Shifting e-commerce dynamics: Flipkart eyeing acquisition of Dunzo to take on Swiggy Instamart, Blinkit?
By Sunita Iyer | First Published Feb 21, 2024, 1:57 PM ISTFlipkart, a Walmart-owned company and a prominent player in the Indian e-commerce market with a valuation exceeding $32 billion, reportedly appears to be evaluating the potential benefits of acquiring Dunzo.
In a move that could reshape the landscape of India's hyperlocal delivery sector, leading e-commerce giant Flipkart is reportedly in discussions about acquiring Dunzo, a hyperlocal delivery startup backed by Reliance Retail. While these negotiations are still underway, the complexity of Dunzo's ownership structure has presented challenges in reaching a conclusive acquisition agreement, according to a report in TOI.
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The reported talks come at a crucial juncture for Dunzo, which has encountered difficulties in fundraising and meeting financial obligations to its staff. Despite having raised approximately $500 million thus far, Dunzo has faced tough competition from emerging players like Zepto, Swiggy, and Zomato's BlinkIt, leading to a loss of market share in the hyperlocal delivery market.
As of now, the acquisition deal is reportedly yet to be finalized, and negotiations are ongoing to iron out the terms. Flipkart, a Walmart-owned company and a prominent player in the Indian e-commerce market with a valuation exceeding $32 billion, appears to be evaluating the potential benefits of acquiring Dunzo. However, uncertainties linger, primarily related to Dunzo's complex relationships with Reliance Retail, India's largest retail chain and Dunzo's major investor. The deal also reportedly awaits approval from Reliance Retail.
Flipkart is said to be eyeing certain assets of Dunzo, particularly its business-to-business offerings based in Bengaluru. This strategic move suggests Flipkart's interest in strengthening its position in the hyperlocal delivery segment, possibly diversifying its services and exploring new avenues for growth.
Responding to the reports, Dunzo denied the acquisition claims, dismissing them as "hearsay." A spokesperson emphasized that the company is on track to break even in terms of free cash flow by March 2024 and has not engaged in any discussions regarding the acquisition of the business.
Over the past three years, Dunzo has reportedly explored acquisition talks with several companies, including Tata and Zomato.
The ongoing discussions between Flipkart and Dunzo highlight the evolving dynamics of instant delivery companies. While these businesses witnessed a surge in popularity during the early years of the Covid-19 pandemic, the sector is facing increased competition and challenges. Dunzo, established in 2014 with backing from Google, Blume Ventures, and Lightbox, initially aimed to revolutionize India's e-commerce sector with its promise of delivering a wide range of items within 30 minutes.
As Flipkart reportedly explores the potential acquisition of Dunzo, the Indian hyperlocal delivery market may witness significant shifts. The outcome of these talks will not only impact the trajectory of both companies but also reflect broader trends in the e-commerce and delivery sectors in India. The evolution of this story will be closely monitored as stakeholders await further developments in this unfolding chapter of the Indian tech and business landscape.
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