Reliance Retail has acquired 25.8 percent stake in India-based quick commerce (Q-commerce) delivery firm Dunzo for $200 million.
The acquisition will not only enable Reliance to synergize its retail footprint with last mile connectivity but also help to improve delivery capabilities to support the growth of its retail operations, according to a report by leading data and analytics company GlobalData.
The TATA Group’s acquisition of a majority stake in online grocer BigBasket in 2020 was one of the first major deals in the sector. Other players such as Zepto have been raising funds at high valuations to fund their expansion plans. Zepto’s latest $100 million funding round takes the company valuation to $570 million.
Similarly, online food delivery start-up Swiggy is also aggressively expanding its Instamart services with an investment of $700 million while Zomato-backed Grofers recently rebranded itself as ‘Blinkit’ to better reflect the ‘Q-commerce’ service model.
Parthasaradhi Reddy, Consumer Analyst, GlobalData, said: “The Covid-19 pandemic accelerated the e-commerce and delivery services market in India. According to GlobalData Q4 consumer survey, 70 percent of surveyed consumers stated that they prefer shopping online, and among these, 21 percent of the respondents stated that they have started doing this in the last three months. The increased activity in the sector reflects the changing attitude of consumers towards online shopping.”
Online shopping for groceries in India has been growing rapidly since the onset of the pandemic, with e-retailer sales of groceries skyrocketing by 166 percent from $1.4 billion in 2019 to $2.3 billion by 2020. Two categories, beans and pulses and baby personal care, dominated the sales during 2019-20201. The frenzy in the instant delivery/q-commerce market revolves around exploiting this growth as the last mile logistics plays an important role in the growth of ecommerce/online sales.
Reddy concludes: “Vendors in the instant delivery/q-commerce sector are adopting different logistics and warehousing strategies to ensure ever-faster deliveries. For instance, Blinkit and Zepto target a delivery time of less than 10 minutes; while Swiggy and Dunzo promise to deliver in under 20 minutes, and BigBasket promises to deliver in under 45 minutes. This will usher in a new era in delivery services in a country where logistics is the least efficient spoke in the supply chain.”