In mid-2020, India was battling the Covid-19 pandemic, with the country being under a stringent lockdown. The pandemic had brought India to a standstill, hitting the supply chain. For citizens stuck in homes, securing their daily essentials—from wheat flour to detergents—without venturing out was the biggest challenge. Aadit Palicha and Kaivalya Vohra, two teenagers stuck in a small apartment in Sher-e-Punjab colony in Mumbai’s Andheri East, decided to do something about it.
“Most online delivery apps were taking seven to 10 days to deliver essential items, while mom-and-pop stores were shut. So, we decided to cater to the many elderly people that resided in the locality,” says Palicha. The duo, childhood friends who dropped out of Stanford University to pursue their entrepreneurship dreams, put in Rs 3-4 lakh to set up KiranaKart, tying up with grocery stores to cater to their locality. As the service gained traction and the number of customers swelled to 200 by November, they raised some $125,000 from Y Combinator as a part of its early stage programme. Quick commerce app Zepto was launched in April 2021.
Three years since its humble beginnings, Zepto has grown exponentially and has turned into a unicorn—it is one of the fastest Indian ventures to cross this milestone. As per its latest round of funding in November 2023, when Zepto raised $235.4 million, the company was valued at $1.435 billion.
What’s more, Zepto has been able to attract investors even as some leading start-ups of the country are struggling to stay afloat, while funding has dried up for many amid a funding winter in the aftermath of global economic uncertainties and geopolitical volatility. Zepto has also expanded beyond Mumbai and is present in cities such as Delhi, Bengaluru, and Chennai, among others.
One of the key reasons for Zepto’s success has been its unique proposition of delivering daily essentials—from vegetables and fresh meat to alkaline batteries and pet-care items—within 10 minutes to the customer’s doorstep. And while there is competition in the quick commerce space from players such as Swiggy’s Instamart, Reliance Industries-backed Dunzo, Zomato’s Blinkit and Tata’s bigbasket, there is a secret sauce that sets them apart, yet mostly goes unnoticed: the bonding of the founders, and the seamless alignment of their vision.
Palicha attributes the understanding between him and Vohra, both 21, to the fact that they are best friends and have grown up together. As children, they met in school in Dubai, where they grew up. From there, both went to Stanford, then both were at start-up accelerator Y Combinator; they were also in touch when Palicha co-founded GoPool, a mobile app that helped parents with children to coordinate with each other and carpool to and from school. “See, KV (as Palicha fondly addresses his business partner) and I are best friends… We both loved building [things] since our childhood [days]and the bond (between us) is deep,” says Palicha.
Their roles at Zepto are clearly defined. While the clean-shaven Palicha is the CEO of the quick commerce venture and looks after its operations, finances and steers its growth engine, the bearded Vohra is the CTO and in-charge of its tech, products and data science needs. And this is for obvious reasons, says Palicha. “KV has always been much smarter and technically adept than I have been,” he explains.
With Zepto now spread across 10 major cities in India, Palicha and Vohra are looking forward to rapidly expanding the business while turning profitable at the Ebitda (earnings before interest, tax, depreciation and amortisation) level by FY25. And to achieve that, reveals Palicha, Zepto has a three-pronged strategy. The first, he says, is to increase Zepto’s reach within its existing markets and not expand beyond, as that may impact profitability. Second, increasing the pace of opening dark stores—large warehouses that stock goods to fulfil orders—by 40-50 per cent every year, which in turn will help Zepto go deeper. In FY23, for instance, it opened some 60 dark stores, and by end-June 2023, its total store count stood at 223. The third part of the strategy is not raising any more funds from investors in the near-term, says Palicha. According to him, Zepto has so far raised around $568 million. “The primary aim is to grow while improving profitability. We expect to become Ebitda positive within FY25,” Palicha tells BT.
In FY23, Zepto’s business jumped 14 times to record operating revenue of Rs 2,024 crore, against Rs 142.4 crore in the previous fiscal. But its net loss ballooned to Rs 1,272 crore, compared to a net loss of Rs 390 crore in FY22.
In FY24, Palicha expects the top line to grow multiple times, like in FY23. He adds that Zepto will be able to improve its margins “very rapidly”. And while all this happens, Zepto will not lose sight of its USP of doorstep delivery within 10 minutes. Once they achieve that, Palicha and Vohra can truly be called the dynamic duo of quick commerce.
@arndutt
