Indian ecommerce giant Flipkart has been engaged in discussions in recent weeks regarding a potential acquisition of Dunzo, the hyperlocal delivery startup backed by Reliance Retail, according to media reports.
However, complexities surrounding Dunzo’s ownership structure have reportedly posed challenges in finalising an acquisition deal, as per a media report. Despite these challenges, talks between the two parties are said to be ongoing, with negotiations still underway.
This potential acquisition comes amidst a challenging period for Dunzo, which has encountered difficulties in securing funding and meeting staff payroll obligations. Despite having raised approximately USD 500 million thus far, Dunzo has faced intensified competition from emerging players such as Zepto, Swiggy, and Zomato’s BlinkIt in the hyperlocal delivery segment.
Flipkart, valued at over USD 32 billion, is said to have acknowledged the potential value in certain aspects of Dunzo’s business, particularly its business-to-business offerings.
However, the Walmart subsidiary remains cautious about the assets it would inherit in acquiring Dunzo, given the latter’s significant intellectual property ties with Reliance Retail, India’s largest retail chain. Moreover, Reliance Retail, Dunzo’s primary investor with a 26 per cent stake in the startup, has yet to sanction the deal.
Over the past three years, Dunzo has reportedly explored acquisition discussions with multiple entities, including Tata and Zomato, according to numerous sources familiar with the matter.
Dunzo, backed by prominent investors including Google, Blume Ventures, and Lightbox, initially aimed to disrupt India’s ecommerce sector with its rapid delivery services. However, several instant delivery businesses, including Dunzo, have faced challenges as consumer preferences reverted to pre-pandemic norms.
Additionally, media reports indicate that PhonePe, a financial services startup that demerged from Flipkart in late 2022, reportedly explored an investment in Dunzo’s merchant network business in December 2023. However, Dunzo was reportedly not interested in the deal due to concerns regarding the strategic nature of the company backed by Walmart.
Furthermore, Dunzo had purportedly sought to raise USD 50 million in 2023, though the completion of that funding round remains uncertain, as per media reports.
