reliance-dunzo deal: $240 million delivered, Reliance Retail picks up 25.8% stake in Dunzo – The Economic Times

lipped from: https://economictimes.indiatimes.com/tech/startups/reliance-retail-picks-up-25-8-stake-in-dunzo-leads-240-million-funding/articleshow/88733921.cmsSynopsis

The Reliance-Dunzo deal has more than doubled the valuation of the Bengaluru-based startup to $775 million. Dunzo is planning an IPO in the next three years, an idea that Reliance Retail is “supportive” of.

Reliance Retail said it has led a $240 million funding round in quick commerce firm Dunzo and will now own 25.8% stake in the Bengaluru-based startup, marking the oil-to-technology conglomerate’s entry into the ultra-fast commerce sector.

Post this deal, Reliance Retail is now the largest shareholder in Dunzo.

Kabeer Biswas, cofounder and chief executive of Dunzo, told ET that partnering with the largest retailer in the country will give it a ‘massive leg-up’ against competitors and that both the companies are looking to collaborate on the supply chain side.

Reliance’s entry into the rapidly expanding quick commerce space comes at a time when significant investments are being poured into startups such as Blinkit (earlier Grofers), Mumbai-based Zepto and Swiggy’s Instamart. Tata-owned BigBasket is also expected to start its 15-30-minute delivery service soon.

Dunzo, which started life as a hyperlocal delivery platform, has recently launched its own quick commerce service, which is facilitated through dark stores.

The Reliance-Dunzo deal has more than doubled the valuation of the Bengaluru-based firm to $775 million, up from about $300 million. Existing investors Lightbox, Lightrock, 3L Capital and Alteria Capital also participated in this round, which saw Reliance bring in the bulk of the cash at $200 million.

Best of ETtech delivered to your Inbox

Trusted by Industry Leaders

  • Kunal BahlCo-Founder & CEO, SnapdealRitesh AgarwalFounder & CEO, OyoDeepinder GoyalCo-founder & CEO, Zomato
Reliance Retail acquisitions

(Graphic: Rahul Awasthi/ETtech)
Biswas said Dunzo is planning an initial public offering (IPO) in the next three years and that both new and existing investors are aligned with the thought process. And while the Reliance deal has closed, it is in early stages of talks for a new funding round as well, he said.

“The idea was to be able to work with a long-term partner on the business. We want to go ahead as an independent entity and be able to find a way to go public,” Biswas told ET. He said the Reliance team was “supportive” of these ideas.

Global technology giant Google, which owns about 8% stake in Jio Platforms, is also an investor in Dunzo. RIL’s funding comes on the back of heightened investor interest in Dunzo, with multiple suitors vying for a stake including the Tata Group, food delivery firm Swiggy and financial investors, among others.

ET reported in August that the proposed Tata-Dunzo deal had failed to fructify as the hyperlocal startup was unwilling to cede majority control to the salt-to-steel conglomerate that is aggressively expanding its footprint in the ecommerce space.

Collaboration, Expansion
The Reliance-Dunzo deal will see extensive collaboration between the two businesses.

“Our merchants will get access to the hyperlocal delivery network of Dunzo to support their growth as they move their business online through JioMart,” Isha Ambani, director at Reliance Retail Ventures Ltd., said in a statement on Thursday.

Dunzo will use the new capital to take its quick commerce business Dunzo Daily to 15 cities this year and power it through its dark stores. It will run two core businesses—the consumer delivery service for grocery and essentials and a business-to-business (B2B) vertical where it offers its delivery fleet to businesses. About 15,000 local merchants use it every month, he said.

“Dunzo Daily should be in 15 cities and the B2B business would be in 50 cities,” Biswas said, adding that the B2B vertical would look to service Reliance Retail as well as other merchants. Dunzo Daily, which is operational in Bengaluru, promises to deliver groceries and essentials in 19 minutes.

Dunzo runs around 60 dark stores in India, and Biswas is aiming to take this to 200 cities in the next six-nine months. Its current monthly delivery fleet is about 40,000 people and it would be looking to add more as it expands across the country.

Terming Dunzo as the pioneer of quick commerce in India, Reliance Retail’s Ambani said the company is seeing a shift in consumption patterns online and would want to support (Dunzo) in furthering its ambition of becoming a prominent local commerce enabler in the country. Biswas said the company will explore partnerships for Reliance JioMart too.

Rising Competition
Besides the quick delivery platforms, Walmart-owned Flipkart also has a 90-minute delivery service named Flipkart Quick but it is looking to bring it down to 30-45 minutes this year, as reported by ET.

“We will see competition but it’s a big consumer behaviour that’s getting digitised in the country. It’s significantly bigger than food delivery,” he said. According to Biswas, Dunzo, in the future, will start offering non-grocery items as well. Recently, Blinkit also said it will deliver a range of products, outside grocery, to consumers in 10 minutes.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s