This comes after Dunzo fired about 30% of its workforce, or over 300 staff, in April, as reported by ET, while simultaneously planning a shift in its business model. The April job cuts were the second round of layoffs that month.
While sources close to the company said the pending salary dues would be transferred by the middle of July, Dunzo’s difficulties underscore the challenges startups have been facing amid tightening of funding and stronger demands from investors to conserve cash and extend their runway.
“They (Dunzo) have been told to run a tight ship and continue to optimise on costs. Every quarter, the firm is looking to cut costs by 5-7%, but it could be more in the ongoing quarter,” one of the persons aware of the development said.
A second person aware of the discussions between Dunzo’s key investors and the firm said job cuts and other measures to conserve cash were on the anvil.
A spokesperson for Dunzo declined to comment while an email sent to Reliance Retail did not elicit any response.
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Reliance Retail owns 25.8% of Dunzo and is the single-largest investor in the firm. Google has a stake of just under 20%.While cost-cutting at the Blume Ventures-backed company will continue to be a consistent theme, there is no indication yet on the scale of the new job cuts. Business Today first reported on Dunzo deferring salaries.
In April, citing changes in the business model and strategy, Biswas informed employees about the job cuts, during the town hall.
As part of the rejig, Dunzo planned to cut 50% of its dark stores and run only those that can be profitable or are nearing that threshold, ET had reported at the time. Dark stores are small warehouses that enable a quick commerce company to fulfil orders in 15-30 minutes. They have to service a certain volume to be profitable, several executives running quick commerce businesses have told ET.
Wherever it is shutting dark stores, Dunzo is now partnering with supermarkets and other merchants. This is similar to its marketplace model, where consumers can order from individual grocery stores as well as other merchants.
Besides its quick commerce offering Dunzo Daily, which has now been scaled down significantly, it has a marketplace model for medicines, grocery, pet supplies, meat and others. It charges a commission from merchants as well as delivery fees from users for these services. Dunzo started operations in Bengaluru with goods pick-up and drop services in 2014.
The company’s bigger rivals, including Swiggy Instamart and Zepto, have also been cutting costs and making operational changes to their respective businesses, realising they need to slash spending to endure challenging macroeconomic conditions.