The grocery market in India gained traction in its online channels as consumer behaviour shifted in the wake of the COVID-19 outbreak. The rise of this sector has been accelerated by factors like urbanisation, tech-savvy consumers, and social alienation caused by the epidemic.
According to RedSeer Consulting, the e-groceries segment has increased by nearly 75% just during the lockdown. Traditional retail will continue to dominate market share, but modern retail is likely to grow at a faster rate.
By 2024, new categories are predicted to cause a $200B increase in the market, accounting for India’s over 100M online buyers.
Meanwhile, Dunzo, a hyperlocal delivery service based in Bengaluru, has secured $240M in a new round of funding led by Reliance Retail Ventures Limited. Reliance Retail, helmed by Mukesh Ambani, has purchased a 25.8% fully diluted share in Dunzo for $200M.
The new round also included existing investors Lightbox, Lightrock, 3L Capital, and Alteria Capital. Dunzo has moved a step closer to joining the illustrious unicorn club as a result of the deal.
The funds will be used to help Dunzo achieve its goal of becoming India’s largest rapid commerce company by enabling instant delivery of essentials from a network of micro warehouses, as well as extending its B2B business vertical to provide logistics for local merchants in Indian cities.
Dunzo and Reliance Retail will also form various business collaborations in addition to the funding. Dunzo will allow hyperlocal logistics for Reliance Retail’s retail outlets, enhancing the omni-channel capabilities of the company. Dunzo will also help JioMart’s merchant network with last-mile deliveries.
“Since our beginning, we have been razor focused on offering an exceptional customer experience, and this fundraising round is a resounding affirmation of our strategy,” stated Kabeer Biswas, CEO and Co-Founder of Dunzo. I’m pleased of the team for working so hard to establish this category over the last three years, and I appreciate our investors’ continuous support. We will have a long-term partner in Reliance Retail, with whom we can accelerate growth and reimagine how Indians buy for their daily and weekly requirements. We’re excited about Dunzo Daily’s traction and speed, and we want to build ourselves as one of the most dependable rapid commerce suppliers in the country over the next three years.”
A delivery goliath
Dunzo, founded in 2015 by Dalvir Suri, Mukund Jha, Kabeer Biswas, and Ankur Aggarwal, connects customers with nearby retailers and suppliers, facilitating deliveries of groceries, prescriptions, meals, and other everyday necessities.
Before this, Dunzo secured $40M in a Series E funding round led by Google and Lightstone.
Dunzo is currently available in 7 Indian metro cities, and the additional funds will be used to expand the rapid commerce firm to a total of 15 locations. Dunzo started its immediate delivery model, ‘Dunzo Daily,’ in Bengaluru earlier this year, and it has seen a week-on-week rise of more than 20%. The Dunzo Daily model, which focuses on supplying high-quality fruits and vegetables, delivers daily and weekly requirements in 15-20 minutes.
Dunzo is backed by Reliance Retail, Google, Blume Ventures, Aspada Investments, Lightrock, LightBox Ventures, STIC Ventures, Alteria and 3L Capital.
“We are observing a shift in purchasing habits to online and have been quite impressed with how Dunzo has disrupted the space,” Isha Ambani, Director, Reliance Retail Ventures Limited, said of the investment. Dunzo is India’s Quick Commerce pioneer, and we want to help them achieve their goal of becoming a leading local commerce facilitator in the country. We will be able to provide additional convenience to Reliance Retail’s customers and a differentiated customer experience through speedy delivery of products from Reliance Retail locations thanks to our cooperation with Dunzo. Our merchants will be able to use Dunzo’s hyperlocal delivery network to help them expand their businesses as they shift their operations online through Jio Mart.”