All of Reliance Retail’s investments in the now-defunct hyperlocal delivery business Dunzo have been formally wiped off. The conglomerate’s 78,923 equity shares of Dunzo, which were internally valued at INR 1,645 Cr in FY24, were worth nothing during the fiscal year under review, according to Reliance Industries Ltd.’s (RIL) FY25 annual report.
According to the report, the now-defunct business generated INR 1 Cr in operating revenue in FY25. This comes more than seven months after Reliance Retail, the biggest shareholder in the hyperlocal firm, wrote off its $200 million investment in it, according to various media reports.
Kabeer Biswas, the CEO and cofounder of Dunzo, left his position that same month to join Flipkart’s Minutes, a fast commerce startup.
Why Did Reliance Back Dunzo in 2022?
Three years have passed since Reliance led a $240 million round in Dunzo in January 2022, when the write-off occurred. The venture was marketed at the time as Reliance Retail’s attempt to get into the fast commerce race.
The agreement was also intended to improve the conglomerate’s omnichannel capabilities and allow hyperlocal logistics for Reliance Retail’s stores. In addition, Dunzo was supposed to assist JioMart’s merchant network with last-mile deliveries.
At the time of Dunzo’s closure of business operations, 26% of the company was held by Reliance Retail. Lightbox owned 10% of the startup, while Google India owned 19.3%. In 2014, Biswas, Ankur Aggarwal, Dalvir Suri, and Mukund Jha founded Dunzo, a platform that first catered to pick-and-drop services before branching out to grocery delivery.
Dunzo’s Financial Struggles and Competitive Pressures
Even though Dunzo has raised around $450 million in its career and accomplished several firsts, its tale took a sharp turn last year when it became apparent that the firm was losing millions of dollars due to very strong competition from players like Blinkit, Instamart, and Zepto.
In FY23, Dunzo’s overall revenue increased 3X YoY to INR 67.7 Cr, but its consolidated net loss expanded 4X YoY to INR 1,801 Cr. The startup made several unsuccessful pivots as funding dried up. After that, it struggled to continue operating and even had trouble finding a buyer. The startup eventually ceased operations.
Reliance Bets on AI for Future Growth with JioBrain
RIL also predicted in the annual report that AI would spur multi-decade growth in small steps. The company reaffirmed that it is creating an AI service platform under the JioBrain brand to provide a range of tools and platforms for businesses as part of its AI drive.
According to the firm, Jio will work with its international partners and use its knowledge of operations, software, data, networking, and infrastructure to allow the lowest AI inferencing cost in the world in India, enabling AI to be accessible everywhere for everyone.
Key Figures from RIL’s FY25 Annual Report
RIL further stated that its telecom subsidiary Reliance Jio is currently testing the AI platform for customer support, resource optimisation, and network planning and maintenance. According to the company, Jio Platforms, its digital arm, has filed more than 3,341 patents so far, including 1,654 in FY25, in the deeptech space.
India’s leading digital commerce entity Flipkart is working to venture into the fast-paced world of quick commerce to meet the burgeoning demand for rapid delivery of everyday essentials.
Flipkart has recently unveiled its latest initiative of same-day delivery service now available in 20 major Indian cities.
This strategic move underscores Flipkart’s unwavering dedication to elevating customer satisfaction, and convenience and to revolutionize the eCommerce landscape.
“We are committed to meeting evolving customer expectations and delivering excellence in value, selection, and speed, with more initiatives expected on this front in the coming months,” Walmart-backed Flipkart said in a statement.
This new initiative of same-day delivery will be for customers across cities including Ahmedabad, Bangalore, Bhubaneshwar, Coimbatore, Chennai, Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Lucknow, Mumbai, Nagpur, Pune, Patna, Raipur, Siliguri and Vijayawada.
It would cover products like mobiles, essential items, electronics, home appliances, fashion, books, and lifestyle goods. The customers will get their products delivered before midnight if they place their orders by 1 pm without any extra charge.
Flipkart’s introduction of same-day delivery service represents a significant advancement in the Indian eCommerce market.
