Operations resume at Dunzo's dark stores in Bengaluru as off-roll workers get paid

Grocery delivery and courier service firm Dunzo is looking to raise up to $100 million from existing investors, except Reliance Retail.

Operations resume at Dunzo's dark stores in Bengaluru as off-roll workers get paid

Tuesday August 22, 2023,

3 min Read

Off-roll pickers at Reliance Retail-backed Dunzo have resumed work at the seven dark stores in Bengaluru after receiving their July salaries, two employees aware of the development told YourStory.

"All of us (nearly 70) received the payment for July in full on August 19. We are back to work now," said a worker. However, several of these employees are on the lookout for other jobs amid uncertainties in the quick commerce startup, this person added.

Like many other startups, Dunzo has a set of employees on its payroll, while some employees are hired and managed by third-party recruitment service providers. The third-party workers earn a stipend of Rs 15,000-20,000 every month.

YourStory reported last week that several employees in two dark stores in Bengaluru had refused to resume work until their long-delayed salaries for July were paid. Later, three more dark stores went offline temporarily.

Now, the dark store in Bengaluru's Frazer Town area has been shut down as it is undergoing transition to a partner store model, according to the other person mentioned earlier.

YourStory has reached out to Dunzo for a comment on the development. The story will be updated once the response comes in.

Meanwhile, Dunzo is in advanced talks to raise up to $100 million from existing investors Lightrock and Lightbox, Inc42 reported last week. However, Reliance Retail, another investor in Dunzo, will not participate in the funding, the report added.

The funding may come with a 50% cut in valuation, as per a report by The Economic Times.

The story so far

Dunzo has been reeling under the pressure of a liquidity crisis for the last few months.

In April, CEO Kabeer Biswas had informed employees that Dunzo intends to change its business model by shifting focus from business-to-consumer to business-to-business (Dunzo for Business).

Dunzo Daily, the main line of business contributing nearly 90% of the company's revenue, had been struggling owing to high cash burn. The service was shut down across all cities–barring Bengaluru. The company laid off 30% of its workforce, about 300 employees, in April.

Dunzo had last raised $75 million in convertible notes, with the lion's share coming from returning investors Google and Reliance Retail. Reliance Retail holds close to 25.56% share in the company, while Google holds about 18.53%, according to market intelligence firm Tracxn, making them the largest shareholders in the company.

The quick commerce venture was valued at $757 million as of May last year. It has raised $497 million in equity investment till date, as per Tracxn data.

The Economic Times reported in July that the quick commerce startup is looking to raise close to $20 million from Reliance Retail, after it fell short of its target to raise $75 million by offering convertible notes.

The company is also said to have held talks with debt investors to restructure the terms of credit to enable the firm to use some of its cash in the bank to clear pending dues to vendors and staff salary arrears for two months, The Economic Times reported on Tuesday.

Meanwhile, Reliance's JioMart has changed its cost structure for its partners delivering orders. It has cut the price it paid for last-mile deliveries on bikes to Rs 35 per order, down from Rs 58 earlier, the report said. JioMart accounts for 30-40% of Dunzo Merchant Services's total business.

Edited by Swetha Kannan