Sources familiar with the matter revealed to Moneycontrol that Dunzo, a hyperlocal quick commerce company facing financial challenges, implemented a salary cap of $914 for employees in June. This meant that regardless of their actual salary, no employee would receive more than the fixed amount, ensuring that those earning less than the capped amount would receive their full salaries.
However, it was reported earlier this week that Dunzo had deferred June salaries for around 500 employees, which accounts for roughly 50% of its workforce. Co-founder and CEO Kabeer Biswas and the top management assured employees that the salary caps were only applicable for June and that all outstanding payments would be cleared by July 20.
Senior employees at Dunzo were reportedly most affected by the salary deferrals. Approximately 60-65% of the workforce received their full salaries, while 35-40% received only a partial payment of $914 for June.
An anonymous employee disclosed that the information regarding the salary caps and deferrals was provided on the day salaries were due, without any prior notice or communication.
Despite securing $75 million in funding in April this year, Dunzo continues to face significant cash burn. While the company made efforts to ensure timely payment of salaries, urgent business needs may have necessitated the last-minute communication with employees.
These recent developments raise concerns about potential layoffs and voluntary exits at Dunzo. The company has already undergone two rounds of layoffs this year, resulting in the termination of approximately 380 employees.
To drive profitability, Dunzo has been implementing various cost-cutting measures. These include transitioning to a marketplace model for sourcing products, closing a significant portion of its dark stores, and exiting unprofitable markets. The company has also increased delivery fees, introduced delivery delays, and imposed convenience fees on users to boost revenue per order.
Industry experts, such as Swiggy’s food delivery CEO Rohit Kapoor, anticipate consolidation in the quick-commerce sector. Moneycontrol reported that only 3-4 significant players are expected to survive. Currently, Dunzo operates in this space alongside Swiggy’s Instamart, Zepto, Blinkit by Zomato, and Tata-operated BigBasket.
Founded in 2015, Dunzo has raised nearly $500 million since its inception, with major investments from Reliance, Google, Lightrock, Lightbox, Blume Ventures, and others. Reliance holds the largest stake in the company at 25.8%, followed by Google with approximately 19% ownership, according to Tracxn.
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