Layoffs, delayed salaries: Dunzo becomes a bumpy ride for founder Kabeer Biswas

Bengaluru-based hyperlocal delivery service Dunzo is grappling with financial challenges, leading to delayed salary payments and employee layoffs. The startup, founded in 2015 by Kabeer Biswas, has failed to pay November salaries to its employees, marking a recurring issue for the company. Despite tying up with revenue financing firm OneTap earlier in the year, Dunzo continues to face financial difficulties.

The company assured employees that funds from investors are expected to be wired soon, with the release of November salaries anticipated shortly afterward. However, a recommendation was made to employees to prepare for a worst-
case timeline of December 15, 2023. This delay comes despite the company's efforts to secure alternative funding and restructure its business.

Not the first time

In October, Republic World reported that Dunzo had deferred the payments of June, and July salaries to its employees by January–February 2024. It was also said that former Dunzo employees will be receiving their payments, including salaries, during January and February 2024. Dunzo hasn't responded to an email query regarding the status of these payments until the time of publishing this report.

Leadership Changes and Restructuring

Dalvir Suri, co-founder of Dunzo and head of the business-to-business logistics arm, Dunzo Merchant Services (DMS), has resigned amid the company's financial stress and restructuring. DMS has played a crucial role in Dunzo's business model, especially as the unit economics of quick commerce failed to turn profitable, leading to downsizing. The departure coincides with a company-wide restructuring in the current quarter. DMS, a crucial aspect of Dunzo's business model, has been grappling with the challenges of quick commerce's unprofitable unit economics.

Dunzo, backed by Reliance Retail and Google, previously laid off 30 per cent of its staff in April 2023, following a $75 million funding round. The company also decided to shut down 50 per cent of its dark stores across the country and planned a pivot in its business model.

Despite engaging with investors for a $30 million funding round, including participation from Reliance Retail and Google, Dunzo's financial struggles persist. As of fiscal year 2022, the company reported a total revenue of Rs 67.7 crore, while expenses stood at Rs 531.7 crore, resulting in a consolidated loss of Rs 464 crore.

Kabeer Biswas, Dunzo's CEO and founder, started the company with a focus on hyperlocal delivery services in 2015. Over the years, Dunzo expanded its services to include packages, pick-up and drop, online restaurant discovery, food and grocery delivery, medicine delivery, laundry services, local couriers, and bike taxis.

Dunzo gained recognition as the first Indian tech company to receive funding from Google in 2017. Despite initial success, the company faced challenges in the competitive quick commerce space and had to pivot its business model. Recent reports suggest Dunzo is transitioning back to its roots, focusing on hyperlocal deliveries with larger supermarkets and grocery stores on a revenue-sharing basis.
The startup's B2B logistics vertical, Dunzo For Business (D4B), remains a key focus, with reliance on the Open Network for Digital Commerce (ONDC) and collaboration with Reliance for growth. However, Dunzo faces obstacles in the B2B hyperlocal logistics space, with competition from other players and uncertainty about its long-term revenue outlook.

Balancing B2C and B2B Operations

As Dunzo navigates financial troubles and seeks a balance between B2C and B2B operations, the challenges ahead include securing the next capital infusion to facilitate growth and scale. Dunzo's leadership aims to achieve profitability by September 2024, but the journey involves overcoming substantial losses and adapting to the evolving dynamics of the hyperlocal and quick commerce landscape.