know that Dunzo stopped services in our location two years back caus they had the best offers on every item.
Founders inability to realise the potential of quick commerce and raise money early
Founder built the company as if it’s a B2B company. Ideating, iterating and slowly scaling the operations while it had to built at speed scaling categories and skus and expanding into different cities or regions every month.
Slowly competitors creeped in, margins lowered, team was fed up of slow growth and moved to competitors. The rot of slow growth combined with fast growth of competitors led to this downfall.
A classic example of industry innovator losing to new comers. Similar to MySpace vs FB, IBM vs Microsoft etc.
Flysky
Stealth
2 months ago
Invoice discounting.
A lot of companies use working capital loans against their invoices. Dunzo did this extensively for their quick commerce business. These loans are for short periods like a week or a month and can cost 15-40%.
Someone I know used to sell these loans and Dunzo was their largest customer in 2022. These loans piled up and led to larger financial woes. Of course the larger ecosystem issues and the cutthroat competition pushed Dunzo to such financial decisions.
Dunzo has only paid half its dues, creditor tells NCLT
https://www.livemint.com/companies/news/dunzo-creditor-insolvency-invoice-discounters-nclt-ibc-quick-commerce-startup-reliance-retail-google-11721893050360.html
Download Live Mint app today for latest Business News, click here. https://livemint.onelink.me/MrDS/o653f51g
Neo1
Stealth
2 months ago
Mo money Mo problems buddy
Bumpy_Stock
Stealth
2 months ago
Flipkart has been unprofitable and is still alive 🤣
Dunzo failed because they underestimated how much money VCs were willing to invest to grow the Quick Commerce industry. Dark stores as a concept was not obvious at the time because it was too expensive. They did eventually start them because of peer pressure, but it was too late by then.
KeyCurrant4
Stealth
2 months ago
Thanks for chiming in and contributing to the thread GV peeps.
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