7 highlights
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The big news of the week was Reliance Retail investing about $200 million in hyperlocal delivery startup Dunzo for a 25.8% stake.
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This is obviously a strategic investment, a prelude to Reliance Retail acquiring Dunzo and getting into a sector now termed quick commerce—rapid deliveries of groceries or consumer goods, usually under 30 minutes at the most.
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Dunzo made a shift last year. From a “pick up and drop” or “buy anything from any store” service, it completely revamped its app to put grocery deliveries front and centre; instead of delivering from neighbourhood stores (which remains an option for users), Dunzo would deliver from its own network of Xpress Mart dark stores, as well as from some BigBasket dark stores.
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Grofers got $100 million from Zomato and announced a focus on 10-minute deliveries; soon after, it rebranded to Blinkit, and eventually said it would stop servicing any location outside a 10-minute radius of its dark stores.
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While Dunzo sat pretty at a $300 million valuation after seven years of building a logistics/local delivery service, Zepto the new kid came in with a $220 million valuation in October and then $570 million in December.
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Dunzo has been in talks with potential buyers for some time now, including Swiggy and the Tata group, which has been increasingly competing with Reliance on e-commerce and groceries after its acquisition of BigBasket. The company and its co-founder CEO Kabeer Biswas have walked away from these talks, adamant on valuation.
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Reliance, it bears repeating, doesn’t usually do expensive acquisitions, especially not of heavily loss-making startups. It prefers to snap up distress sales or modestly priced targets (which it has done with the likes of Urban Ladder, Milkbasket and Netmeds). Dunzo is an exception, as was Just Dial, where Reliance Retail acquired a majority stake (around 66%) for more than $750 million.