Dunzo Fires 30% Workforce After Raising $75 Mn

Quick commerce unicorn Dunzo went for another round of layoffs within three months as it fired 30% of its employees ahead of a business model shift. Reportedly, the number of impacted employees comes to around 300.

The retrenchments come after Dunzo fired about 3% of its staff in January.

The news also comes as the Reliance Retail-backed quick commerce startup secured $75 Mn through convertible notes. Per an ET report, $50 Mn is coming from Google and Reliance Retail while the rest is coming from other existing investors.

The publication added that Dunzo founder and CEO Kabeer Biswas told employees in a town hall about the layoffs on Wednesday (April 5), further informing them of the business model change.

Inc42 has reached out to Dunzo and the story will be updated as and when the startup responds.

Following the layoffs, the quick commerce startup will shut down 50% of its dark stores and run only those which can either be profitable or are close to being profitable in the near term. Further, Dunzo will partner with supermarkets and other merchants wherever it shuts down dark stores.

Biswas told employees at the town hall that the unicorn had to take this call to ensure it can hit profitability in the next 18 months. According to sources cited by ET, while the money from the convertible notes has already come, it would take Dunzo 36 months to become profitable without going through with layoffs.

The quick commerce bubble in India has more or less burst, with incumbents realising that making an operationally profitable quick commerce business model is difficult in the current macroeconomic environment. Dunzo’s rivals Swiggy Instamart, Zepto and others have also been cutting costs and making operational changes.

Founded in 2015 by Biswas, Dalvir Suri, Mukund Jha, and Ankur Aggarwal, Dunzo’s platform connects its consumers with nearby stores and vendors to facilitate online deliveries of groceries, medicines, and other everyday items. It is said to be on an annualised revenue run-rate of about $300 Mn, sources cited by ET said.

Dunzo’s consolidated loss in FY22 widened 2X to INR 464 Cr from INR 229 Cr in FY21 on the back of a doubling of its expenses.

In FY22, Dunzo’s total expenses grew to INR 531.7 Cr, with employee benefit expenses accounting for 26% of the total expenditure. The quick commerce platform’s expenditure on employee benefits jumped to INR 138.3 Cr in FY22.

Adding this layoff figure at Dunzo, the total number of layoffs in the first three months of the year reached to over 6,100 employees, according to Inc42’s ‘Indian Startup Layoff Tracker’.