Exclusive: Dunzo to shut down some dark stores in NCR and Hyderabad

Quick commerce company Dunzo is in the process of shutting down some of its dark stores in Delhi-NCR and other regions, two sources told Entrackr. This comes even after the Bengaluru-based company scooped up a $240 million round led by Reliance Retail in January.

“Dunzo is shutting down 25-30% of its dark stores in the national capital region and Hyderabad as the company has been eyeing to improve unit economics ,” said one of the sources on the condition of anonymity.

Dunzo, however, denied saying the number of dark stores they are shutting down are less.  “... we shut down a few stores in peripheral areas with very low demand to drive operational efficiencies and optimize costs. Most of these areas are now being serviced by our high density stores, where we are already witnessing a spike in order volume,” said a Dunzo spokesperson in response to Entrackr’s queries. “We continue to service almost 97% of our overall customer demand. In fact, Delhi-NCR and Hyderabad remain important markets for us and we are going to build our presence here.”

As of June, Dunzo had 120 dark stores across eight cities. Entrackr couldn’t independently verify the exact number of stores that remain after the shutdown activity.

According to Entrackr’s sources, Dunzo is also laying off 25-30% of its staff from dark store teams in these two cities. The departing employees include people on payroll as well as contractual.

While Dunzo did not disclose the exact number of people whose jobs are affected by this move, their spokesperson said, “It’s a healthy business practice to focus on operational efficiencies and prune costs wherever needed, and we are confident that focusing on our high priority areas makes us a lot stronger. What is unfortunate is having to let go of a few people, even if it’s a small number of our overall team size.”

According to sources, this move is a cost cutting measure amidst a challenging funding environment and high burn. It’s worth noting that Dunzo lost Rs 230 on each order it delivered during the first half of 2022 or H1 2022.

Dunzo’s move to trim costs aligns with the strategy the company discussed internally some months ago. According to an internal document, as exclusively reported by Entrackr in August, Dunzo had charted plans to cut down their monthly burn of over Rs 176 crore to a little more than Rs 100 crore by December.

Since its inception, Dunzo has been bleeding money without a formidable topline. Last fiscal year (FY22), the company’s losses spiked 2X and crossed the Rs 460 crore mark. Its revenue also registered a two-fold growth in income which stood at Rs 54 crore in the fiscal year ending March 2022.

In September, several delivery executives of Dunzo had gone on strike to protest changes to the company’s delivery policy. Dunzo counts Swiggy’s Instamart, Zomato-owned BlinkIt, and Zepto as its major competitors.