Dunzo, the hyperlocal and quick-commerce startup, has initiated another round of layoffs, reducing its workforce by 150 employees. This move, which cuts the company’s staff by 75%, leaves just 50 employees in its core supply and marketplace teams, according to recent reports. Backed by Reliance Retail, Dunzo has been grappling with intense competition from rivals like Zomato’s Blinkit, Swiggy Instamart, Tata’s BB Now, and Zepto. Compounding these challenges is a significant cash flow issue, hampering the company’s ability to sustain operations.
On August 31, approximately 150 employees were handed pink slips, as reported by a media house. This decision is part of the company’s strategy to reduce costs and “generate sufficient cash flow” to manage its increasing liabilities. One of the critical challenges facing Dunzo is its ability to maintain operations, which includes paying both current and former employees, as well as vendors. The company has previously struggled to meet payroll deadlines, delaying salary payments for many employees by several weeks, even missing extended deadlines.
Despite these setbacks, Dunzo has assured laid-off employees that pending salaries, severance, leave encashment, and other dues will be paid “as soon as it secures the necessary funds,” according to an email sent by the company to its employees, cited in the report.
Once valued at $775 million, Dunzo has encountered significant hurdles in securing the additional funding required to continue its operations. Originally launched as a concierge service in select Indian cities, Dunzo later diversified into ride-hailing and quick-commerce in an effort to attract more investors. However, as the market grew increasingly competitive with the entry of well-established players like Zomato, Dunzo’s prospects began to dim.
In May, the company was reportedly close to securing $22-25 million through a mix of equity and debt from existing and new investors. Employees were informed in mid-July that the company expected to settle dues within 10-15 days of receiving these funds. However, subsequent communications from Dunzo highlighted delays and uncertainties, with further emails in August addressing unexpected challenges in securing the funds and urging employees not to pursue legal action, as it would exacerbate the delays.
