Once upon a time, Dunzo was considered as one of the best hyper local delivery partners in Bengaluru. The brand started with minimal resources on the Whats App group. The idea was to deliver anything, anytime and anywhere. All the daily needs and requirements were delivered. After seeing the growth without being funded, people admired the services they provided. After the growth, Google invested almost $12 million in the brand, making it the first startup were Google invested. After that, the company grew bigger receiving more funding and increased size of its operations. Many people have predicted that it will be the future brand which could reach the level of a unicorn.
Such an amazing start, and how come it failed ?
The company operated efficiently and effectively. Eventually, after COVID-19, a new market emerged for quick delivery of e-commerce services. By seeing this opportunity, many giant players have invested and successfully ran the business. Dunzo also entered this market of quick delivery, this was their biggest mistake they made.
Initially, based on orders, they used to take it from nearby stores and deliver it, which they used to get commission. They didn't have to get any resources or prepaid infrastructure and resources. It firmly stood over its core ideas and ethics.
The moment they entered Quick E-commerce, their expenses increased. The high competition killed its presence and uniqueness. Which was making them dependent on money, investors and fundraising. The entry of reliance as they invested $200 million, acquired 26% of stakes and along with veto power of the company. Dunzo had no warehouse, storage or bulk material buying. Initially, somehow they managed effectively, but as time moved ahead, the circumstances have changed with burdens.
The downfall emerged when Dunzo wanted more funding for its large operations, but reliance has refused further funding from others. As they had absolute Veto power over Dunzo, so the funding was halted. Slowly, one by one, they have been losing their essence from all the company's operations. They couldn't pay salaries for delivery partners, and co-founders have resigned their positions and joined other organizations. Shut down offices across India, they couldn't even pay rent for many office spaces. The official website and applications were completely shut down and the founders have also left the company.
3 Major Reasons of Failure.
*Dunzo’s business failed due to entering into a new sector in which they had no resources or idea about.
*Without becoming profitable in the core business and investing in other businesses.
* Giving veto power to investors, which stopped their independent decision-making power.
