Byju’s of Quick Commerce? Zepto’s Fast Ride in the Spotlight

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Guess which company is the poster boy of Indian Quick Commerce?

Here’s a cheeky hint: “Users with phones priced above ₹30,000 are charged more for the same goods.” Got it? 😂

Yes, I’m talking about Zepto, the fastest-growing quick commerce sensation in India that’s been making headlines everywhere. And guess what? This case study is all about them, just like I promised.

We’ll dive into Zepto’s origins, the buzz it’s created in the Indian startup ecosystem, and tackle the question that’s been on everyone’s mind: “Is Zepto the next Byju’s of Indian Quick Commerce?” So read till the end to get an answer.

Honestly, this is one of the most thrilling case studies I’ve worked on. Watching a giant like Zepto navigate such a turbulent phase(Or not) is nothing short of fascinating. So, grab a coffee (or a 10-minute-delivery snack, perhaps?), and let’s dive in!

But before we get started, let’s give a shoutout to our sponsors for making this issue possible.

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First and foremost,

What is Zepto?

Zepto is a rapidly growing e-grocery startup based in Mumbai, India, founded in 2021 by Aadit Palicha and Kaivalya Vohra. The company has revolutionized the grocery delivery landscape by promising deliveries in under 10 minutes, leveraging a network of strategically located "dark stores"—hyperlocal fulfillment centers that allow for quick order processing and delivery. This innovative model emerged during the COVID-19 pandemic when traditional grocery services struggled to meet consumer demands for speed and convenience.

With a focus on efficiency, Zepto utilizes advanced technology to optimize logistics and routing, ensuring that customers receive their groceries quickly and reliably. The platform offers over 2,500 products, including fresh produce, daily essentials, and personal care items, catering to the needs of urban consumers. Since its launch, Zepto has expanded its reach across multiple major cities in India and has garnered significant investment, positioning itself as a leader in the burgeoning quick commerce sector.

The inception of Zepto

The journey of Zepto began when two young entrepreneurs dropped out of the Stanford University to pursue their vision of revolutionizing grocery delivery in India. They started a venture called KiranaKart, which aimed to facilitate grocery deliveries from local kirana stores. However, their initial attempt struggled to find a sustainable market fit, prompting the duo to pivot their strategy. They recognized the growing demand for faster delivery services during the COVID-19 pandemic, which highlighted inefficiencies in traditional grocery shopping.

The concept for Zepto emerged from their experiences during lockdowns when they faced challenges accessing essential groceries. They envisioned a platform that could deliver items within 10 minutes using a network of "dark stores"—hyperlocal warehouses designed for rapid order fulfillment. This innovative approach quickly resonated with consumers, leading to impressive growth; within just a month of its launch, Zepto was valued at $200 million.

Since its inception, the company has grown exponentially, as we will see in the upcoming sections, swiftly achieving Unicorn status. To this day, it continues to expand at an unprecedented pace with no signs of slowing down. Zepto has been making headlines more frequently than most companies—sometimes for its remarkable achievements and, occasionally, for not-so-great reasons. How? Let’s see…

The Dark side of Zepto?

While the company has made a strong mark in India’s quick commerce industry, it also has its share of challenges. One prominent example is the case of Ansh Nanda, where he alleged that he was promised upto 20% equity as a cofounder for his critical work on the app’s tech and product development when the company was still kiranaKart but was later squeezed out after investors, including Nexus Venture partners, entered the picture. He even accused Zepto’s founders of threatening him with dire consequences, including references to the underworld connections to relinquish his claims. You can read the entire story covered by Inc42 in detail over here. I would strongly recommend you to read it if you are a fan of drama, because this story surely has a lot. It almost feels like a script out of a film. You can easily guess which one😉

Another interesting story is the article published by Hindustan Times in June 2023, where the Zepto delivery partners alleges that the company payout structure forces them to drive rashly to meet delivery targets necessary for earning incentives, as basic payouts are insufficient. Zepto however denies these allegations, stating their payout system allows for reasonable earnings, with no pressure to speed deliveries.

