In recent weeks, Flipkart, the Indian e-commerce giant owned by Walmart, has been in talks to acquire Dunzo, the hyperlocal delivery startup backed by Reliance Retail, according to sources familiar with the matter. However, the potential acquisition faces challenges due to complexities in Dunzo’s ownership structure, hindering both parties from reaching a deal.
The discussions come at a challenging time for Dunzo, which has struggled with fundraising and staff payroll issues in the past year. Despite raising $500 million to date, Dunzo has faced increasing competition in the hyperlocal delivery market from emerging players like Zepto, Swiggy, and Zomato’s BlinkIt.
The ongoing talks indicate Flipkart’s interest in certain assets of Dunzo, particularly its business-to-business offerings. However, the deal has not materialized, as Flipkart remains cautious about the uncertainties surrounding Dunzo’s IP relationships with Reliance Retail, the major investor in the startup.
Dunzo, founded in 2014 and initially focused on half-hour deliveries, has experienced a shift in strategy, redirecting attention to hyperlocal services and investing over $100 million in setting up dark stores across Indian cities. Despite being an early player in the instant delivery space, the company, like other instant delivery businesses, has grappled with declining demand and challenges in achieving strong unit economics.
Responding to the reports, Dunzo issued a statement refuting the acquisition talks, dismissing them as “hearsay.” The spokesperson emphasized Dunzo’s commitment to achieving free cash flow break-even by March 2024 and denied engaging in acquisition discussions with any player.
The discussions between Flipkart and Dunzo highlight the broader trend of diminishing prospects for instant delivery companies. Initially propelled by the COVID-19 pandemic, the hype around instant delivery models has waned as consumer behavior returned to pre-pandemic patterns, with shoppers increasingly opting for in-person shopping.
As the landscape of instant delivery evolves, companies like Dunzo face challenges in adapting their business models to ensure sustainable growth. The uncertain outcome of the acquisition talks reflects the dynamic nature of the hyperlocal delivery market in India.
