Dunzo, the on-demand delivery company backed by Google and Reliance Retail, is facing a cash crunch, leading to a delay in salary payments for half of its employees in June. Reports suggest that around 500 workers, including top leadership and managerial positions, have been impacted by the deferred salaries. The pending payments are expected to be settled after July 15, causing financial strain for the affected employees.
This development follows a series of cost-cutting measures by Dunzo, including multiple rounds of layoffs. The company let go of approximately 400 employees earlier this year, and after raising $75 million in April, it implemented another round of staff reductions, affecting nearly 30% of its workforce. Reports indicate that Dunzo may undergo a third round of layoffs in the near future.
To address its financial challenges, Dunzo’s CEO, Kabeer Biswas, announced a pivot in the business model during a company-wide town hall meeting after the second round of layoffs. This shift involved the closure of half of the company’s dark stores, which are small warehouses used for efficient order delivery.
Financial records from the Ministry of Corporate Affairs filings for the fiscal year 2021-22 revealed significant discrepancies in Dunzo’s financial performance. Despite generating a total revenue of ₹67.7 crores, the company’s expenses amounted to ₹531.7 crores. Moreover, Dunzo experienced a consolidated loss of ₹464 crores, double the amount compared to the previous year. Employee benefits accounted for the largest portion of expenses at ₹138 crores, followed by advertising expenses at ₹64.4 crores.
Currently, Reliance Retail holds a 25.8% stake in Dunzo, while Google’s ownership stands at under 20 percent. The companies involved have not yet publicly commented on Dunzo’s financial challenges or the delayed salary payments.
The situation highlights the financial pressures faced by on-demand delivery companies, particularly during a time of intense competition and shifting market dynamics. The impact on employees underscores the need for sustainable business models and prudent financial management to ensure the long-term viability of such ventures.