Reliance Retail has led a $240 million funding round in Google-backed hyperlocal delivery startup Dunzo as the largest Indian retail chain expands to the instant commerce space, a category that has made inroads in the South Asian market in recent quarters.
Reliance Retail is investing $200 million in the round for a 25.8% stake in the six-year-old startup, which operates an eponymous hyper-local delivery service in seven cities in India. The new round, a name for which was not disclosed, values the Bengaluru-based startup at $775 million. Existing investors Lightbox, Lightrock, 3L Capital and Alteria Capital also participated in the round. (Google backed Dunzo in the previous round, which was the Series E funding.)
“We are seeing a shift in consumption patterns online and have been highly impressed with how Dunzo has disrupted the space. Dunzo is the pioneer of Quick commerce in India and we want to support them in furthering their ambitions of becoming a prominent local commerce enabler in the country,” said Isha Ambani, director of Reliance Retail Ventures Limited, in a statement.
“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.
Dunzo allows its customers to buy a wide range of items across several categories, from grocery, perishables, pet supplies and medicines to dinner from their neighborhood stores and restaurants. They can also use Dunzo to move their own items — such as laptops, chargers, medicines and lunch — around the city.
Last year, it entered the instant delivery space in Bengaluru, offering customers delivery within 15 to 20 minutes. The startup said it is seeing over 20% week-on-week growth without disclosing any figures.
Dunzo said Thursday that it plans to expand to more geographies — an additional eight cities — and broaden its quick commerce play with the fresh funds.
E-commerce accounts for less than 3% of all retail sales in India, according to industry estimates. Mom and pop stores and other neighborhood outlets that dot tens of thousands of cities, towns, villages and slums across the country drive most of the sales in the nation.
Dunzo, which counts Blume Ventures among its investors, is attempting to reimagine how e-commerce and delivery is done in India, thereby posing a challenge to Amazon and Walmart-owned Flipkart, as well as local food and grocery delivery startups such as Swiggy, Zomato and new comer Zepto.
Kabeer Biswas, co-founder and chief executive of Dunzo, said in Reliance Retail — which is run by India’s richest man, Mukesh Ambani — the startup has found a “long-term partner with whom we can accelerate growth and redefine how Indians shop for their daily and weekly essentials.”
“We’re excited by the traction and velocity that Dunzo Daily has achieved and over the next three years, we aim to establish ourselves as one of the most reliable quick commerce providers in the country.”