“We have invested in cutting-edge technologies, leveraged data analytics, and harnessed insights on demand patterns to ensure that we are well-equipped to anticipate and fulfill demand the very same day. I must acknowledge the hard work and dedication of our teams who have tirelessly contributed to making this vision a reality,” said Hemant Badri, Senior Vice President, Head of Supply Chain, Customer Experience & ReCommerce Business, Flipkart Group.
In the past year, quick commerce has surged into a billion-dollar industry with platforms like Blinkit, Zepto, and Swiggy Instamart poised to exceed USD 1 billion in revenue in the financial year 2023-24.
The surge in quick commerce has captured Flipkart’s interest, prompting the eCommerce giant to enhance its emphasis on the grocery sector.
As quick commerce constitutes approximately 40% of online grocery delivery, it is increasingly fueling growth. Flipkart’s renewed focus on grocery aligns with a broader transition away from conventional eCommerce models centered on sales and discounts.
As of now, these apps are providing quick commerce to consumers in major Indian cities:
Blinkit
Swiggy Instamart
Zepto
Started operations in
January 2022
August 2020
April 2021
Revenue as of FY 2023 (in Rs crore)
724
3221
2024
Revenue as of FY 2022 (in Rs crore)
236
2036
142
Funds raised for quick commerce (in U.S.$ million) US$ 1 mn = Rs 8.2 cr
569
700
361
Current market share (in %)
40%
37-39%
20%
It’s essential to acknowledge how its rivals have also expanded into quick commerce to meet evolving customer demands.
Here’s how some of Flipkart’s competitors have ventured into quick commerce:
Amazon India
Amazon has been a key player in the Indian eCommerce sector, and it has also delved into quick commerce to enhance its delivery capabilities. The company offers Amazon Prime Now, which provides ultra-fast delivery of essentials, groceries, electronics, and more within a few hours.
Reliance Retail
Reliance Retail, through its digital arm JioMart, has been rapidly expanding its presence in the e-commerce space. Leveraging Reliance’s extensive network of physical stores and warehouses, JioMart offers quick delivery of groceries, household essentials, and other daily items.
BigBasket
As a leading online grocery platform in India, BigBasket has capitalized on the growing demand for quick delivery of essential items. The company offers express delivery services for groceries and household essentials, ensuring that customers receive their orders within a few hours. BigBasket has the quick commerce feature BB Now too to get groceries delivered in 15-30 minutes.
Blinkit
Grofers now Blinkit has rebranded itself to reflect its commitment to rapid delivery. With its extensive network of local partners and warehouses, Blinkit ensures that customers receive orders within a few minutes, making grocery shopping seamless.
Blinkit has begun selling home appliances, puja essentials, Eid special offerings like prayer mats, thobe kurte, ‘sehri’ and ‘iftar’ needs, ‘Holi’ needs, sweets, colors, thandai, bakery items, meats, seafood, cosmetics, mobiles and accessories, electronics, baby care products and much more.
Swiggy and Zomato
While primarily known for their food delivery services, Swiggy and Zomato have also entered the quick commerce space by offering delivery of groceries, medicines, and other essential items.
Zepto
Zepto is also the name of a quick commerce platform that enables businesses to offer fast delivery services for groceries, bakery products, kitchen essentials, paan corner (betel leaf), tobacco, health and hygiene, toiletries, clothing, and other essentials. Zepto provides tools and infrastructure to facilitate within minutes delivery of goods to customers’ doorsteps.
Dunzo
Dunzo has become synonymous with hyperlocal delivery, with its Daily service taking it a step further by guaranteeing delivery within 19 minutes. From groceries to medicines to food from nearby localities to letters to clothes from the nearest boutique, Dunzo Daily fulfills all your daily needs with lightning speed.
While Flipkart maintains a strong foothold in the market, achieving revenue growth poses a continual challenge. With the emergence of competitors such as Zepto and Blinkit, there is a critical need for Flipkart to establish itself within the quick commerce sector.
As per media reports, Flipkart is also weighing options to expand into quick commerce with the introduction of dark stores. Dark stores are like mini warehouses designed for online orders.
Flipkart is also planning to buy Dunzo Daily. Despite having raised approximately USD 500 million in funding, Dunzo has struggled to secure additional investment and meet its staff payroll.
The hyperlocal delivery company has lost ground to newer competitors like Zepto, Swiggy, and Zomato’s Blinkit, leading to a drop in its market position.
