Dunzo Lays Off Employees: Why and What's Next?
Dunzo, a Bengaluru-based hyperlocal delivery services platform, has announced a fresh round of layoffs. According to reports, the company has let go of about 150 employees, or 30% of its workforce, citing COVID-19 impact and restructuring needs. While Dunzo has not disclosed the financial details of the layoff, it has said that it will provide “generous severance and thorough career transition support” to the “affected Dunzites.”
As a news media outlet covering business reporting, we have analyzed the information available and prepared this report to provide you with insights into what led Dunzo to lay off its employees, what this means for the company, and what the implications are for the industry at large.
Company Introduction and History:
Dunzo started as a chat-based personal task management app in 2015, founded by Kabeer Biswas, Ankur Aggarwal, Dalvir Suri, and Mukund Jha. The app allowed users to get things done by connecting them to nearby merchants, delivery partners, and service providers. In 2017, Dunzo pivoted into a hyperlocal delivery platform, enabling users to order anything from food to medicine to groceries to pet supplies and more. Dunzo raised $12.3 million in Series B funding led by Google in 2018 and $45 million in Series D funding led by Google in 2019. As of June 2021, Dunzo was valued at $800 million and claimed to have 2 million monthly active users across eight cities in India.
Funding and Investors:
Dunzo’s investors include Google, Blume Ventures, Aspada Investments, STIC Investments, Lightbox, and Alteria Capital. The company has raised a total of $202 million in funding as of September 2021, according to Crunchbase. Dunzo’s association with Google as an investor and technology partner has been crucial for its growth and visibility, as Dunzo integrated Google assistant into its app and utilized Google cloud for scale, speed, and security.
Performance and Challenges:
Dunzo has been one of the most promising startups in India in recent years, with a strong brand, customer loyalty, and innovative features. However, Dunzo has also faced several challenges, such as intense competition from Swiggy, Zomato, BigBasket, and Amazon, regulatory hurdles related to the gig economy, and profitability pressures. Dunzo reported a loss of Rs 205 crore ($27.8 million) on revenue of Rs 76 crore ($10.3 million) in FY20, according to its regulatory filings. Dunzo’s revenue grew by 85% in FY20, but its expenses also increased by 149%.
Reasons for Layoffs:
Dunzo’s reasons for layoffs are primarily twofold: COVID-19 impact and restructuring needs. Dunzo’s business has been hit hard by the pandemic, as many of its merchant partners have shut down or reduced operations, and its delivery volumes have dropped due to mobility restrictions and safety concerns. Dunzo had to suspend its services in Delhi temporarily in April 2021 due to the surge in COVID-19 cases. Dunzo’s restructuring needs are related to its efforts to focus on core business areas, optimize costs, and streamline operations. Dunzo has reportedly discontinued some of its non-core services, such as laundry and home services, and consolidated some of its regional teams into its headquarters.
Implications of Layoffs:
The layoffs at Dunzo are significant in multiple ways. First, they reflect the impact of the pandemic on startups that depend on the gig economy and discretionary spending. Second, they highlight the challenges of scaling and sustaining hyperlocal delivery platforms in a highly competitive and regulated market. Third, they raise questions about the role of investors and their expectations in the startup ecosystem, as some critics argue that investors prioritize growth over sustainability and accountability. Fourth, they underscore the importance of empathy and communication in handling layoffs, as Dunzo’s approach has been criticized by some former employees and outsiders for lacking clarity and compassion.
In conclusion, the layoffs at Dunzo are a sobering reminder of the fragility and uncertainty of the startup world, especially in the face of external shocks. We hope that Dunzo and other affected companies can navigate through these challenges with resilience, innovation, and social responsibility. While layoffs can be painful and disruptive for employees, they can also be catalysts for change and learning for organizations. We will continue to monitor and report on the developments in this story and others like it. Thank you for reading.