Dunzo grapples with cash crunch, employees miss November paychecks

Dunzo, backed by Google, faces financial strain, reportedly delaying employee salaries for November amid cash crunch problems, as per the Hindu Business Line.

Layoffs and Unpaid Dues:

The hyperlocal e-commerce platform has cut over 30% of its workforce in recent months, reducing its staff from over 1,000 employees at the start of 2023. The company has undergone three rounds of layoffs, axing about 300 employees in the first half of the year to curb expenses.

Additionally, Dunzo has yet to settle dues for its existing employees, as reported by the Financial Daily. The startup has also deferred final payments to those laid off, planning to clear their dues over the next three months, as stated by PTI agency in October.

Dark Store Closures and Financial Woes:

Facing financial woes, Dunzo aims to close down 50% of its dark stores, having already shut down 20-30% of these stores in Delhi-NCR and Hyderabad in 2022.

The company's financial troubles coincide with its collaboration with OneTap, a revenue financing firm, established in August. Co-founder Dalvir Suri reportedly exited the company in October.

Cost-Cutting Initiatives:

Earlier in April, Dunzo closed a $75-million financing round via convertible notes, having previously raised $240 million in equity funding in January 2022. Notably, Reliance Retail holds a 25.8% stake in Dunzo, while Google possesses around 20%.

Despite raising approximately $457.6 million across 19 funding rounds, Dunzo's auditor, Deloitte, expressed doubts about its sustainability, citing a significant increase in net losses to ₹1,802 crore in FY23, a 288% surge from the previous year.

To reduce costs, Dunzo migrated employee accounts from Google to Zoho workspace, aiming for at least a 33% cost reduction. Earlier, the company had also relinquished its Bengaluru office space.