Dunzo’s business in free fall amid severe cash flow issues
Dunzo has seen its scale of operations fall to almost one-fifth of the peak it hit last year as it continues to grapple with cash flow issues and scouts for a lifeline, multiple people aware of the matter said. The Reliance Retail-backed firm is clocking somewhere between 1 million to 1.5 million monthly transactions for its consumer-focused grocery delivery service Dunzo Daily, they told ET.
Dunzo Daily had clocked 5.5 million transactions in June last year and predicted moderate growth to 5.7 million in December, according to internal presentations reviewed by ET. It had achieved these numbers after spending heavily on marketing and discounts during the popular T20 cricket tournament Indian Premier League last year.
The data on orders placed do not include its B2B vertical and pick-up-and-drop services, a business Dunzo originally operated before jumping on to the instant delivery model. The descent in its scale of operations accelerated earlier this year as the firm’s funding was delayed in the backdrop of a larger stress in the technology industry.Also read | Dunzo’s downfall: from startup star to sinking ship? Dunzo managed to secure only $45 million from the planned $75 million debt funding through convertible notes in April this year, ET had reported.
“Funds were supposed to come much earlier, but as it took longer, the reduction in burn had a direct impact on the scale of quick commerce business,” one of the persons cited above said. “Dunzo Daily rivals were still being aggressive on discounts while the company tried increasing average order value (AOV) by reducing minimum order value for free deliveries.” While the AOV did increase, Dunzo witnessed consumers dropping out and moving to rival platforms because of
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