Flipkart, valued at over USD 32 billion, is considering buying Dunzo, known for its local delivery skills. This move could be smart, but talks might take a while because Dunzo has ties to Reliance Retail, its main investor owning a 26% share.
Flipkart wants to be careful about what it buys, especially considering Dunzo’s connections, according to an article published by Business Insights Now on February 23.
The prospects of quick commerce, including Flipkart’s role, are exceptionally promising, driven by evolving consumer preferences, technological advancements, and market dynamics.
Flipkart, along with other quick commerce platforms, will capitalize on increasing smartphone penetration, internet connectivity, and digital payment systems to broaden its reach across diverse demographics and geographic regions.
By 2028, it is anticipated that the number of users in the quick commerce market in India will reach 56.4 million users. The user penetration rate, which currently stands at 1.8% in 2024, is projected to rise to 3.8% by 2028.
Meanwhile, the quick commerce market in India is anticipated to reach a revenue of USD 3.3 billion in 2024, with a projected compound annual growth rate (CAGR 2024-2028) of 27.42%. This growth trajectory is expected to propel the market volume to USD 8.8 billion by 2028.
Revenue of Quick Commerce Market in India
Conclusion
In summary, Flipkart’s expansion of its same-day delivery service epitomizes its dedication to setting new benchmarks of excellence in the eCommerce arena.
With a focus on speed, convenience, and customer satisfaction, Flipkart reaffirms its position as a trailblazer in India’s digital commerce revolution.
As the quick commerce market continues to evolve and expand, Flipkart’s strategic initiatives and dedication to customer satisfaction will shape its trajectory in the years to come.
The future holds endless possibilities, and Flipkart stands ready to embrace the opportunities that lie ahead, driving forward the evolution of online retail.
“Many believe Amazon and Walmart-owned Flipkart will continue to dominate the future of Indian eCommerce. In my humble opinion, I would not bet against the hometown teams at Zepto and Zomato,” said a LinkedIn post by Paul Hudson, Founder and CIO, of Glade Brook Capital.
Glade Brook Capital, which supported Zepto in Mumbai last year, also invested in Zomato’s parent company, Blinkit, back in 2019.
FAQs
In how many cities will Flipkart provide the same-day delivery service?
Flipkart will provide same-day delivery service in 20 major Indian cities including Ahmedabad, Bangalore, Bhubaneshwar, Coimbatore, Chennai, Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Lucknow, Mumbai, Nagpur, Pune, Patna, Raipur, Siliguri and Vijayawada.
What will be the revenue of the quick commerce market in India in 2024?
The quick commerce market in India is anticipated to reach a revenue of USD 3.3 billion in 2024, with a projected compound annual growth rate (CAGR 2024-2028) of 27.42%. This growth trajectory is expected to propel the market volume to USD 8.8 billion by 2028.
Who are the competitors of Flipkart in the field of quick commerce?
The competitors of Flipkart in quick commerce include Dunzo, Amazon India, Reliance Retail, BigBasket, Blinkit, Zepto, Zomato, and Swiggy.
Reliance Retail Ventures Ltd (RRVL), under the leadership of Mukesh Ambani, is gearing up for a monumental Rs 8.38 lakh crore IPO scheduled for 2025. As this colossal IPO looms on the horizon, the remarkable journey and strategic maneuvers of Reliance Retail have become a focal point for investors and market observers.
RRVL is in discussions regarding a comprehensive strategy that involves an additional divestment ranging between $250-300 million this year. This comes in addition to the recent dilution in favor of the Qatar Investment Authority (QIA) and the US-based private equity fund Kohlberg Kravis Roberts (KKR). According to sources familiar with the discussions, this will be succeeded by a third stake sale offer to investors next year, at an increased valuation, preceding an anticipated initial public offering (IPO) in 2025.
In August of this year, RRVL divested 0.99% in favor of the Qatar Investment Authority, amounting to $0.99 billion (Rs 8,278 crore), resulting in a nearly doubled company valuation from Rs 4.21 trillion to Rs 8.27 trillion post-deal. Additionally, RRVL secured a deal with KKR, wherein the existing investor invested an additional Rs 2,069.50 crore, increasing its stake from 1.17% to 1.42%.
