In a recent development, hyperlocal delivery startup Dunzo has informed its employees that it will not be able to meet the previously postponed deadline for their monthly wages. This comes as Dunzo faces mounting challenges in the competitive delivery space, having spent over $150 million in the past 18 months in an attempt to compete with rivals like Zepto.
The Bengaluru-based startup, which boasts backing from industry giants Google and Reliance Retail, notified its employees that their outstanding salaries would now be disbursed in the first week of October instead of the previously scheduled date of September 4.
In an email to employees, the company stated, “Ensuring that you receive your due compensation as early as possible is our top priority. Please be assured that we are doing everything to make this happen, and we are confident that there will be no further delays after this.”
Dunzo had previously deferred June payroll for some employees and delayed July and August salaries for all staff. These delays are part of Dunzo’s strategy to streamline its cash flow and aggressively seek new funding.
The eight-year-old startup has raised nearly $500 million in total and was last valued at $757 million, according to market intelligence firm Tracxn. Despite its recent funding efforts, Dunzo has been struggling to secure a substantial funding round, falling short of its target of $150 million and securing only about $45 million in a recent round.
In contrast, its rival Zepto recently announced a successful funding round, raising $200 million at a valuation of $1.4 billion.
Dunzo’s challenges are reflective of the broader difficulties faced by startups globally as venture investors become more cautious amid economic uncertainties. Additionally, Dunzo operates in the cash-intensive instant grocery delivery category, which has seen consolidation across the globe.
Major players like Zomato and Swiggy are also competing in this space, with Zomato acquiring Blinkit for $568.1 million in an all-stock deal last year, while Swiggy has slowed the growth of its instant grocery delivery business.
In response to these challenges, Dunzo has reportedly closed more than half of its “dark stores,” which are warehouses used for inventory storage, and is increasingly focusing on its business-to-business offerings.
As Dunzo navigates these hurdles, it remains to be seen how the company will adapt to the evolving dynamics of the hyperlocal delivery market.
