Reliance Retail led a $240 million financing round in Google-backed local delivery company Donzo, as India’s largest retailer expanded into the spot commerce space, a category that has made inroads into 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 a super-name local delivery service in seven cities in India. The new round, the name of which has not been disclosed, values the Bengaluru-based startup at $775 million. Also participating in the round were existing investors Lightbox, Lightrock, 3L Capital and Alteria Capital.
“We are witnessing a shift in online consumption patterns and we have been deeply affected by how Dunzo is disrupting the space. “Donzo is the leading fast-trading company in India, and we want to support them in furthering their ambitions for the To become a prominent local business enabler in the country.”
“Our merchants will be able to access Dunzo’s local delivery network to support their growth while taking their businesses online through Jio Mart,” she added.
Dunzo allows its customers to purchase a wide range of items across several categories, from groceries, perishables, pet supplies, and medicines to dinners from their nearby stores and restaurants. They can also use the Dunzo to move their own items — such as laptops, chargers, medicine, and lunch — around town.
Last year, it entered Bengaluru’s spot-delivery district, providing customers with delivery within 15-20 minutes. The startup said it is seeing 20% growth week on week without disclosing any numbers.
Dunzo said Thursday that it plans to expand into more geographies — eight additional cities — and expand its fast-paced business play with the new money.
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 handle most of the sales in the country.
Dunzo, which counts Bloom Ventures among its investors, is trying to reimagine how e-commerce and delivery are implemented in India, posing a challenge to Walmart-owned Amazon and Flipkart, as well as local food and grocery delivery companies like Swiggy, Zomato, and newcomer Zepto.
Kabir Biswas, Dunzo’s co-founder and CEO, at Reliance Retail – run by Mukesh Ambani, India’s richest man – said the startup has found “a long-term partner with whom we can accelerate growth and redefine how Indians shop for their daily business and weekly necessities”.
“We are excited about the traction and speed of Dunzo Daily and over the next three years, we aim to establish ourselves as one of the most reliable express trade providers in the country.”