Dunzo's ₹1802 Cr Loss: Survival at Stake?

Hey there,

Picture this: For every ₹1 earned, ₹9 goes out the door. Sounds like a tough spot, right? That's exactly where Dunzo finds itself in 2023.

But how long can this last before the bubble bursts?

Back in the day, Dunzo was the king of quick deliveries. Now, they're struggling. Even with big names like Reliance and Google behind them, their cash burn is alarming. They're spending money like there's no tomorrow, all in the name of "quick commerce."

So, where did things start to go downhill for Dunzo?

1. Sky-High Spending:
   Dunzo's spending has shot through the roof, crossing the 2000 crore mark. A huge chunk of this is their ad spend, which jumped from Rs 64.4 crore in FY22 to Rs 309.7 crore in FY23. That's a fivefold increase.

   
   Dunzo’s procurement expenses went up by 9,079% to INR 174.4 Cr in FY23 from INR 1.9 Cr in FY22.

   
   

2. The Workforce Costs:

   They've had to say goodbye to some employees and put salaries on pause. Yet, they're still recruiting. Their spending on employee benefits alone has gone up from ₹138 crore to ₹338 crore.

   
   These are tough times, and tough choices are being made. But it's not a great situation for the folks who've been there from the start.

   
   

3. Top-Level Resignations:
   The company has seen big changes. Co-founder Dalvir Suri and some board members from Lightrock and Reliance have stepped down. It's a sign of the times and the challenges they're facing.

   
   

4. The Delivery Dilemma:

   
   The cost of their delivery partners has hit ₹367.4 crore. That's a hefty price tag for a service that's meant to be fast and affordable.

   
   And when you add in the cost of order cancellations, you have to wonder if their business model can stand the test of time.

Now, Dunzo is in a bad spot. They have the technology, the team, and the drive. But the financial figures are not so good. With competitors like Instamart, Blinkit, and Zepto not just edging in but breaking down the door, Dunzo needs to find a quick fix.

So, what's in store for them? Can they adjust their strategy to survive, or will they become a lesson in what not to do in the cutthroat startup scene? Time will tell.

✍️ Jargon of the day

Layoffs - When a company reduces its workforce to cut costs, often due to financial strain or a shift in business strategy.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik