Dunzo to undertake third round of layoffs in 2023 as it crumbles under cashflow issues

This will be the third layoff undertaken by the company in seven months.

Quick-commerce player Dunzo will undertake another round of layoffs, the size of which will be decided within this week, the company’s co-founder and CTO Mukund Jha informed employees during an all-hands meeting on the evening of July 19.

This will be the company’s third round of layoffs within the last seven months, with the company having its back to the wall as it faces mounting troubles, thanks to issues surrounding cashflow. 

Senior employees estimated that at least 20 percent of the company’s workforce — approximately 200 employees — will be affected. So far, 380 employees have already been let go by the company in two rounds of layoffs. 

The new round of layoffs comes even as Jha claimed that the company has a runway of around 18 months and about $40 million in the bank account, but debt obligations do not allow the startup to tap into those funds.

“We are definitely considering layoffs and the size will be decided either tomorrow [July 20] or day after [July 21]. Within this week we will communicate to employees,” Jha said in the July 19 meeting.

Hours before the all-hands meet, the beleaguered startup had sent out an email to its employees over its delayed salaries, stating that their deferred salaries for June, as well as amounts due for July and August would come on September 4, a marked delay as compared to its original deadline of July 20.

In June, Dunzo deferred salaries for around 50 percent of its workforce — roughly 500 employees — with the promise that dues would be cleared by July 20. Due to the cash crunch, the company had also capped the salaries of employees at Rs 75,000 in June, no matter how much higher than this their salary is. Everyone below the threshold was to get paid in full. 

"We understand this is very difficult for you and we appreciate your patience. At this stage, we need to focus on streamlining our cash flow so we can build a more sustainable business for the future. We need your support as we work through this," the email sent to employees read. 

Dunzo had raised $75 million in April, but continues to struggle — a clear indicator of its high burn rate. 

The company has continued to juggle measures to stay afloat. It has looked at sourcing products through a marketplace model after it reportedly shut over 50 percent of its dark stores, along with exiting unprofitable markets. Additionally, it has increased its delivery fees, started delaying deliveries and is also levying convenience fees on users to earn more on each order. 

Founded in 2015, Dunzo has so far raised close to $500 million since 2015 from Reliance, Google, Lightrock, Lightbox, Blume Ventures and several others. Reliance is the largest shareholder with a 25.8 percent stake in the company, and Google was the second-largest with around 19 percent ownership in Dunzo, according to Tracxn.

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