In a headline-making move, the Qatar Investment Authority (QIA) acquired a 1% stake in Reliance Retail for an astounding Rs 8,278 crore. This substantial investment is expected to significantly enhance the growth potential of Reliance Retail. The QIA, established in 2005, serves as the sovereign wealth fund of the State of Qatar, managing surplus funds from the country’s substantial oil and gas reserves. With a diversified portfolio spanning various sectors, QIA is a key player in global investments.
Kohlberg Kravis Roberts (KKR)
Kohlberg Kravis Roberts (KKR) further demonstrated its commitment to Reliance Retail by increasing its stake from 1.17% to 1.42%, injecting an additional Rs 2,070 crore. KKR, a globally renowned investment firm founded in 1976, is recognized for its expertise in private equity and alternative asset management across diverse sectors such as technology, healthcare, energy, and retail.
Abu Dhabi Investment Authority (ADIA) secured a 0.6% stake in Reliance Retail through an investment of Rs 4,966 crore, signaling its interest in the Indian retail sector and expressing confidence in Reliance Retail’s strategic positioning. Established in 1976, the Abu Dhabi Investment Authority is a formidable sovereign wealth fund owned by the Emirate of Abu Dhabi in the United Arab Emirates. Known for its extensive and diversified global investments, ADIA holds stakes in various asset classes.
According to analysts at Motilal Oswal, Reliance Retail Ventures Limited (RRVL) is anticipated to experience substantial growth. We project an annual increase of approximately 25% in earnings and 34% in profits, resulting in total revenue reaching around INR 4.1 trillion and profits reaching around INR 320 billion by the year 2025.
An insider familiar with the developments stated, “Reliance Retail has extended participation offers to all their key investors in this round as well. The ongoing discussion pertains to further divestment in 2024, at an elevated valuation before gearing up for an IPO.” Sources indicated that considering upcoming elections in India and the US next year, the prevailing sentiment is to abstain from major financial moves in 2024 and instead pursue an IPO in the subsequent year.
RRVL also counts other global investors among its stakeholders, including sovereign funds such as Saudi Arabia’s Public Investment Fund, Mubadala, and GIC Singapore, along with TPG, Silverlake, and General Atlantic. These investors, who injected funds in 2020, have witnessed a substantial increase in valuations in 2023.
The funds divested in Reliance Retail constitute 11.31% of the stake, attracting investments amounting to Rs 57,562 crore. In FY23, Reliance Retail reported annual revenues exceeding Rs 2.6 trillion, marking a 30% increase, and generated profits of Rs 9,181 crore. The company currently holds a position among the top 10 retailers globally and ranks within the top four in the country.
Reliance Retail Revenue for FY 2022 and FY 2023
With a footfall of 780 million in FY23 and a customer base nearing 250 million, Reliance Retail reaches 30% of the addressable population in the country. Consequently, it stands among the 10 most visited retailers worldwide. While digital and new commerce businesses contributed Rs 50,000 crore to revenues in FY23, constituting a fifth of total sales, the company has invested over $10 billion in the last two years for expansive growth. This is evident in the opening of 55 stores in the first quarter of FY24, bringing the total store count to 18,446, spanning 70.6 million square feet.
Noteworthy Financial Performance
The formidable financial performance of Reliance Retail becomes evident when examining the first quarter results of the fiscal year 2024. During this period, the company disclosed an impressive revenue of Rs 62,159 crore, coupled with a net profit of Rs 2,448 crore. These figures underscore Reliance Retail’s remarkable growth trajectory and profitability, solidifying its position among the top 10 retailers worldwide and ranking within the top four companies in India in terms of equity value.
“I have the conviction that as India progresses from a $2500 per-capita economy to a $10,000 per capita economy, Reliance Retail will emerge as our swiftest-growing business in terms of revenues and EBITDA,” affirmed Mukesh Ambani, the chairman of Reliance Industries Limited (RIL), during the company’s 46th annual general meeting (AGM) held in August.
In addition to its flagship Reliance Retail, RRVL boasts other subsidiaries and joint ventures, including Reliance Brands and Marks & Spencer, overseeing the remaining facets of apparel and additional retail operations.
