Some dark stores in Hyderabad and the NCR will be closed by Dunzo
- ByStartupStory | November 12, 2022
According to two people who spoke to Entrackr, the quick commerce startup Dunzo is in the process of closing down several of its dark stores in the Delhi-NCR and other areas. Even after the Bengaluru-based business acquired a $240 million round headed by Reliance Retail in January, this just happened.
According to one of the insiders who requested anonymity, “Dunzo is closing 25–30% of its dark stores in the national capital region and Hyderabad as the corporation has been eyeing to enhance unit economics.”
Dunzo, however, refuted the claim that the number of dark businesses they are closing is lower. “To increase operational efficiencies and save expenses, we closed a few stores in remote locations with very little demand. In response to questions, a Dunzo spokeswoman stated that the majority of these locations are now supplied by our high-density stores, where we are already noticing an increase in order volume. “We are still able to meet roughly 97% of all consumer demands. In fact, Delhi-NCR and Hyderabad continue to be significant markets for us, and we plan to expand here.
Dunzo had 120 dark stores spread across eight cities as of June. The precise number of stores that remain after the shutdown activity couldn’t be independently verified. Sources claim that Dunzo is also letting go of 25–30% of its employees working on the dark store teams in these two cities. The departing personnel include both contractual and payroll staff.
A spokesperson for Dunzo said, “It’s a healthy business practice to focus on operational efficiencies and prune costs wherever needed, and we are confident that focusing on our high-priority areas makes us a lot stronger. Dunzo did not disclose the precise number of people whose jobs are affected by this move. Even though it affects a small portion of our entire team, it is unfortunate to have to fire a few people.
Sources claim that this action is being taken as a cost-cutting measure because of the difficult funding climate and high burn. It’s important to note that during the first half of 2022, or H1 2022, Dunzo lost Rs 230 on each order it sent.
The cost-cutting initiative by Dunzo is in line with the corporate strategy that was stated a few months ago. According to an internal document, which Entrackr exclusively disclosed in August, Dunzo had planned to reduce their monthly burn from more than Rs 176 crore to just over Rs 100 crore by December.
Dunzo has been losing money ever since it was founded because of its weak topline. Losses for the company increased 2X and reached Rs 460 crore in the most recent fiscal year (FY22). In the fiscal year that ended in March 2022, its revenue increased by a factor of two, reaching Rs 54 crore.
Several Dunzo delivery executives went on strike in September in opposition to changes made to the company’s delivery policy. Dunzo’s main rivals are Zepto, Zomato-owned BlinkIt, and Swiggy’s Instamart.
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