A few partners, limited to a couple of locations, have raised certain issues and we are engaging with them to work towards an effective resolution: Dunzo.
Last reported, Dunzo Daily services were down in Frazer Town, Benson Town, Cooke Town, Ulsoor and surrounding areas of Bengaluru
Riders on protest over changes in incentive structure and plans to slash the number of riders in the Frazer Town area
Amid an ongoing strike by delivery executives, quick-commerce platform Dunzo’s 20-minute delivery service has reportedly come to a grinding halt in Bengaluru.
“Operations were severely hit for Dunzo Daily in the last two days after protests by delivery partners at Dunzo’s office premises in Bengaluru,” a source privy to the development told the Economic Times.
Confirming the development, a Dunzo spokesperson told Inc42 that a ‘few partners’ have raised certain issues and the startup is in talks with them to resolve their issue .
“While it’s business as usual for the majority of our stores in Bengaluru, a few partners, limited to a couple of locations, have raised certain issues and we are engaging with them to understand their concerns and work towards an effective resolution,” the spokesperson said in a statement.
Without mentioning the affected areas, the statement added that the services would soon be live in the said locations.
Moneycontrol reported that Dunzo Daily services were unavailable in Frazer Town, Benson Town, Cooke Town, Ulsoor and surrounding areas of Bengaluru on Thursday evening.
“Dunzo Daily will be back in a while,” flashed the app on users’ phones trying to access the service.
“We also enjoy very high partner retention rates in the industry. Our delivery partners choose to stay with us because of the benefits we offer them – from one of the best incentives and reward systems, great earning opportunities to more control over their work,” the spokesperson said in the statement.
Drivers vs Dunzo
Dunzo riders are reportedly up in arms against the startup over a slew of issues, including login timings, changes in incentive structure and an alleged plan to slash the number of riders in Bengaluru’s Frazer Town area.
A delivery executive was quoted as saying that Dunzo has increased the number of orders to be delivered in a 10-hour login period to 30 from 27 earlier. The driver added that the startup has also reduced the minimum daily guarantee, apart from provisioning for fuel, to INR 1,225 from the earlier INR 2,000 for the same 10-hour time span.
Another bone of contention appears to be Dunzo’s batching of orders. Last month, the startup began to push its batching service in a bid to save fuel costs and reduce trips for its drivers. The Reliance-backed company has already made internal tech changes to deploy the batching service.
For orders marked batched, a single delivery executive is assigned multiple servicing orders in the near vicinity. Terming the system ‘unfair’ to some of the drivers, delivery executives said that while some executives have to travel long distances to fulfil one order, other drivers can complete multiple orders from their target numbers in a single trip through the batching service.
Workers are also demanding rollback of the mandatory 10-hour login limit and have alleged that Dunzo is looking to lay off 450-500 drivers in the Frazer Town area.
The Realisation Of Cash Burn
The quick-commerce startup had a dreamy start to 2022 as it raised more than $240 Mn in funding from Reliance. Subsequently, Dunzo expanded at a break-neck speed as it spruced up investments and hired more and more drivers.
As the year unfolded, the quick-commerce player had the same sordid realisation as its peer Zomato-owned Blinkit on the high cash burn. According to a report, Dunzo had a monthly cash burn of $15 Mn in the quarter ending June 2022.
The startup quickly went into an overdrive, cutting costs and focusing on unit economics. Dunzo has shelved plans to expand to 15 more cities and is reportedly targeting improving its performance in the seven cities that it currently operates in.
This reflects the overall mood in the quick-commerce space. The heavy cash burn coupled with rising costs have stunted growth prospects for these startups. Earlier, Inc42 reported that the quick-commerce fad that gripped the startup ecosystem a few months back has ‘hit a dead end’.
Quick-commerce startups have also been hit by protests in recent times. Earlier this year, drivers associated with Zomato protested in Bengaluru and Chennai for a host of reasons, including increased workload, lower wages, and other forms of alleged exploitation.
In August, Swiggy drivers protested in Bengaluru against the company demanding fair wages. Earlier, Zepto drivers also protested against the startup over alleged unfair deductions from the salaries in Delhi.
According to a report, the Indian quick-commerce space is expected to grow 15X by 2025 and is projected to reach a market size of close to $5.5 Bn.