Quick Commerce Category Can Exist In Tier 2 & 3 Cities But Promise May Change: Dunzo’s Kabeer Biswas

Everyone wants to speed up! From hyperlocal delivery startups to food-grocery delivery platforms and cab aggregators, a number of players are trying to carve a niche in the quick commerce sector– the new kid on the ecommerce block. As the quick commerce players have charmed consumers with its convenience-led shopping propositions, there have always been questions about the sector’s scope beyond Tier 1 cities.

However, Kabeer Biswas, cofounder & CEO, Dunzo, is of the view that the category can have its presence in Tier 2 and 3 cities.

“Broadly the category can exist there, but the promise will change. The players will have to look a lot deeper rather than just focussing time,” Biswas said while speaking at the The Makers Summit 2022.

“If time is the only thing you function on, then you potentially have only 600-700 demand centres in the country where you have enough density to be able to make your warehouses profitable. The chancers are broader when you go ahead and say that your promise is bigger than that,” Biswas added.

Talking about how to tap into Tier 2 or 3 cities, Biswas said it is important to redefine what convenience store shopping looks like for customers. He added that the quick commerce players might end up seeing slightly sparse network expansion in those markets.

Biswas, who is a big believer of new experiments, said that the Bengaluru-based startup has plans to experiment in one of the Tier 2 cities in the coming six to nine months. If the experiment works for the startup, it will go ahead to scale its business in Tier 2 cities by next year. For now, the startup is highly focused on the top 10 or 12 cities, he noted.

Hyperlocal delivery startup Dunzo raised $250 Mn in January, led by Reliance Retail. Mukesh-Ambani led company invested $200 Mn for a 25.8% stake in the Bengaluru-based startup. Further, it is planning a $250-300 Mn fundraising to boost its expansion plans. 

Reliance Retail and Google-backed Dunzo recently expanded its instant delivery service to Mumbai. As part of the expansion, Dunzo Daily will cover all parts of Mumbai as well as the satellite towns of Thane and Navi Mumbai. At the time of the announcement, the startup said it would also expand its service in Delhi and Hyderabad within April.

Dunzo is competing against the likes of Swiggy Instamart, Ola Dash, Zepto, BB Now, among others. According to the latest RedSeer report, India’s quick commerce market is expected to witness a 15X growth by 2025, reaching a market size of close to $5. Bn.