Flipkart, a major ecommerce platform backed by Walmart, is reportedly exploring the acquisition of cash-starved hyperlocal delivery startup Dunzo.
According to a TechCrunch report, complexities around Reliance-backed Dunzo’s ownership structure have made it difficult for both parties to reach a deal.
It’s important to highlight that Dunzo has been grappling with a cash shortage for nearly a year. This has led the startup to implement numerous rounds of layoffs and suspend salary payments to employees for several months. Additionally, the company experienced the departure of several key board members and its co-founder, Dalvir Suri, last year.
Continue Exploring: Dunzo Co-Founder Dalvir Suri announces departure after six years of service
According to the report, discussions regarding the acquisition between Flipkart and Dunzo are ongoing. Nevertheless, the deal has not materialized yet, partly because Flipkart is uncertain about the aspects it would be able to incorporate through the acquisition.
Dunzo has multiple IP relationships with Reliance Retail. Furthermore, as the largest investor in Dunzo, the Reliance Group company holds considerable sway and has reportedly not yet approved the deal.
Emails sent to Dunzo and Flipkart did not elicit a response.
According to the report, Flipkart recognizes the value of specific assets within Dunzo, particularly its business-to-business offerings in the hyperlocal delivery sector.
Established in 2015 by Kabeer Biswas, Suri, Mukund Jha, and Ankur Aggarwal, Dunzo connects consumers with nearby stores and facilitates deliveries of products including groceries, medicines, and food, among other daily needs. Though the startup entered the quick commerce space with Dunzo Daily, it only resulted in more cash burn for the company.
In fact, the startup’s major funding round from Reliance Retail in January 2022 was to support its quick commerce operations and strengthen its B2B business.
Nonetheless, its business has faced challenges in expanding at the same pace as the leading quick-commerce giants such as Blinkit, Zepto, and Swiggy Instamart. Even in the B2B sphere, Dunzo encountered stiff competition from Porter, Shiprocket, as well as Zomato and Ola.
Continue Exploring: Cash-strapped Dunzo promises to settle outstanding payments to former employees by March-end
Dunzo has secured approximately $457 million across various funding rounds to date. In addition to Reliance, notable investors on its cap table include Google, Lightbox, Lightrock, and Alteria Capital.
Amid the ongoing challenges, Dunzo saw its losses almost quadruple year-on-year to INR 1,801 crore in FY23. Nevertheless, there was a remarkable growth in operating revenue, which stood at INR 226.6 crore during the year, marking a 317% YoY increase.
Meanwhile, reports have emerged indicating that PhonePe, a major fintech firm backed by Walmart and previously associated with Flipkart until its separation in 2022, is exploring an investment opportunity in Dunzo.
