Indian e-commerce giant Flipkart has been in talks about potentially acquiring Dunzo, the hyperlocal delivery startup backed by Reliance Retail, according to three sources familiar with the matter. However, the complexities surrounding Dunzo’s ownership structure have made it difficult for the two parties to reach an acquisition deal, according to two sources familiar with the talks.
The previously unreported talks are still ongoing and follow a turbulent year at Dunzo, which has been struggling to raise cash and make staff payroll. The hyperlocal delivery market has also been heavily contested by upstarts Zepto, Swiggy and Zomato’s BlinkIt in recent quarters.
As at least two stakeholders scramble to iron out the terms, the acquisition deal has yet to materialize. Flipkart, owned by Walmart, is skeptical about precisely what it would be able to acquire from Dunzo, especially since Dunzo has important IP relationships with Reliance Retail, India’s largest retail chain. Similarly, Reliance Retail, the largest investor in Dunzo, has also not approved the deal.
With a valuation of over $32 billion, Flipkart leads the Indian e-commerce market and sees value in certain assets of Dunzo’s, including the younger Bengaluru-headquartered firm’s business-to-business offerings.
These discussions underscore the declining prospects for instant delivery companies, which received considerable attention during the early years of the Covid-19 pandemic. Dunzo, founded in 2014, was one of the earliest startups to explore the instant delivery model and had ambitions to upend the country’s e-commerce sector with its promise of half-an-hour deliveries to shoppers.
However, as shoppers have returned to pre-pandemic buying habits, a number of instant delivery businesses, including Dunzo, have struggled to find strong unit economics around their models in recent times.
Reports suggest that Dunzo had been looking to raise $50 million in 2023, although it’s not clear if that round was completed. Financial services startup PhonePe, which separated from Flipkart in late 2022, also explored an investment in Dunzo, according to the Indian daily Economic Times.
Neither Flipkart nor Dunzo immediately responded to a request for comment. This is a developing story, so check back for updates.
