About Zepto
Zepto, the fast-growing quick commerce company founded in 2020, has been making waves in the grocery delivery space. It was established by Aadit Palicha and Kaivalya Vohra, who both dropped out of Stanford University to launch this venture during the pandemic. Zepto’s main appeal lies in its ability to deliver groceries and essentials in under 10 minutes, a model that has attracted significant investor interest.
While Swiggy’s Instamart was the first to start quick commerce, Zepto quickly captured consumer attention and market share. Despite entering the market after competitors like Swiggy, Zepto has swiftly captured market share, with plans to expand into 40-50 cities. Its rapid adoption rate is a key differentiator.
Zepto Valuation
Zepto has raised $1.6 billion across nine funding rounds from 52 investors, including big names like General Catalyst, StepStone Group, and Lightspeed Venture Partners. As of its latest funding round in August 2024, Zepto was valued at $5 billion. This sharp rise in valuation reflects the strong backing it has received, even during a challenging “funding winter” in the tech world.
Unlike competitors such as Blinkit, which is backed by Zomato, and Instamart (Swiggy), Zepto is the only major quick commerce player funded purely by financial investors.
Operations & Performance of Zepto
In terms of sales, Zepto has been gaining traction, with a Gross Merchandise Value (GMV) of $1.5 billion as of July 2024. The company operates a network of dark stores—micro-warehouses strategically located in high-demand areas to facilitate its lightning-fast deliveries. As of August 2024, Zepto was processing approximately 650,000 orders per day and aimed to ramp up this number to 900,000 during the festive season.
Its average order value (AOV) has also increased steadily, contributing to rising revenues. In FY23, Zepto reported operating revenues of ₹2,024 crore but incurred a net loss of ₹1,272 crore, highlighting the challenges in making the quick commerce model profitable.
Zepto aims to break even by the September 2024 quarter, as its EBITDA margins move towards positive territory. Each dark store processes up to 2,000 orders per day, and new dark stores are reportedly reaching profitability within 9 months, which is a significant improvement.
Future Plans of Zepto
Zepto plans to expand beyond groceries into higher-value categories like electronics and home goods, which could help boost its gross sales and profit margins. However, despite its rapid growth and consumer adoption, profitability remains elusive—a challenge faced by most players in the quick commerce space globally.
Despite this rapid expansion, however, quick commerce has only captured a modest 7% of the potential market, with a total addressable market (TAM) estimated at $45 billion.