Dunzo's scale of operations severely hit amid financial troubles

Dunzo struggled with funding as it could manage to secure only $45 million from the planned $75 million debt funding.

Bengaluru-based quick commerce startup Dunzo's scale of operations has fallen to almost one-fifth of the peak it hit last year amid the company's ongoing financial and legal troubles.

According to a report by Economic Times, the firm's grocery delivery service Dunzo Daily is recording somewhere between 1 million to 1.5 million monthly transactions. This stands in stark contrast with last year's numbers when the firm had clocked 5.5 million transactions in June 2022.

The peak in numbers was reportedly due to company's heavy expenditure on marketing and discounts offered during the T20 cricket tournament Indian Premier League last year. However, this year, the situation tells a different tale.

Delay in funding

Dunzo has struggled with funding as it could manage to secure only $45 million of the planned $75 million debt funding through convertible notes in April this year, ET reported.

“Funds were supposed to come much earlier, but as it took longer, the reduction in burn had a direct impact on the scale of quick commerce business,” a person aware of the matter was quoted as saying by the publication.

Consumers moving to rival platforms

Another reason being attributed to the drop in monthly transactions is consumers moving to rival platforms due to Dunzo's pricing changes.

ET, citing a person, said while Dunzo Daily's rivals were giving massive discounts, thr firm tried increasing the minimum order value for free deliveries, leading to consumers switching to rival platforms.

Employees' salaries deferred

Dunzo has once again deferred salary payouts for its employees.

An internal mail shared with employees had stated that the remaining salary for June and July would be paid with the August salary payout, in the first week of September, PTI had reported.

Dunzo had previously delayed salaries of half of its 1,000-strong workforce till July 20, impacting their top management the most.

The company had also fired about 400 employees in the first half of this year as part of cost-cutting measures.

(With PTI inputs)