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Thursday, April 6, 2023

Layoffs Intensify! Now, Google and Reliance Retail-backed Indian startup announces MASSIVE job cuts - Details - Times Now

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Founder and CEO of Dunzo, Kabeer Biswas, in the town hall conducted on Wednesday, told employees about the job cuts along with informing them about a change in the business model and strategy

Layoffs 2023: Google and Reliance Retail-backed quick commerce Bengaluru-based startup has laid off over 300 staff, which account for about 30% of its workforce besides planning a shift in the business model, employees were updated about the decision in a town hall on Wednesday.
The layoffs at the homegrown quick-grocery delivery provider comes despite the company secured funding of $75 million through convertible notes, The Economic Times reported quoting several people who were aware of the matter.
As per reports, about $50 million of the funding is coming from Google and Reliance Retail while other existing investors provided the rest funding.
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What is Convertible Note? - A convertible note refers to a short-term debt instrument (security) that can be converted into equity, typically during a future financing round, or an IPO. It requires no valuation to be ascribed to a company immediately. The debt method has been used widely by Indian startups over the last few years.

Meanwhile, Dunzo is also in talks with other investors such as Abu Dhabi Investment Authority (ADIA) for funding. However, the capital may only come after the business has stabilised and certain metrics are met, said people in the know as reported by The Economic Times.

Dunzo Layoffs- What founder and CEO Kabeer Biswas told employees?

Founder and CEO of Dunzo, Kabeer Biswas, in the town hall conducted on Wednesday, told employees about the job cuts along with informing them about a change in the business model and strategy, people briefed on the matter said.

Earlier in January, Dunzo had eliminated about 3% of its employees, which is minor compared with the latest job cuts at the quick commerce platform, which competes with Swiggy Instamart, Zepto, Zomato’s Blinkit, and BigBasket’s BB Now.

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However, Biswas, Google, and Reliance Retail are yet to respond to the queries sent by ET.

Reliance Retail owns 25.8% stake in Dunzo and is the single largest investor in the firm while Google has a stake of less than 20%.

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Dunzo to make changes in its business model

Dunzo will cut 50% of its dark stores and run only those that can be profitable or are nearing that threshold as part of the changes in its business model, reported ET.

Dunzo will partner with supermarkets and other merchants wherever it’s shutting its dark stores. This is similar to its marketplace model where consumers can order from individual grocery stores as well as other merchants. “They (Dunzo) have realised all its dark stores won’t be profitable, which is dragging down the stores that are working profitably,” said a person aware of internal discussions, as quoted by The Economic Times.

“It is looking to adopt the so-called omnichannel play, with own dark stores in areas with enough density while servicing the rest through third-party partners,” the person added.

While speaking to employees at the town hall, Biswas said that the firm had to take this decision to ensure it can hit profitability in the next 18 months.

Dunzo started operations in Bengaluru with goods pick-up and drop services in 2014. It is present in about seven cities. Besides its quick commerce offering Dunzo Daily, it has platforms for medicines, grocery, pet supply, meat, and others.

Sources said, as reported by ET, Dunzo is believed to be on an annualised revenue run-rate of about $300 million.

The company is aiming for its dark stores (small warehouses in key areas in a city to fulfill orders in 15-30 minutes) — after the cleanup — to become profitable by around October, sources added.

“Dunzo will focus on servicing short-distance orders with an average value of Rs 450, which is needed to make some money. The other realisation, after a year of expensive expansion amid rising competition, has been that all pockets in a city won’t have enough density and which is where they want to go back to external merchants,” said one of the persons, as quoted by ET.

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Layoffs Intensify! Now, Google and Reliance Retail-backed Indian startup announces MASSIVE job cuts - Details - Times Now
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