Here’s a look at ETtech’s comprehensive coverage of the latest developments at the troubled Bengaluru-based company.
Dunzo’s business in free fall amid severe cash flow issues: Dunzo has seen its scale of operations fall to almost one-fifth of the peak it hit last year as it continues to grapple with cash flow issues and scouts for a lifeline, multiple people aware of the matter said.
The Reliance Retail-backed firm is clocking somewhere between 1 million to 1.5 million monthly transactions for its consumer-focused grocery delivery service Dunzo Daily, they told ET.
Dunzo Daily had clocked 5.5 million transactions in June last year and predicted moderate growth to 5.7 million in December, according to internal presentations reviewed by ET.
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ETtechDunzo’s downfall: from startup star to sinking ship? It was clear last year itself that Dunzo’s big bid to turn itself into an ultra-fast grocery delivery platform, competing against bigger rivals like Swiggy’s Instamart, Zomato’s Blinkit, and Zepto, had not worked. The company started tweaking its business model soon thereafter, which indicates that its unit economics with respect to grocery delivery in 19 minutes (its product promise) was not working.What was a bigger worry was that the market had become wary of investing in startups, let alone in a cash-thirsty space like quick commerce. This is when Dunzo decided to halt its expansion plans, whether it be for Dunzo Daily or its business-to-business product Dunzo Merchant Services (DMS).
Unlike some other ecommerce firms, Dunzo had limited money and yet needed to invest in and grow the venture to raise more monies. Pausing the expansion helped, but just. By the end of 2022, it became amply clear that Dunzo Daily couldn’t operate even at its reduced scale given the limited resources and funding winter.
ETtechDunzo eyes $20 million more from Reliance Retail: ET reported on July 18 that Dunzo was seeking at least $20 million (about Rs 165 crore) more from Reliance Retail, its largest shareholder, after the cash-strapped quick commerce startup fell short of its target to raise $75 million by offering convertible notes.
The Bengaluru-based firm could raise just about $45 million in April, as reported first by ET, with only Reliance Retail and Google subscribing to the convertible notes and its other shareholders staying away. This caused an adverse cash flow situation at the company.
Also read | Dunzo faces legal notice from seven firms over unpaid dues
ETtechCash-strapped Dunzo seeks a lifeline; defers salaries, plans more job cuts: Dunzo has decided to reduce costs by 30-40%, which will involve more job cuts, even as it further delays payment of salaries, people briefed on the matter said, indicating deepening crisis at quick-commerce startup.
While the cash-strapped company on July 19 informed employees about the delay in salary payment, chief executive Kabeer Biswas was in Mumbai meeting its existing investors to secure funds, people aware of the matter said. This is in addition to the discussions with Reliance Retail, its largest investor with an about 26% stake, to raise around $20 million.
According to multiple people, Dunzo employees expressed their anxiousness to the senior leadership after they were told that the payment of salary arrears for June and the pay for July would happen only in early September. The company had capped June salary payment at Rs 75,000 and promised to pay the arrears on July 20.
Quick commerce startup Dunzo announces fresh layoffs: Dunzo on July 21 formally informed its staff about fresh layoffs, which will impact around 150-200 employees. This is the third round of layoffs at the Reliance Retail-backed firm amid cash flow issues.
Over the last eight months, Dunzo has had to fire close to 400 employees as it was forced to scale down its consumer facing business–Dunzo Daily– and moved its focus to the B2B vertical, Dunzo Merchant Services.
The employees were officially informed of the layoffs by cofounder and chief technology officer Mukund Jha in a short meeting. The fresh layoffs are part of plans to internally cut costs by 30-40%.
