Off-roll workers at some Dunzo dark stores in Bengaluru stop work after salary delay: sources

Third-party workers, whose salaries for July were delayed, have stopped work at certain Dunzo dark stores in Bengaluru, affecting operations at atleast in two such stores, according to two people aware of the development

Off-roll workers at some Dunzo dark stores in Bengaluru stop work after salary delay: sources

Tuesday August 15, 2023,

5 min Read

Several off-roll employees of Dunzo dark stores in Bengaluru have stopped work after their July salaries were delayed, leading to a temporary halt of operations at atleast in two such stores, according to two people aware of the development.

The sources, who did not wish to be identified, said the salaries of about 70 off-roll workers working at seven Dunzo dark stores in Bengaluru have been delayed. Two dark stores in Bengaluru's Koramangala and ITI Layout areas were temporarily unserviceable as of Tuesday afternoon.

Trouble began on Monday evening when several dark store workers in the city halted work and refused to resume until their salaries were paid, said the people quoted above. Dunzo has shifted a few on-roll employees and delivery partner teams to take over operations at these dark stores temporarily, they added.

The off-roll employees, primarily involved in packing groceries and handing it to assigned delivery partners under the Dunzo Daily service, expected their July salaries to come in the first week of August. "Dunzo's management has been asking us to wait patiently for the payment and return to work in the meanwhile. But there is no clarity on when the payment will come in," a dark store worker told YourStory on condition of anonymity.

"We have built a hybrid network of stores for Dunzo Daily, which is a combination of dark stores and partner stores. This network is dynamic and continues to evolve—where it makes business sense for us to have partner stores, we will switch to that model," a Dunzo spokesperson said in response to YourStory's queries.

"We are live in more than 95% of our geos in Bangalore, except in a couple of areas where we are transitioning to partner stores over the long weekend. We should be operational in these areas as well within the next 24 hours," the spokesperson added.

Last month, YourStory reported that the quick commerce company said it will defer salaries for the month of August of all employees till September 4, in an attempt to streamline cash flows and build a more sustainable business. While the internal email did not mention whether the delay would affect both on-roll and off-roll employees, Dunzo is said to have verbally assured its senior managers that third-party workers, including those working in dark stores, will not be affected, according to the one of the sources quoted above.

"The founding team knew that if these workers weren't paid on time, all the dark stores would come to a screeching halt. While the financial situation of the company isn't a surprise, nobody expected the dark store workers to suffer," the source added.

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

Some workers have also contacted Quess Corp—the third-party recruitment services provider that manages Dunzo's off-roll employees—to seek clarity on the payments, said the two people quoted above. YourStory has reached out to Quess Corp for comments on the development. The story will be updated once the responses come in.

In April, CEO Kabeer Biswas had informed employees that Dunzo intends to change its business model by shifting its focus from business-to-consumer to business-to-business (Dunzo for Business). Dunzo Daily, the main line of business contributing nearly 90% of its revenue, had been struggling owing to high cash burn. The service was shut down across all cities–barring Bengaluru–subsequently. It laid off 30% of its workforce or about 300 employees in April.

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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 2022 and 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 Google and Reliance Retail-backed company is also said to have held talks with debt investors to restructure the terms of the credit to enable the firm to utIlise some of its cash lying in the bank to clear pending dues to vendors and staff salary arrears stretching to two months, The Economic Times reported on Tuesday.

Meanwhile, Reliance's JioMart has undertaken a change in its cost structure for its partners delivering orders by cutting the prices it paid for last-mile deliveries made by bikes to Rs 35 per order, down from the Rs 58 per order earlier, the report added. JioMart accounts for around 30-40% of Dunzo Merchant Services's total business.

(The story was updated with additional information in the last two paragraphs regarding Dunzo's talks with debt investors to restructure terms of credit)

Edited by Megha Reddy