Indian e-commerce giant Flipkart has held discussions in recent weeks about a possible acquisition of Dunzo, the hyperlocal services startup backed by Reliance Retail, three sources familiar with the matter told TechCrunch. But complexities surrounding Dunzo’s ownership structure have made it difficult for the two sides to reach a takeover deal, according to two sources familiar with the talks.
The previously undisclosed talks are still ongoing, all three sources said. The takeover talks follow a turbulent year at Dunzo, which has struggled to raise cash and pay staff. Dunzo, which was once valued at $500 million, has ceded much of the hyperlocal delivery market to Zomato pioneers Zepto, Swiggy and BlinkIt in recent quarters.
The deal has yet to materialize as at least two players are trying to finalize terms. Walmart-owned Flipkart is skeptical about exactly what it will be able to take on if it acquires Dunzo, which has several IP relationships with Reliance Retail, India’s largest retail chain. Reliance Retail, the largest investor in Dunzo, has also not approved the deal.
Flipkart, which leads India’s e-commerce market and is valued at more than $32 billion, sees value in some assets of local startup Dunzo, including the younger Bengaluru-based company’s business-to-business offerings.
The talks between the two companies are notable for several reasons. Dunzo – which also counts Google, Blume Ventures and Lightbox among its backers – once tried to disrupt the country’s e-commerce sector by offering fast deliveries to shoppers.
However, as global interest in its instant grocery delivery model grew, Dunzo turned its attention back to hyperlocal services, pouring over $100 million to set up obscure stores in several Indian cities.
Financial services startup PhonePe, which is spun off from Flipkart in late 2022, has also explored an investment in Dunzo, India’s Economic Times reported in December.
Flipkart and Dunzo did not immediately respond to a request for comment on Tuesday evening.
This is a developing story. Check back for updates.
