© Reuters.
Quick commerce startup Dunzo, backed by Reliance and offering hyperlocal delivery services in Bengaluru, has reported a fourfold increase in losses for FY23. The company’s losses rose to ₹1,801 crore from ₹464 crore in FY22. This increase coincided with a 317% surge in operating revenue to ₹226.6 crore in FY23, primarily driven by product sales from its dark stores.
The company’s dark stores contributed significantly to the revenue with sales amounting to ₹141.5 crore, marking a 67.3X increase from the previous year. However, these stores have faced closure due to financial challenges leading to a pivot to a partner store model. The shift was followed by the exit of cofounder Dalvir Suri and the closure of most dark stores.
Despite facing a cash crunch, which led to workforce layoffs and salary withholding since July 2023, Dunzo’s expenses saw a significant rise. Total expenses surged by 286% to ₹2,054.4 crore in FY23, with procurement and advertising costs seeing the biggest increases. Employee benefit expenses more than doubled even as salaries were withheld.
The company also faced strikes from delivery executives demanding better pay. As a result, Dunzo spent ₹367.4 crore on its delivery agents, an increase of 174% from ₹134 crore in FY22. Order cancellations further cost the company ₹44.2 crore in FY23.
Dunzo’s EBITDA margin fell to -678.6% in FY23 as it spent ₹9 for each ₹1 earned from operations. Despite these challenges, the startup raised around $457 million across multiple funding rounds, including $240 million from Reliance Retail and recently a $45 million debt. The company has been in discussions to raise $100 million from investors for over half a year now.
Despite the financial challenges, Dunzo claims its business burn is now neutral due to the successful implementation of cost cuts and that its overall platform GMV crossed ₹1,500 crore (INR100 crore = approx. USD12 million).
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