Startup mantra: Pune-based DukaanSe delivering solutions from store to door

While on one hand, quick commerce or flash delivery companies received a lot of flak over the rider safety concerns, on the other hand ‘dark stores’ popping up in the neighbourhood were looked upon by retailers as a ‘threat’ to their local business. Sans technology support, local retailers had less options to fulfil the customer needs of instant delivery. That’s when Saurabh Agnihotri and Ziaul Hoda, co-founders of DukaanSe (from the shop), thought about democratising the technology and scale for such traditional offline retailers. Operating in the quick commerce space, DukaanSe provides last mile delivery solutions to these retailers to enable fast and affordable home delivery services across multiple categories like grocery, pharmacy, laundry, food, among others.

In the beginning

A graduate from IIT Kharagpur, Saurabh was always fascinated by startups. He worked in several startups and handled operations and other projects as well. He met co-founder Ziaul, an IIM Rohtak alumnus, in one of earlier companies where they both were handling the operations vertical.

Says Saurabh, “Since I had been working in the previous company for about seven years, I was looking for a change. That’s when certain e-commerce and quick commerce companies were making headlines with 10-minute delivery. Since we had experience in the logistics and operations space, we knew the flash delivery companies had not optimised their operations. We also thought that local retailers should be prepared to face this new onslaught of quick commerce and dark stores.”

“Since 90 % commerce still flows through the local offline retailers, we decided to enter the local commerce space and empower it. Although, we started our operations in 2021, we incorporated the company in April 2022,” Saurabh said.

Home delivery challenges

During the lockdown period local businesses and shops were also affected. Large crowds were seen at the shops, people were buying goods and products far more than their immediate needs and creating a shortage of the products. As a result, local retailers could not cater to their regular loyal customers. Besides, even during normal days, the e-commerce or delivery company executives land up at the doorstep at an inconvenient time. The recipient or customer has to be present or make an arrangement to receive the parcel, or the order may get returned further causing anguish to the customer.

There were challenges like limited or no delivery executive available, lack of reliable service, weight limit per order, cash handling, surge pricing and complex user interface

Explaining further, Saurabh said, “Around 80 % of our country’s population avails the benefits of local products and services. Even in the age of e-commerce, local shops and businesses will stay relevant. Some issues at these shops is that customers may have to wait for longer time to get their product or service. They might sometimes return empty-handed either due to non-availability of product or the closing time. Some retailers make arrangement for product delivery later to retain such customers. This becomes unmanageable at the time of festivities.”

Cluster surveys

Saurabh believes that instead of setting up dark stores, local and offline retailers can be made smart and efficient. “Offline and local retailers were the only supply chain which was not broken during tough times like Covid-19 and lockdowns. Even today, a huge chunk of our population uses this channel. I would also order items through online commerce companies, so we decided to start with the easiest segment of grocery.”

“We divided the city into clusters. We decided to start from Balewadi area as we are located there. Initially, we did a survey in which we got a positive response for home delivery of groceries. We realised that customer expectations have changed. Earlier people used to wait for two or more hours for the order delivery, but now they want it delivered in 30 minutes or maximum one hour,” Saurabh said.

Sharing other insights from the survey, Saurabh said, “Retailers do not have any mechanism to deliver at home. They will have to appoint a delivery executive, bear their salary expense along with the vehicle maintenance and fuel charges. That goes up to ₹22,000 to ₹25,000 per month. The retailers simply cannot afford this. And even if they do it, they can’t deliver multiple orders at the same time. However, retailers have their customer base intact and they want to retain it and engage with them without any complex user interfaces.”

Optimisation

Saurabh and his team onboarded some grocery stores and received traction during the survey itself. However, they could not optimise the operations and costs involved.

Says Saurabh, “We were trying to optimise our operations cost. So we replaced the petrol bikes with electric vehicles. We managed to bring down the per kilometre operation cost, but the level of optimisation was not enough. So we decided to open new segments for delivery. We started with pharmacy as we realised that the e-pharmacy players could deliver medicines only within two or three days of time. If any pharmacy owner or operator wanted to deliver medicines, they needed a delivery executive but that was not a financially prudent option for them. Pharmacy delivery model proved to be more successful than grocery for us.”

Minimising dry run

“We have now decided to be category agnostic. Greater the number of orders we can generate from a small location, the less will be the dry run of our rider (delivery executive). Dry run means the distance travelled by the rider between two orders. In our case, the dry run was drastically reduced and it came down to just 500 metres. We thought this could work. In our business model, there is no risk to the rider while delivering the order in 30 minutes because by-design itself this is possible.”

Technology scope

Saurabh and Ziaul saw a lot of scope for technology for scaling up the business. Saurabh said, “When we spoke to retailers, they said they didn’t use any other app for their business. This is because overall literacy level among local and offline retailers is low. So, for the first six months, DukaanSe team ran its operations only through Whatsapp groups. Now we have developed an Android app for retailers and soon we will be launching iOS app too. At present the app accepts English instructions, but soon we will launch the Hindi and Marathi version too.”

“Technology enabled us to combine orders and bring efficiency in operations. Local shopkeepers and businesses could schedule their customers and manage the crowd at peak times,” he added.

“Our user acquisition cost is nearly zero. Also, we do not impose minimum orders per day limit on any retailer. Since we do not collect any data related to the order being delivered, retailers do not have any trust issues with us,” said Saurabh.

Trust building

Beginning with a few retailers in Balewadi and Wakad area, DukaanSe has now onboarded more than 120 retailers from these two regions.

Saurabh informs, “We deliver more than 350 orders per day which we receive from the retailers. There is a huge demand for our service. There are about 60 retailers who put in orders daily on our app. Almost 95% of the retailers are placing orders through the app, while the remaining will soon start doing it.”

Rider app

Besides retailers, Saurabh and his team had to also sort out the rider assignment issues. Six months before when DukaanSe started, 10-minute delivery was considered the fastest service, whereas 30 minutes was the slowest.

Saurabh said, “We didn’t have the cash to burn and deliver in 30 minutes. Also, the big quick commerce companies were paying heavily to their riders which we couldn’t afford. So we went for security personnel hiring, who did not own any vehicle. We provided them with our vehicle and asked them to deliver. This arrangement ensured that we saved on our salary expenses and the riders too earned decent amount along with other incentives.”

“We have now developed a rider app through which we sort the logistics at the backend to assign orders to riders depending on their proximity and other factors. At present, we have 19 riders on contractual basis working for us. We will soon have more riders who are paid on order basis.”