And lastly, the toxic work culture comment that is going absolutely viral and taking over the internet by storm, directly questioning the culture of the company and the company’s founders.

While the founder Aadit Palicha responded to the claims saying “I have nothing against work-life balance. In fact, I recommend it to all our competitors“, it has really stir up people.

Now let’s try to answer the most important question,

Is Zepto the Byju’s of Indian Quick Commerce Industry?

Let’s start this by going through the funding and valuation history of Zepto. Below is a detailed account of its funding history, incorporating the most recent updates.

Quite impressive, isn’t it? Now that you have an idea of the money and valuation that Zepto holds, let’s see it’s cash burn pattern, revenues, loses etc. which will give us a fair idea of the startup’s current state:

• In the year FY22, Zepto grabbed a total revenue of INR 132.3 crores with a loss that amounted to INR 390.3 Crore during the same fiscal year. Overall expenses stood at 523.7 Crore in FY22.

• In the year ending FY23, the losses increased to INR 1272.4 Crore which was 3.35 times increase as compared to the previous year. Operational revenue increased from INR 142.3 crore in FY22 to INR 2024.4 crore in FY23

• The expenses incurred costs of INR 3350 crore in FY23, a 6.3X rise from INR 532.7 crore in FY22.

• The Gross merchandise value crossed the $1 billion dollar mark in FY24, with company reporting a 140% year-on-year growth.

  (Source for the above information: https://startuptalky.com/)

Now, what does the above numbers say about the company? It says that Zepto’s journey so far shows impressive growth, but it comes at a high price(quite literally). The skyrocketing revenue and GMV prove that market sees potential in Zepto, but the growing losses and expenses raise a fundamental question: How long can this pace be sustained? How long can the company raise money and burn their investor’s cash?

Scaling aggressively is great, but at the end, the basics matter.

Apart from this, Zepto is apparently facing some fundamental issues as well. Check out these posts on various social media platform about Zepto:

financebyswag

View more on Instagram

These posts are just the tip of the iceberg. Social media is buzzing with debates on whether Zepto is on the path to becoming the next Byju’s. While some people are defending the company, the majority seem to believe the warning signs are real.

And my take? It’s tough to say for sure. Zepto is barely three years old and, quite honestly, still figuring things out. The founders are young, and while their ambition is commendable, the rapid growth does raise some serious red flags. Growing too fast can sometimes mean overlooking fundamental problems, which could hurt the company in the long run.

That said, the potential is there. But for Zepto to truly succeed, it needs to address these challenges head-on. The good news is that the issues are still in the early stages, giving the founders and promoters a chance to make meaningful changes.

Because at the end of the day, building a successful company isn’t just about reaching the IPO stage—it’s about delivering real value to customers and stakeholders. That’s what truly defines long-term success.

So, What are the lessons we can learn from this story?

Well, if you ask me, it might be a little too soon to draw any concrete lessons from Zepto’s story just yet—and for good reason, as we’ve discussed above. But that’s not to say it isn’t brimming with potential insights. The way this quick-commerce giant’s journey is unfolding, I’m certain there will be some fascinating takeaways waiting for us down the line.

For now, it’s like watching the middle of a movie—exciting, full of twists, but you just don’t know how it’s going to end. Will Zepto rewrite the rulebook of quick commerce? Or will it face challenges that force a major pivot? Only time will tell.

And when that moment arrives, you can bet I’ll be here, diving deep into the story and breaking it all down for you. So stay tuned—because this is one case study that’s far from over! 😊

That brings us to the end of another great story. I really hope you liked it. If you did, share this within your network and if you haven’t subscribed to Think Tank already, do it using the link below.

I will get back to you with more stories like these. In the meantime, take a look at these other interesting case studies:

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Keep tuned for more such case studies.
Until then,
Happy Reading!