Flipkart drops plan to purchase stake in Zepto; to launch its own quick delivery service: Report

Walmart-owned ecommerce giant Flipkart and quick commerce unicorn Zepto were reportedly in discussions for a potential merger, but the negotiations have fallen through and are unlikely to be revived.

According to an ET report, Zepto chose to seek a financial round rather than a strategic sale, focusing on a valuation increase and preparing for an initial public offering (IPO).

Flipkart had made an offer valuing Zepto at under $2 billion, but Zepto declined as Flipkart sought a majority stake which Zepto was not willing to give up.

Why did Zepto reject Flipkart's offer?

Zepto's decision to reject the offer from Flipkart was driven by its desire to maintain control over the company. Aadit Palicha, Zepto's CEO, reportedly said, “We are not open to strategic investors today.” He emphasized the company's strong financial position and its near EBITDA positive status, indicating no immediate need for large-scale fundraising, ET reported.

What's next for Zepto?

Zepto is now turning to private equity funds and existing investors to raise new capital. The startup is reportedly in talks with firms like General Atlantic and sovereign funds, including Abu Dhabi Investment Authority (ADIA), aiming for a valuation of nearly $2.5 billion.

This would nearly double its previous valuation of $1.4 billion. The potential investment round may stretch up to $500 million, with internal commitments already accounting for $200 million.

Flipkart plans to launch its own quick-commerce vertical

After the breakdown of talks with Zepto, Flipkart is also likely to launch its own quick delivery service in July this year. It is currently in the process of setting up dark stores, which will enable deliveries in under 30 minutes.

The initiative reflects Flipkart's strategy to strengthen its position in the instant-delivery segment, a sector where it previously lagged behind competitors.

The larger impact on quick commerce

The quick commerce sector is increasingly seen as crucial for e-commerce firms, with a potential gross merchandise value (GMV) of around $34 billion by FY29. According to a UBS report, the sector's importance has evolved from "good to have" to "indispensable," signalling a significant shift in the e-commerce landscape.

Flipkart's move into this space is seen as a strategic step to counter competitors and cater to evolving consumer expectations for faster delivery services.