India's quick commerce play, which has seen a sharp increase in activity in recent times, is now set for a more hectic phase as Dunzo, the country's top quick commerce player, has raised $240 million in its latest round of funding.
The investment was led by Reliance Retail Ventures with an investment of $200 million. The Mukesh Ambani-led company will now own 25.8% stake in Dunzo on a fully diluted basis. This round of funding also saw funds from Dunzo's existing investors Lightbox, Lightrock, 3L Capital and Alteria Capital. This roughly takes the valuation of the company, in which Google has also invested, to $775 million.
In a press statement, the company said the capital will be used to enable instant delivery of essentials from a network of micro warehouses while also expanding its B2B business vertical to provide logistics for local merchants in Indian cities. Reliance Retail will of course use Dunzo to further penetrate the services of JioMart.
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Quick commerce space will see more action
Dunzo, it was speculated, was in talks with Tata Group, Swiggy and Zomato for the new round of funding. As it happened, Reliance was the one managed to make inroads. Though it is a bit of a surprise that Reliance did not go for an outright buy as it did with Netmeds and Milkbasket. Or possibly Reliance is under pressure due to the pressure in its attempted takeover of Future Retail.
But Dunzo will be key to Reliance's plans, as it (Dunzo) has established itself as the market leader in the quick commerce category in India, which according to market estimates has an addressable opportunity of $50+ billion.
As of now, Dunzo is available across 7 metro cities in India and the new funds will be used to expand the quick commerce business to 15 cities. Dunzo launched its instant delivery model ‘Dunzo Daily’ in Bengaluru earlier this year, which it claimed is seeing over 20% week on week growth. The Dunzo Daily model delivers daily and weekly essentials within 15-20 minutes, with a focus on providing high quality fruits and vegetables.
The quick commerce space, as we said, will see increased action as players like Zepto, Zomato-backed BlinkIt (formerly Grofers), Swiggy and Ola are all upping the ante. Swiggy is to invest $700 million in Swiggy Instamart and Zomato is to pour more funds into BlinkIt. Zepto also saw a $100 million round to expand to more cities in the country.
Kabeer Biswas, CEO and Co-Founder, Dunzo, said, “We’re excited by the traction and velocity that Dunzo Daily has achieved and over the next 3 years, we aim to establish ourselves as one of the most reliable quick commerce providers in the country.”
What Dunzo and Reliance Retail plan to do
In addition to the funding, Dunzo and Reliance Retail will also enter into certain business partnerships. Dunzo will enable hyperlocal logistics for the retail stores operated by Reliance Retail. Dunzo will also facilitate last mile deliveries for JioMart’s merchant network.
Isha Ambani, Director, Reliance Retail Ventures said as much: “Through our partnership with Dunzo, we will be able to provide increased convenience to Reliance Retail’s consumers."
Our merchants will get access to the hyperlocal delivery network of Dunzo to support their growth as they move their business online through Jio Mart, she added.
Reliance Retail has reported a consolidated turnover of Rs 157,629 crore and net profit of Rs 5,481 crore ($750 million) for the year ended March 31, 2021.
For the year ended March 31, 2021, Dunzo saw its revenue from operations growing to Rs 45.8 crore from Rs 27.5 crore in FY20. During the period, it cut its annual losses from Rs 338.4 crore in FY20 to Rs 225.7 crore in FY21.
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