A recent report by RedSeer Consulting revealed that the online grocery business in India is estimated to reach $24B by 2025, accounting for only 3% of the total grocery market. On the other hand, groceries account for around 66.5 percent of retail spending in India, with unorganised firms controlling 95 percent of the market (local or kirana stores). This is a tremendous opportunity.
Cashing on that, Zepto, a Mumbai-based startup that provides 10-minute rapid grocery delivery, has more than doubled its valuation to $570M from $225M less than two months ago. The fundraising value is $100M Series C funding which was led by Y Combinator’s Continuity Fund. Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, and Contrary Capital were also among the investors in the round, bringing the total amount raised to $160M.
The fresh funding will enable the Mumbai-based firm to expand its workforce and reach new cities.
How did it start?
Aadit Palicha and his childhood friend Kaivalya Vohra, both 19, founded Zepto after dropping out of Stanford University’s prestigious computer science department to return to India and create a business in rapid commerce. The firm began in Mumbai earlier this year and has already expanded to Bangalore, Delhi, and four other cities, promising to deliver groceries and everyday supplies in 10 minutes.
Zepto is competing against companies like Blinkit, which is supported by SoftBank Group Corp., Dunzo, which is backed by Google, and Swiggy, which is backed by Naspers Ltd., as well as Amazon.com Inc. and Walmart Inc.-backed Flipkart.
Palicha noted in the statement that Zepto is developing swiftly and that its basic unit economics are solid. The ability to deliver within 10 minutes is “game changing,” according to co-founder and chief technology officer Vohra.
Vohra claims to have a 65 percent month-over-month buyer retention rate and has established a network of micro-warehouses, each of which can handle over 2,500 orders each day.
Zepto is currently present in Bangalore, Delhi, Gurgaon, Chennai, and Hyderabad, with ambitions to grow to Pune and Kolkata in the near future. It has put up a maze of over 100 dark storefronts across these cities, which it claims are geared for speedy deliveries, to assure instant deliveries.
He stated, “We’re looking at a fairly ridiculous runrate.” “In just over a month and a half, we’ve increased our revenue by tenfold.” “Right now, we’re aiming for a 10-fold increase by February or March,” Palicha said.
Zepto has attracted several talents in the last several months. Several well-known executives from Flipkart, Amazon, Uber, Dream 11, and Pharmeasy have joined the company.
One of the reasons why so many executives have joined Zepto, according to Palicha, is that it has allowed those who had relocated from Mumbai to Bangalore to return to their hometown. However, he claims that the startup’s fast growth, disciplined execution, and goals have attracted people with similar tastes. He stated, “We’ve been able to walk the walk.”
According to Anu Hariharan, a partner at Y Combinator’s Continuity Fund, the founders bring “Doordash-like” execution to the rapid commerce concept. According to the statement, the firm is acquiring 100,000 new customers every week.
“They started with a different strategy, quickly transitioned to fast commerce in August 2021, and are now acquiring 100,000 new clients each week, 60% of whom are women.” Their meticulous attention to detail in the logistical experience has allowed them to scale to most major metros in just 5 months. Simply put, we believe Zepto will be the long-term winner in this space.”