India’s First Unicorn of 2023 Zepto's Remarkable Journey

Zepto is a quick commerce startup that offers a 10-minute grocery delivery service in 7 Indian cities. The company was founded in 2021, by Aadit Palicha and Kaivalya Vohra, two Stanford dropouts who wanted to revolutionize the online grocery market in India. Zepto has achieved phenomenal growth since its launch, becoming India’s first unicorn of 2023 with a valuation of $1.4 billion and piquing the interest of the stock market.

Zepto’s Business Model

  

Zepto’s business model is based on delivering groceries in just 10 minutes using AI and data analytics. Zepto operates its own dark stores, which are small warehouses that stock over 3,000 products. Zepto uses machine learning to optimize its inventory management, route planning, and delivery operations. Zepto also uses data analytics to understand customer preferences and offer personalized recommendations. 

What are Dark Stores? 

Dark stores are physical warehouses where all the products available on the Zepto app are stored. When you place an order, a Zepto delivery executive retrieves your selected items from one of these dark stores and delivers them to your location.

Dark store order fulfillment is a process by which online orders are fulfilled from a brick-and-mortar retail location that is not open to the public. These stores are typically located in high-traffic areas and are designed to optimize the picking and packing process for online orders.

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Dark stores are physical storages where all the products available on the Zepto app are stored. When you place an order, a Zepto delivery superintendent retrieves your named particulars from one of these dark stores and delivers them to your position.

Dark store order fulfillment is a process by which online orders are fulfilled from a slip up- and- mortar retail position that isn't open to the public. These stores are generally located in high- business areas and are designed to optimize the selecting and quilting process for online orders.

Dark stores are the sole reason why Zepto is suitable to deliver some orders in under 10 twinkles. By being in close proximity to a thick civic area, they're suitable to deliver your order snappily.

BigBasket took anywhere between 3 hours to a day to deliver a bag of groceries, while Zepto does it in 10 twinkles. A lot of this speed is heavily owed to a storehouse that's present in close proximity to an civic position. This is just simple drugs bringing down the time of the last afar delivery.

Since the distances are closer, the delivery directors are also suitable to fulfill their orders hastily. Also, with guests who order constantly, Zepto can assign the same set of delivery mates to fulfill their orders. Since they're well acquainted with the position of the guests, this brings the time to Deliver indeed lower.

With Zepto, some of these problems like Prep Time are naturally removed due to the nature of the business. Since the motorists are also operating in a familiar position, the first afar & last afar times are brought down significantly.

The company's rapid-fire expansion of dark stores, from 86 in 2021 to over 200 in just 1-1.5 times, has resulted in a remarkable boost in its profit numbers. Also, the average order value has surged to aroundRs. 440- 450, motioning an emotional time- on- time growth rate of roughly 40. This substantial increase in order value has played a vital part in driving up the company's overall profit.

Zepto’s secret to success lies in its scrupulous prosecution and discipline in managing every aspect of its force chain. Zepto uses its own network of pall shops that are strategically located in popular neighborhoods to fulfill orders snappily. Zepto also leverages data and technology to optimize its force, routing, and delivery operations.

​Zepto’s Financials

Zepto’s financials show that the company is growing. According to Planify, a platform that provides exploration reports, Zepto’s request cap is ₹728.29 crore, which is higher than its contender Big Basket’s ₹ 250 crore. Zepto’s profit for 2022 is projected to be ₹140.71 crore, which is much higher than Big Basket’s ₹8.5 crore.

​Zepto Funding Details:

Funded By	Funding Amount (in Rs cr.)	Date	Funding Round	Fund Name
Contrary, LLC; G C & H Investments; Glade Brook Capital Partners LLC; Kaiser Permanente Ventures; Nexus Venture Partners; Y Combinator; Y Combinator Continuity Fund I, L.P.	₹1,530.42	02/05/22	Series D	Right Issue
Glade Brook Capital Partners LLC; Global Founders Capital Management GmbH; Nexus Venture Partners; Y Combinator	₹440	08/02/22	-	Right Issue
Breyer Capital, LLC; Contrary, LLC; Glade Brook Capital Partners LLC; Global Founders Capital Management	₹758	20/12/21	Series C	Right Issue

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Glade Brook Capital Partners LLC; Global Founders Capital Management GmbH; Nexus Venture Partners; Y Combinator	₹14.85	01/11/21	-	Right Issue
2 a.m. Ventures; Contrary, LLC; Global Founders Capital Management GmbH	₹2.68	15/02/21	Pre Seed	Equity
M/s KiranaKart Pte. Ltd.	₹2.7	Sep,2020	Pre Seed	Equity

Zepto’s Growth Potential and Challenges

Zepto’s growth has not gone unnoticed by investors. Zepto has raised about $560 million till date from various backers, including StepStone Group, Goodwater Capital, Nexus Venture Partners, Glade Brook Capital, and Lachy Groom. Zepto became India’s first unicorn startup in 2023 when it raised $200 million in a Series E funding round led by StepStone Group at a valuation of $1.4 billion.

Zepto has a huge growth potential in the online grocery market in India, which is expected to reach $50 billion by 2025. Zepto has already expanded its presence across Mumbai, Delhi, Bengaluru, Chennai, Hyderabad, Pune, and Lucknow. Zepto plans to enter more cities. 

However, Zepto also faces some challenges and competition in the quick commerce space. Zepto competes with other players such as Dunzo, Big Basket, Swiggy Instamart, Zomato Grocery, and Blinkit. These players have also raised funds and invested in technology and infrastructure to offer fast and convenient delivery services. Zepto also has to deal with regulatory issues, customer retention, quality control, and operational costs.

Here Zepto’s Competitive Analysis snapshot: 

	Zepto	Dunzo	Big Basket	Blinkit	Instamart
No. of Dark Stores	200	250	100	450	1000
Promised Delivery Time	10	19	15	10	22
No. of Delivery Partners	25000	100000	150000	75000	300000
Average Order Value (AOV)	450	350	450	522	400
Using Dark Stores Since	2021	2020	2015	2020	2020
No. of cities Operating in	11	32	25	18	29

Future Prospectus 

As per the article from techcrunch, The startup has ambitious plans for the future. Zepto aims to reach $1 billion in annualized sales within the next few quarters and become IPO-ready with a company-wide EBITDA-positive metric by 2025.  Zepto also plans to launch new categories of products and services, such as pharmacy, beauty, pet care, and more. Zepto also hopes to expand to more cities and countries in the near future.

Zepto claimed it has reduced its burn significantly and a majority of its dark stores are EBITDA positive now.

Click here to get research report of  Zepto Share Price.