Flipkart, the e-commerce behemoth, has been in talks to potentially acquire hyperlocal delivery startup Dunzo, known for its rapid deliveries and backed by Reliance Retail. This development comes amidst a challenging period for Dunzo, which has faced difficulties in fundraising and maintaining its payroll.

What Happened? As per a TechCrunch report, the acquisition path is, however, not straightforward. Complexities in Dunzo’s ownership, particularly its intellectual property ties with Reliance Retail, have stalled the deal.

Reliance Retail, a significant stakeholder in Dunzo, hasn’t yet green-lighted the acquisition. Meanwhile, Flipkart, valued at over $32 billion (₹2.65 lakh crore), is assessing the value of Dunzo’s assets, especially its B2B services.

Dunzo, rejecting the claims of acquisition talks, stated its focus towards financial stability by March 2024. The company, which had earlier reportedly engaged in acquisition discussions with Tata and Zomato, is navigating a changing market landscape.

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Why it matters? The talks between Flipkart and Dunzo highlight a broader trend in the instant delivery sector. Initially thriving during the COVID-19 pandemic due to increased demand for quick home deliveries, companies like Dunzo are now grappling with shifts back to pre-pandemic buying habits. This shift has impacted the instant delivery model’s viability, with many companies in the space struggling to maintain profitable unit economics.

Dunzo’s journey, beginning in 2014, saw it pioneering the instant delivery model, backed by significant investors including Google. The company poured substantial resources into setting up dark stores for hyperlocal services but is now facing the challenges of changing consumer patterns.

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