What went wrong with Dunzo?

Dunzo has been the talk of the town for a while now, but not for good reasons. The company incurred a loss of over 1800 crores; many people from senior leadership, including co-founder Dalvir Suri, have left the company. Multiple rounds of layoffs, strikes by delivery partners, severe cash crunches, and whatnot have added to Dunzo’s challenging situation.

Dunzo’s condition seems to be a nightmare.

But how did they get into such a situation? 

 In 2014, Dunzo started as a WhatsApp group, and until 2020, it operated as an on-demand delivery service. In 2021, they expanded into Quick Commerce, and that's where things started to go wrong.

Many quick commerce companies are operating in India, such as Zepto, Zomato’s Blinkit, Swiggy’s Instamart, etc. It's tough competition in the segment, but Dunzo also made some execution errors. The money they are spending is not coming back. Their revenue was 226.6 Cr in FY23, and they reported a loss of 1801 Cr, whereas other companies in the same segment are doing much better in terms of revenue. 

Zepto’s revenue was 2078 Cr with a loss of 1272 Cr, and Blinkit’s revenue was 724.2 Cr with a loss of 1191.2 Cr.

All the competitors of Dunzo are performing better than Dunzo as they were able to execute better.

Dunzo has raised around $408 million since 2020 and is currently struggling to raise more capital. 

But it is not a dead end for Dunzo. 

Reliance owns around 25% of it and brings good business for the B2B operations. Dunzo has reduced its workforce to 200 people, and there haven’t been any official statements yet, but most likely they will now focus on their B2B business.

Zomato and Ola are also entering the B2B business, but being backed by Reliance may work for Dunzo here. 

There are going to be many changes in Dunzo soon.

Until then…

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