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Zepto business model: All you need to know

By Abhishek Goel 7th February 2022

Zepto business model was developed by a couple of successful instant grocery delivery startup founders. The company was founded by a couple of teenagers. Zepto was recently successful in raising $100 million for financing its operations. This funding operation was led by Y Combinator and took the valuation of Zepto up to $570 million in a space of 5 months after beginning their operations in India. The Zepto business model works within the quick commerce segment in India that is running red hot. Zepto was named after a small unit and it was started by Aadit Palecha and his childhood buddy Kaivalya Vohra who were both 19 at the time.

zepto business model

Both the Zepto founders were studying computer science at Stanford University and left the course to enter quick commerce in India. The Zepto business model promises to deliver your grocery in 10 minutes. The company began its operations in Mumbai in 2021 and has since extended its operations to Delhi, Bangalore, and 4 other major cities. The business of online grocery delivery is already taking off in India with a $1 trillion retail market perceived. Purchasing groceries account for the majority of your retail spending.

The arrival of Zepto in India

Even the arrival of the startup in India was a bit serendipitous. Both Kaivalya Vohra and Aadit Palicha had returned to the country for a break just before the coronavirus pandemic engulfed India. Both these teenagers had partnered on several other projects earlier. They created a ride-hailing commute app suitable for school-going kids. But this time they found themselves locked in their homes when they arrived in Mumbai.

With the pandemic raging on mercilessly, both the teenagers were struggling to get their grocery supplies. This was even though grocery deliveries were categorized as essential by the government. They felt the need for having an online player for the grocery delivery sector in India. Despite being one of the largest markets in the world they were still grappling with some execution errors.

The $100m funding

The new funding Zepto has received recently comes just 45 days after they raised $60 million with a valuation of $225. This information was provided by the CEO and co-founder of Zepto Aadit Palicha in one of his interviews. Apart from a huge contribution from the continuity fund of Y Combinator, the Zepto business model was also successful in getting investments from existing and new players such as Nexus Venture Partners, Glade Brook Capital Partners, Breyer Capital, and a Silicon Valley investor called Lachy Groom.

Zepto and the competition

However, the Zepto app is also facing tough competition in India, coming in the form of Blinkit. It is a startup backed by Softbank group Corporation. Other competitors Zepto has to face include Dunzo backed by Google. There is Swiggy’s Instamart, backed by Naspers Limited. You have Flipkart backed by Walmart Inc and companies such as Amazon.com Inc. However, the startup Zepto is growing fast and the core unit economics of the company are pretty strong as informed by the CEO Palicha.

Zepto founders

The 10-minute delivery

The concept of 10 minutes delivery from the Zepto business model has turned out to be the game-changer. This was conveyed by the other co-founder of Zepto, Vohra. He is also the chief technology officer of the organization. This new funding, they have received also means that the Mumbai-based startup can grow its team to expand into newer markets and cities to extend their outreach.

How Zepto works

Zepto has more than 100 places called dark stores or micro fulfillment centers that lie in higher-demand neighborhoods. These dark stores use technology for performing tasks such as the placement of products. Some other tasks they perform include deciding the store locations, and mapping delivery routes for avoiding heavy traffic congestions. The company is already delivering in the excess of 2500 items that include cooking necessities, fresh produce, personal care items, snacks and beverages, and home cleaning items.

The founders of Zepto bring an execution similar to Doordash to their q-commerce Zepto business model. This fact was disclosed by Anu Hariharan, who is a partner in the continuity fund of Y Combinator. This amazing startup is adding 1,00,000 new customers to their list each week she quipped.

Acquiring talent

One of the main things that went in the right direction for the startup was the talent acquisition department. They were able to attract several top-profile executives from Amazon Uber, Pharmeasy, Flipkart, and Dream 11 to join their organization. The main thing that led to so many top executives deciding to join Zepto was that it allowed several people that moved to Bangalore to come back to Mumbai. However, the aggressive growth of the startup, its ambition, and its disciplined execution have led to several people that are similarly inclined to be attracted to the company.

Zepto now

Order volume Claims

Both Instamart and Blinkit (formerly grofers) have claimed that their weekly order volumes have reached in the excess of one million. What about Zepto? How many orders are they delivering at the moment? Well, the Zepto owners are not too keen on publishing their numbers. But they are telling that with the current numbers, they will easily surpass all the competitors to become market leaders in 4 to 5 months.

However, with the numbers available floating around, they do have some competitors they need to respect. But there is just a lot of gas and little substance in their claims they feel. Several factors are leading up to those numbers such as fraud rate, where is the business coming from, who is ordering etc.

Conclusion

The fact remains that Zepto is growing faster than anyone else in the niche at the moment. They have plans to grow into newer cities as quickly as possible. They are also planning to extend their coverage to micro-markets to become a decisive leadership in the sector. Several other people are trying to participate in the market and trying to grow quickly. But they cannot promise things such as 10-minute delivery as consistently as Zepto. This period extends to 30, 40, and 45 minutes in most cases. Zepto is a detail-oriented and intense business with strong technical and operating discipline that allows them to pull off the 10-minute delivery.

Build your own app like Zepto

If you are looking to set up an on-demand business one of the best places to visit for a technology-based solution will be Jungleworks. With the powerful ordering, delivery, and growth suite, Jungleworks allows you to deliver faster to your customers. Visit the page for more information.

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