Walmart-controlled Flipkart is considering buying Reliance backed Dunzo, the battle for India's e-commerce market shares continues.
TechCrunch cited three sources familiar with the matter, reporting that Walmart-backed Indian e-commerce company Flipkart has held discussions on a possible acquisition of on-demand delivery platform Dunzo. Amid ongoing negotiations, complex issues surrounding Dunzo's ownership structure have prevented the two sides from reaching consensus. In an emailed response, Dunzo denied having "any conversations with any company regarding the acquisition of the business."
Founded in 2007 by two former Amazon employees, Sachin Bansal and Binny Bansal, Flipkart is India's largest e-commerce retailer. Since its inception, the company has completed more than $6 billion in financing. In addition to its own e-commerce platform, Flipkart also owns fashion portals Myntra and Jabong. In August 2018, Walmart announced the acquisition of Flipkart Group for $16 billion, and thereby becoming the company’s largest shareholder by holding about 77% of its shares. Meanwhile Walmart also announced a $2 billion investment to accelerate Flipkart's growth.
In the face of fierce competition in American market, aside from the home rival Amazon, Walmart also face emerging foreign competitors like SHEIN and TEMU. In this context, the Indian market has become an important stop for Walmart to seek new growth abroad. Some analysts have pointed out that after the acquisition of Flipkart, the Indian e-commerce market will evolve into a showdown between two American companies, Walmart and Amazon.
Dunzo, the company Flipkart intending to buy, is a grocery delivery startup domestically known as the Indian version of "FlashEx". Co-founded by Kabeer Biswas, Ankur Aggarwal and others in 2015, it is headquartered in Bangalore. The company competes with companies such as Swiggy's Instamart and YC Continuity-backed Zepto. At the moment, the company's two biggest backers are Reliance Retail and Google. Despite its ambitious business goals, nevertheless, in these two years the company has been grappling with deficit, trying to reducing costs and frequently seeking financing.
Flipkart's planned acquisition of Dunzo might be of sign of its intention to expand its offline delivery business, which also indicates that that Volvo behind it will further expand the Indian market map so as to counterbalance Amazon and Reliance Industries. For Dunzo, on the other hand, it would at least escape its current financing predicament and seek a new way out if the acquisition is completed. As for whether the two companies can coincide in their goals, the public still need to wait for further information.