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Zepto has changed the grocery delivery system in India with its lightning-fast service that delivers products to customers within 10 minutes. This is made possible by the company’s use of mini-warehouses and dark storefronts, allowing for efficient and speedy delivery.
The company is dedicated to maintaining unbeatable customer loyalty and delivering products to their doorsteps on time. In this blog, I will help you to decode the success of this amazing startup.
Learn about Zepto, in this article, in just 10 minutes!
What is Zepto?
Zepto, a Mumbai-based company founded by Aadit Palchia and Kaivalya Vohra, has made a name for itself by delivering groceries to customers in just 10 minutes. The company is considered one of the fastest-growing players in the fast-delivery business, with a particular focus on delivering groceries before the end of the year.
In 2021, Zepto worked with more than 86 dark store owners across 13 different areas and completed over one million deliveries.
The E-grocery delivery industry
With a $1 trillion retail market in India, where grocery purchases account for the majority of consumer spending, e-grocery delivery is gaining popularity.
The Indian e-grocery market was worth $2.9 billion in 2020, and it is projected to grow at a rate of 37.1% from 2021 to 2028.
Founders and Team
Aadit palicha and Kaivalya Vohra founded Zepto when they were just 19 years old. They dropped out of the Computer Science program at Stanford University to return to India and start their own business. Zepto was founded in September 2021 and began operations in April 2022.
Aadit Palchia, the CEO and co-founder of Zepto and KiranaKart, started his first company called GoPool at the age of 17 but left it in 2020. He completed his IB diploma in Mathematics and Computer Science at GEMS Education and earned a Bachelor’s in Computer Science from Stanford University.
Kaivalya Vohra, the co-founder, and CTO of Zepto and KiranaKart, also graduated from Stanford University with a Bachelor’s Degree in Computer Science. Both Aadit and Kaivalya participated in the Y Combinator program and successfully completed it.
The Startup Story
Vohra and Palicha dropped out of the university to pursue their passion for entrepreneurship. They came up with the idea for Zepto during the Covid-19 pandemic when they realized there was a void for quick delivery of groceries and other essentials, which typically took a couple of days to arrive.
While working on various projects, including a ride-hailing commuting app for children, the duo was confined to their homes in Mumbai due to Covid regulations. Despite grocery delivery being deemed essential by local authorities, they struggled to obtain their provisions as the illness spread.
Although their first venture, KiranaKart, which offered supermarket delivery services, did not receive the same level of attention as Zepto, it served as the inspiration for the latter. KiranaKart had partnered with Kirana merchants to offer groceries in 45 minutes or less.
Zepto, on the other hand, delivers groceries within 10 minutes, and it has attracted investors such as Global Founders Capital, Contrary Capital, angel investors, and 2 am Ventures, who contributed to a $730,000 pre-seed round. Initially, Palicha and Vohra aimed to complete the first 150,000 deliveries for Rs 1.
Name, Logo, and Tagline
The brand name of Zepto represents the time frame of 10-21 (subscript), which symbolizes the incredibly short amount of time it takes for the company to deliver groceries to its customers.
The logo of the company is a striking reddish-pink color that is eye-catching and memorable. It leaves a long-lasting impression on the minds of its customers.
The company’s tagline is “Groceries delivered in 10 minutes,” which succinctly captures the essence of Zepto’s business model.
Business and Revenue Models
Zepto operates on a quick commerce model, providing user-centric grocery delivery within 10 minutes of order placement through a network of mini-warehouses and dark storefronts. The company has developed various hotspot methods to optimize factors such as topography, road patterns, weather, real estate values, population, last-mile supply availability, traffic dynamics, and more, to ensure efficient and quick deliveries.
The company’s revenue model is commission-based, and it partners with local merchants and shop owners for grocery delivery in the local areas. Zepto charges a percentage of commission on the orders placed through its platform, with the commission rate varying based on the order value. The company also applies a delivery charge on orders below the minimum order amount.
How Zepto delivers groceries within 10 minutes
Zepto Delivery operates through the following methods:
Improved Delivery and Quicker Distribution
Zepto’s dark stores, along with micro and cold warehouses, enable them to fulfill orders quickly and efficiently. This provides several distribution alternatives that bring groceries closer to a specific market segment, allowing Zepto to control market spread and distribution more effectively.
A Larger Customer Base
The opening of dark stores allows customers to easily access distribution hubs, and online orders are accepted 24/7. This attracts customers to utilize their services and expands Zepto’s customer base.
Contactless Shopping
The need for contact-free shopping has influenced businesses to adopt the “dark store” strategy. Consumers can purchase food from dark stores without interacting with other customers or entering an actual store. They purchase items online and immediately have them delivered.
Enhanced Inventory Management and Better Product Selection
Dark stores have better inventory control, can accommodate larger orders, and lack consumers. Packers can work quickly to pack orders due to the ease of navigation in dark stores. Additionally, Zepto’s AI-powered solutions track product assortments and inventory levels, leading to better product selection.
Funding and Investors
Zepto has secured more than $360 million in funding across four rounds to date.
| Date | Round | Amount | Lead investors |
| May 2, 2022 | Series D | $200 million | Y Combinator Continuity Fund |
| Dec 20, 2021 | Series C | $100 million | Y Combinator Continuity Fund |
| Oct 31, 2021 | Series A | $60 million | Glade Brook Capital Partners |
Challenges
Zepto, like any other startup, has had to face numerous challenges in its entrepreneurial journey. Despite the challenges, the company has managed to survive and is currently doing well.
Trust, honesty, and dignity are crucial aspects of any organization, and Zepto was not an exception. The company had to deal with instances of impropriety among its founder and investors, which resulted in FIRs and court battles to settle disputes.
Competitors
Zepto faces stiff competition from various businesses that are already providing rapid delivery of groceries. These competitors include Big Basket, Swiggy Instamart, DealShare, and Blinkit.
Swiggy Instamart and Big Basket have already established themselves by delivering groceries within 10-15 minutes. Blinkit is planning to launch its 10-minute grocery delivery service in 10 cities, which will add to the competition for Zepto.
Additionally, Dunzo also competes with Zepto by utilizing its Xpress Mart dark shop network to deliver groceries in Bengaluru in just 19 minutes.
Future Plans
Zepto has ambitious plans for growth in the future. One key strategy is to increase the number of Dark Stores, which will help to drive up the volume of orders. As the company gains a larger customer base, Zepto plans to introduce convenience fees. However, the intense competition in the market poses significant challenges to Zepto.
Despite this, it’s remarkable how two 19-year-olds have disrupted established players like Big Basket and Blinkit. In another exciting development, Zepto may even consider going public in the next 2-3 years.
The Bottom Line
The modern consumer values a brand’s pricing proposition over its logo. As a result, companies must focus on continuously enhancing their pricing proposition to retain customer loyalty and stay competitive in the market.
Did I miss anything? let me know in the comment section below.
FAQs
How many dark stores does Zepto work with?
Zepto works with 86 dark stores.
What are dark stores?
Dark stores are retail spaces that resemble traditional stores, but they are not open to the public for in-person shopping. Instead, they function as fulfillment centers for online orders.
What was the age of the founders when they started Zepto?
Aadit Palchia and Kaivalya Vohra started Zepto when they were 19 years of age.
How much Zepto raise in May 2022?
Zepto raised a whooping $200 Million in series D funding.
How is Zepto so fast?
Zepto is able to deliver groceries so quickly due to its unique business model that utilizes a network of dark storefronts and mini-warehouses.