Three more Dunzo dark stores go offline in Bengaluru as employees stop work over salary delays

The temporary disruption in Dunzo Daily’s dark store operations comes at a time when the Reliance Retail and Google-backed company faces a liquidity crisis amid mounting losses and a shift in the business model.

Three more Dunzo dark stores go offline in Bengaluru  as employees stop work over salary delays

Wednesday August 16, 2023,

3 min Read

Employee issues at Dunzo's dark stores have escalated after three more units in Bengaluru went offline on Wednesday, as several staff refused to work until their July salaries are paid, two sources close to the development said on condition of anonymity. 

Dunzo's dark stores in Indiranagar, Richmond Town, and HSR Layout temporarily stopped servicing customers on Wednesday, taking the total number of stores currently offline in Bengaluru to five. YourStory reported on Tuesday that Dunzo's dark stores in Koramangala and ITI Layout had gone offline temporarily following employee issues.

“The dark store workers are coming together to ensure Dunzo Daily operations remain halted until there is clarity on salary payments,” said one of the sources quoted above. Dunzo’s management has not yet given a date by when salaries will be paid but has verbally promised to pay them soon, this person added.

While the Dunzo consumer app shows the Richmond Town store as temporarily unavailable as of Wednesday afternoon, orders from the Indiranagar and HSR Layout stores are being fulfilled by partner store MK Retail.

"As mentioned earlier, we are transitioning to partner stores in a couple of areas. While we are servicing 95% of our geos [geographies], we should return to 100% coverage soon," a Dunzo spokesperson said in response to queries sent on Wednesday.

On Tuesday, Dunzo, in its response to YourStory’s queries, said that some affected areas will be operational in the next 24 hours. However, the Koramangala and ITI Layout dark stores remained offline at the time of this article's publication. Orders in nearby areas are being fulfilled by partner stores, according to the Dunzo app.

"We switched to a hybrid network model for our quick-commerce business nearly six months back, and now operate a mix of dark stores and partner stores, depending on traffic density and a few other factors. We believe this model delivers the best unit economics in q-commerce," Dunzo's spokesperson added.

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

Dunzo’s dark stores have about 70 off-roll workers who earn up to Rs 20,000 every month and are mainly involved in packing groceries and handing them to assigned delivery partners.

Last month, YourStory reported that the quick commerce company said it will defer salaries for August of all employees till September 4, in an attempt to streamline cash flows and build a more sustainable business.

In April, CEO Kabeer Biswas 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). It reportedly raised $75 million in convertible notes from returning investors.

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.