According to reports, Dunzo, the quick commerce startup, is anticipated to undergo another round of layoffs this week.
Insiders familiar with the matter informed Moneycontrol that Mukund Jha, the Co-Founder and Chief Technology Officer (CTO) of the startup, conveyed the decision to employees during a meeting on July 19.
“We are definitely considering layoffs and the size will be decided either tomorrow (July 20) or (the) day after (July 21). Within this week we will communicate (the size of layoffs) to employees,” Jha said.
According to the report, Dunzo is preparing for its third round of retrenchments, which is expected to affect approximately 20% of the startup’s workforce, amounting to nearly 200 employees.
This came hours after the quick commerce startup disclosed to its employees that their salaries for the month of June would be deferred until September. Additionally, the company informed them that they would receive their salaries for July and August on September 4.
Following last week’s reports indicating Dunzo’s salary delays, the company had assured that payments would be credited by July 20. However, it appears that the company has now missed the deadline due to cash flow challenges it is currently facing.
Hit by a cash crunch, the startup found itself compelled to enforce a salary cap of flat INR 75,000 for many of its employees in June.
According to Jha, the company is currently facing a new round of layoffs and implementing cost-cutting measures. Despite having $40 million in the bank and a projected 18 months of runway, these funds remain inaccessible to the startup due to existing debt obligations.
Established in 2015 by Kabeer Biswas, Dalvir Suri, Jha, and Ankur Aggarwal, Dunzo runs a hyperlocal delivery platform. Since its founding, the company has secured an impressive $500 Mn in funding from prominent investors, including Reliance, Google, Lightrock, Lightbox, and Blume Ventures, among others.
In January, the startup attempted to secure $100 Mn in funding but could only manage to raise $75 Mn through convertible notes from Reliance and Google by April. Unfortunately, the company has been facing significant losses and a high burn rate, adversely affecting its overall financial performance, particularly the bottom line.
To tackle its escalating expenses, the startup has implemented a series of initiatives. These measures include the closure of over 50% of its dark stores, exiting unprofitable markets, and raising delivery fees. Additionally, the company has started imposing convenience fees on customers to boost its earnings from each order.
In April of this year, the company made the decision to terminate over 300 employees as part of its cost rationalization efforts. Additionally, the company has been devising a strategic plan to transition from its dark store model to partnering with larger supermarkets and grocery stores. This new approach involves revenue-sharing arrangements between the company and its onboarded partners.
Read More: Dunzo downsizes workforce by 30% to cut costs as it secures $75 million in convertible note funding
As the saga unfolds, the looming question is whether Dunzo will prove resilient enough to navigate through the persisting headwinds.
