Flipkart
, a leading player in the Indian
e-commerce
sector, has reportedly been in talks about a possible
acquisition
of Dunzo, a hyperlocal delivery startup backed by
Reliance Retail
, according to three sources who spoke to TechCrunch. However, the complex ownership structure of
Dunzo
has posed challenges in reaching an acquisition agreement, two sources familiar with the discussions revealed.
These previously undisclosed negotiations are still in progress, all three sources confirmed to the company. The talks come after a challenging year for Dunzo, which has faced difficulties in raising funds and paying its staff. Despite raising around $500 million so far, Dunzo has lost a significant portion of the hyperlocal delivery market to newcomers like Zepto, Swiggy, and Zomato’s BlinkIt in recent times.
Deal still to be finalised
The deal is yet to be finalised as at least two parties are working to sort out the terms. Flipkart, a Walmart-owned company and a leader in the Indian e-commerce market with a valuation exceeding $32 billion, is uncertain about what it would gain from acquiring Dunzo, which has multiple IP relationships with Reliance Retail, India’s largest retail chain. The deal has not yet received approval from Reliance Retail, Dunzo’s largest investor.
Flipkart sees potential in some of Dunzo’s assets, including the younger company’s business-to-business offerings based in Bengaluru.
What Dunzo said on the deal
In response to the report, Dunzo denied the claims, calling them “hearsay.” A spokesperson added, “We are on track to break even in terms of free cash flow in March 2024 and have not engaged in any discussions with any party regarding the acquisition of the business.” Over the past three years, Dunzo has reportedly held acquisition talks with several companies, including Tata and Zomato, as per more than a dozen individuals familiar with the matter.
The ongoing discussions between Flipkart and Dunzo highlight the diminishing prospects for instant delivery companies. These businesses have been operational for years, but their popularity surged during the early years of the Covid-19 pandemic when homebound people turned to companies like GoPuff, Getir, and Dunzo for quick delivery of a wide range of everyday items.
Dunzo, established in 2014, was one of the first startups to explore this model. With backing from Google, Blume Ventures, and Lightbox, it aimed to revolutionise India’s e-commerce sector with its 30-minute delivery promise to customers.
While Dunzo also operated in the B2B sector, it refocused on hyperlocal services as the global interest in instant grocery delivery grew, investing over $100 million to establish dark stores in numerous Indian cities.
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