Flipkart has weighed acquiring Dunzo

Indian e-commerce giant Flipkart has held discussions in recent weeks about potentially acquiring Dunzo, the hyperlocal delivery startup backed by Reliance Retail, three sources familiar with the matter told TechCrunch. However, complexities surrounding Dunzo’s ownership structure have made it difficult for the two parties to reach an acquisition deal, according to two sources familiar with the talks.

The previously unreported talks are still ongoing, all three sources said. The acquisition talks follow a turbulent year at Dunzo, which has been struggling to raise cash and make staff payroll. Dunzo, once valued at $500 million, has ceded much of the hyperlocal delivery market to upstarts Zepto, Swiggy and Zomato’s BlinkIt in recent quarters.

The deal has yet to materialize as at least two players scramble to iron out the terms. Flipkart, owned by Walmart, is skeptical about precisely what all it will be able to take over if it were to acquire Dunzo, which has several IP relationships with Reliance Retail, India’s largest retail chain. Reliance Retail, the largest investor in Dunzo, has also not approved the deal.

Flipkart, which leads the Indian e-commerce market and is valued at over $32 billion, sees value in certain assets of local startup Dunzo, including the younger Bengaluru-headquartered firm’s business-to-business offerings.

The talks between the two firms are remarkable for several reasons. Dunzo — which also counts Google, Blume Ventures and Lightbox among its backers — once sought to upend the country’s e-commerce sector by offering fast deliveries to shoppers.

However, as global interest in instant grocery delivery model surged, Dunzo shifted its attention back to hyperlocal services, pouring over $100 million to set up dark stores across many Indian cities.

Flipkart and Dunzo didn’t immediately respond to a request for comment Tuesday evening.

This is a developing story. Check back for updates.