Dunzo is set to lay off 30% of its workforce or 300 employees.
How it went
It opted to break the news during a company-wide conference call on Wednesday.
A source told Business Today, “The leadership conducted an organisation-wide call in which everyone was there and the layoff announcement was made. It was followed by a town hall also in the evening, where we could ask questions.”
Post layoffs announcement, the impacted employees got a face to face session with their managers.
Firing despite securing funding
This comes about despite having secured funding worth $75 million, with Google and Reliance Industries believed to be among the investors.
It informed employees of the same, stating that it was looking to pivot its business strategy to achieve profitability ahead of the IPO.
The move is aimed at helping turn a profit before its planned IPO in 2025.
Increased competition
This development comes as the grocery delivery platform faces increasing competition in India’s highly competitive e-commerce market.
Blinkit and Zepto have been some of its biggest rivals.
Although the pandemic has led to a surge in demand for online delivery services, it has also led to challenges such as supply chain disruptions and increased costs.
Downward spiral
Dunzo was founded in 2015 and has grown rapidly in recent years, offering a range of services from grocery delivery to pet supplies.
It has also considered expansion into new areas such as bike taxi services and has raised over $200 million to date.
In January, Dunzo laid off around 60-80 employees, amounting to almost 3% of its workforce as the company looked at team structures and network design to build efficiency into its teams.
Previous cycle of layoffs
This came months after it shut some of its dark stores in a cost cutting measure.
It had raised $240 million to expand its footprint in India in January 2022.
The freshly-raised funds were to be used in enabling instant delivery of essentials from a network of micro warehouses while also expanding its ‘B2B’ business vertical to enable logistics for the local merchants.
Crocodile tears
CEO and cofounder Kabeer Biswas released a statement then, saying that letting people go was always a difficult decision and the company was constantly working on redefining business processes at scale.
He added that the impacted employees were being provided with the best support possible during their transition.
The quick commerce platform will also shut down 50 per cent of its dark stores, and will now join supermarkets and other merchants.
Hopping on the bandwagon
Dunzo is just one of many Indian startups that have had to cut costs by laying off employees due to macroeconomic headwinds and a funding winter.
In this case, as funding dried up and macro-economics changed, Dunzo shifted its focus from quick commerce to group deliveries by August 2022 and added business-to-business deliveries, including for its investor Reliance Retail.
The job market in India has been turbulent for a while now, and the COVID-19 pandemic has only worsened the situation.
Many startups in the country have struggled to raise funds, while others have had to pivot their business models to stay afloat.
