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Dunzo to shift away from quick commerce model amid market slowdown

Dunzowill be shifting away from quick commerce deliveries after months of pursuing this goal, amid high costs and a market downturn. Instead, the company will be encouraging users of its quick Dunzo Daily to opt in to 60 minute deliveries so that it can batch multiple orders together with a single delivery agent.

Reported by The Economic Times, Dunzo has witnessed an average monthly burn of Rs 100 crore, or $15 million, during the entire June quarter as well as July. While a part of this expense was its advertising campaign during the IPL, an internal presentation claimed to want to bring the number down.

Dunzo raised $240 million from Reliance in January, and sources told ET that the company is shifting away from the hyper growth phase of the past to focus on expenses and unit economics due to the current difficulty in late-stage funding. The company has engaged investment bank Morgan Stanley to help with another fund raise.

“They [Dunzo] went aggressive with IPL at a time when all quick commerce platforms were going crazy on acquiring consumers. They are now cutting back on spending and aiming to bring it back to first-quarter levels,” the source said.

As such, Dunzo is now looking to reduce its growth targets internally. For example, it will no longer be looking to expand its city count from 7 to 15 or 16. Similarly, even though Dunzo Daily hit 5.5 million orders in June, it is only looking to hit around 5.7 million by December.

This change of pace has been reflected across the market as quick commerce rivals Swiggy Instamart and Zepto have both looked into the viability of promising quick deliveries as the logistics have been too hard to guarantee.