Three sources informed Eltrys that Flipkart had discussed buying Reliance Retail-backed hyperlocal delivery firm Dunzo in recent weeks. According to two individuals familiar with the proceedings, Dunzo’s ownership structure has complicated takeover talks.
All three individuals stated that the undisclosed conversations continue. After a year of trying to obtain funding and pay people, Dunzo is negotiating an acquisition. Since raising $500 million, Dunzo has lost most of the hyperlocal delivery business to Zepto, Swiggy, and Zomato’s BlinkIt.
At least two parties are still negotiating the agreement. Flipkart, controlled by Walmart, is unsure what it may get if it acquires Dunzo, which has multiple IP ties with Reliance Retail, India’s biggest retail chain. Reliance Retail, Dunzo’s principal investor, has also rejected the purchase.
Flipkart is worth over $32 billion and dominates Indian e-commerce. It values Dunzo’s business-to-business products, the younger Bengaluru-based startup.
The conversations between the two corporations show rapid delivery providers’ decreasing prospects. During the early years of the COVID-19 epidemic, people remained home and resorted to GoPuff, Getir, and Dunzo for ultrafast (“instant”) delivery of an expanding number of ordinary products.
Dunzo—founded in 2014—was one of the first to try this concept. Its half-hour delivery with Google, Blume Ventures, and Lightbox backing aimed to disrupt the country’s e-commerce business.
As worldwide demand for quick food delivery grew, Dunzo returned to hyperlocal services, investing over $100 million in dark shops in various Indian towns.
A few years later, customers have resumed their pre-pandemic behaviors, including shopping in person. Several rapid delivery companies have failed to achieve good unit economics across all countries due to falling demand.
Dunzo sought $50 million in 2023, but it’s unclear whether that round was completed. In December, the Economic Times claimed that PhonePe, which split from Flipkart in late 2022, considered investing in Dunzo.
Flipkart and Dunzo did not reply to requests for comments Tuesday evening.
