Dunzo plans to terminate 300 employees, which accounts for 30% of its workforce.
How it went
On Wednesday, the company chose to announce the layoffs during a conference call that involved all employees, as per a source who spoke to Business Today.
The call was followed by a town hall session in the evening where employees could ask questions.
Post-announcement, the affected employees had a one-on-one session with their managers.
Firing despite securing funding
Despite having secured funding of $75 million, reportedly with investors including Google and Reliance Industries, the company has made the decision to proceed with the layoffs.
The company notified its employees that it intended to pivot its business strategy to attain profitability ahead of its IPO, which is why it was implementing the layoffs.
The objective of this move is to assist the company in achieving profitability before its scheduled IPO in 2025.
Increased competition
This development has occurred as the grocery delivery platform is encountering heightened competition in India’s fiercely competitive e-commerce market.
Blinkit and Zepto are among Dunzo’s major competitors.
While the pandemic has resulted in a significant increase in demand for online delivery services, it has also posed challenges such as supply chain disruptions and rising costs.
Downward spiral
Established in 2015, Dunzo has experienced swift growth in recent years, providing a variety of services ranging from grocery delivery to pet supplies.
Additionally, the company has mulled over expanding into other domains like bike taxi services and has garnered more than $200 million in funding so far.
In January, Dunzo eliminated approximately 60-80 jobs, accounting for nearly 3% of its workforce, as the company assessed team structures and network design to enhance efficiency across its teams.
Previous cycle of layoffs
This occurred several months after the company had shut down some of its dark stores as a cost-cutting initiative.
In January 2022, the company had acquired $240 million in funding to expand its presence in India.
The funds that were recently raised were intended to facilitate the instant delivery of essential items from a micro-warehouse network, while also expanding the company’s ‘B2B’ business vertical to provide logistics services to local merchants.
Crocodile tears
During that time, CEO and cofounder Kabeer Biswas released a statement, acknowledging that letting go of employees is always a difficult choice and emphasized that the company is continuously working to redefine its business processes on a larger scale.
Biswas further mentioned that the affected employees are receiving the best possible support during their transition.
Moreover, the quick commerce platform has decided to close down 50% of its dark stores and will now collaborate with supermarkets and other merchants.
Hopping on the bandwagon
Dunzo is among several Indian startups that have had to cut costs and lay off employees due to macroeconomic headwinds and a funding winter.
With funding drying up and changes in the macroeconomic environment, Dunzo had to shift its focus from quick commerce to group deliveries by August 2022.
The company also added business-to-business deliveries, including for its investor Reliance Retail.
The job market in India has been tumultuous for some time now, and the COVID-19 pandemic has only exacerbated the situation.
Several startups in the country have found it challenging to secure funding, and others have had to change their business models to remain viable.
