Key Highlights :
Reliance Retail offloads ₹1,645 crore investment in Dunzo after the rapid-commerce company’s ₹1,800 crore loss in FY23.
Dunzo incurred steep per-order losses, leadership departures, unsuccessful fundraising attempts, and large-scale layoffs.
Key Background :
Reliance Retail’s withdrawal from Dunzo brings an end to a very aggressive bet on India’s quick-commerce sector. In January 2022, the retail giant made a big bet in the startup, buying a 26% stake with the dream of merging Dunzo’s hyperlocal delivery network into its retail and e-commerce businesses. The quick-commerce model was regarded as the next retail frontier at the time, fueled by demand for extremely fast delivery.
Dunzo was started in 2014 and initially found success as a hyperlocal convenience platform before its expansion into grocery and instant delivery. Scaling the quick-commerce business, though, was expensive. Every delivery averaged reportedly around ₹230 more than what the company made, indicating high operational inefficiencies and an unviable burn rate.
The cost pressure came through in FY23 when Dunzo’s loss escalated to ₹1,800 crore, almost three times higher than the prior year. While revenue went up to ₹226 crore, it was unable to match the increase in costs. The mismatch between growth and profitability became an important challenge.
Operational issues were followed by leadership transitions. Co-founder and CEO Kabeer Biswas stepped down in late 2023 to move to Flipkart’s fast-commerce division, creating a leadership void. Simultaneous repeated rounds of layoffs took the company’s staff down to about 50 employees in central teams. Attempts at raising $22–25 million in new funding were unsuccessful, resulting in delayed salaries and outstanding vendor payments, further undermining faith in the company’s sustainability.
Dunzo then shifted away from consumer-to-consumer grocery delivery, concentrating instead on its B2B logistics business, Dunzo 4 Business. Google India currently owns the second-largest portion at 19.3%, after Lightbox with 10%, with other investors and founders.
Reliance Retail’s full write-off of its ₹1,645 crore bet on the business is a strong indicator of the difficulties in keeping up quick-commerce companies in India’s competitive, price-conscious market. As attractive as the model is for customers, the economics continue to be tough to make without substantial subsidies or game-changing operational efficiencies. Dunzo’s path is a warning for investors wagering on high-growth, high-burn industries.
About the Author
Abhishek Roy
Abhishek Roy is a Managing Editor at Business Minds Media India.