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Flipkart in talks to acquire delivery platform Dunzo: Report

Flipkart at the moment remains unsure of precisely what it would be able to take over if it were to acquire Dunzo, which has several intellectual property (IP) relationships with Reliance Retail.

Walmart-backed e-commerce company Flipkart has been in talks to acquire delivery platform Dunzo in recent weeks, according to a report by TechCrunch. Talks of this acquisition come as Dunzo struggled to raise cash flow and staff payroll in 2023. The acquisition deal is yet to be finalized with Flipkart being unsure of precisely what it would be able to take over if it were to acquire Dunzo, which has several intellectual property (IP) relationships with Reliance Retail. Reliance Retail, which picked up a 25.8% stake in Dunzo for $200 million back in 2022, has not yet approved the deal.

Dunzo started in 2014 as a hyperlocal, app-based delivery platform that picked and dropped packages but has since expanded to delivering groceries and food. Interestingly, Flipkart opened its own hyperlocal commerce service, Flipkart Quick, in 2020. The service was first launched in Bangalore and later expanded to other cities like Delhi, Gurgaon, Noida, Hyderabad, Pune, Lucknow, and Mangaluru. The company reportedly had a goal of expanding Flipkart Quick to 200 cities by the end of 2022. However, instead of scaling up, the hyperlocal commerce service was scaled down from 14 cities to only 2. According to an Inc42 report, Flipkart scaled down the service due to a decision to realign priorities to its next-day grocery delivery platform ‘Flipkart Supermart’. Acquiring Dunzo could be Flipkart’s attempt to re-enter the hyperlocal commerce space.

What is the market situation of other hyperlocal commerce platforms?

While Dunzo has been struggling to raise funds, its competitors in the space, like Zomato’s BlinkIt, seem to be faring well. As of December 2023, BlinkIt has seen a 103% year-on-year rise in gross order value. Zomato says that BlinkIt’s losses have been declining and that it expects the platform to reach break-even adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the first quarter of fiscal year 2025. Similarly, Swiggy is preparing for an initial public offering (IPO) this year with plans to raise over $1 billion.

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