Reliance Retail, once the largest investor in hyperlocal delivery startup Dunzo, has decided to write off its $200 million investment in the company, signaling a significant setback for the Indian quick commerce sector.
According to sources familiar with the situation, Reliance is no longer pursuing additional funding rounds or considering a distressed acquisition of the cash-strapped startup.
Dunzo, co-founded by Kabeer Biswas, is reportedly in talks with high-net-worth individuals and family offices to secure an acquisition deal valued at approximately ₹300 crore ($30 million). This valuation is a sharp decline from the $770 million peak valuation Dunzo achieved during its last funding round in January 2022, when Reliance Retail injected $200 million into the startup.
Efforts to engage major players like Flipkart, Swiggy, Tata Group, and Zomato for a potential buyout have not yielded results so far. Meanwhile, Biswas has communicated his intent to step down as CEO after concluding any acquisition deal.
The $240 million funding round in January 2022, led by Reliance, was seen as a strategic move to integrate Dunzo’s hyperlocal logistics with Reliance’s retail operations and JioMart platform. However, the rapid ascent of competitors like Zepto, alongside Zomato’s Blinkit and Swiggy’s Instamart, disrupted Dunzo’s plans to dominate the quick commerce sector.
Dunzo struggled to capitalize on the market opportunity, failing to replicate Zepto’s success. Over the past two years, its financial position deteriorated significantly. Losses tripled to ₹1,801 crore in FY23, compared to ₹464 crore the previous fiscal year. This financial strain resulted in severe cost-cutting measures, delays in employee salaries, and mounting dues to vendors.
To manage its escalating costs, Dunzo shifted its focus from ultra-fast 15-20 minute deliveries to a more cost-efficient 60-minute delivery model. Despite raising $6.2 million in debt funding, the company has been unable to stabilize its operations. Sources estimate that Dunzo’s total outstanding debt, including vendor payments and tax liabilities, stands at approximately ₹80 crore.
While Reliance’s investment in Dunzo was initially intended to strengthen its presence in the quick commerce space, the company now appears to be exploring opportunities within its existing JioMart ecosystem. Reliance’s other investments in startups, such as Embibe, Clovia, and NetMeds, have seen more stability, but the failure of its largest startup bet with Dunzo underscores the challenges of navigating India’s competitive quick commerce market.
Dunzo’s future remains uncertain as it struggles to secure a buyout deal to stay afloat. For Reliance, this episode serves as a cautionary tale about the volatile nature of the quick commerce industry, which requires substantial capital and operational efficiency to succeed.
As the quick commerce race continues to evolve, players like Zepto, Blinkit, and Instamart will likely dictate the sector’s direction. For now, Dunzo’s fall highlights the harsh realities of competing in one of India’s most dynamic and demanding market