How Zepto Plans to Challenge Instamart, Blinkit, and Others with a $665 Million Fundraise 

Zepto aims to launch its IPO next year. Palicha reportedly said that they are looking at this fundraise as a means of strengthening the balance sheet in preparation for the IPO. 
Zepto Founders
Zepto Founders

Quick commerce platform Zepto was on the news recently for raising $665 million at a valuation of $3.6 billion in its latest fundraise. The round was co-led by existing investors, including Glade Brook, Nexus, and StepStone, along with Goodwater and Lachy Groom. 

New investors who participated in the round include Avenir, Lightspeed, and Avra Capital. Just nine months ago, the company secured a fundraise of $235 million, reaching a valuation of $1.4 billion. 

DST Global, an early investor in Swiggy, a competitor of Zepto, also co-led the latest funding round, as per the Economic Times. However, Zepto did not disclose DST Global's involvement in the new funding round.

Read: Zepto Raises $665 Million to Double Store Count to 700+ by March 2025

Founded three years ago by Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto provides fast delivery of a wide range of products, from groceries to electronic gadgets, to consumers in urban Indian cities. 

Following the founding round, Zepto co-founder Aadit Palicha took to X to mention that the company is ready to dedicate themselves to building Zepto into a world-class $50 billion Indian company that employs lakhs—as a way to give back to this country that has given us so much. 

What will Zepto do with the fundraiser?

By March 2025, the Quick Commerce platform aims to double its store count from 350 to more than 700. The company also plans to enter new cities, such as Ahmedabad, Jaipur, and Chandigarh. Additionally, it is planning to expand its headcount from over 1,600 to over 2,000. 

The quick commerce platform has mentioned that its gross merchandise value (GMV) has increased year-over-year to surpass $1 billion, with around 75 percent of its stores being fully EBITDA (earnings before interest, taxes, depreciation, and amortization) positive as of May 2024. 

Read: Why Aren't Swiggy and Zepto Following Zomato's B2B Grocery Path?

Quick commerce platforms have been focusing extensively on expanding dark stores. Recently, Zomato-backed Blinkit announced that it would double its dark stores to 1,000 in 12 months. The quick commerce platform is also planning to increase its penetration in cities such as Bengaluru, Mumbai, and Hyderabad. 

The firm has, meanwhile, expanded its stock-keeping units from 3,000 to 10,000. According to Kaivalya Vohra, the company's co-founder and CTO, the most exciting aspect of this next phase is the introduction of significant new projects aimed at dramatically enhancing the customer experience. 

This includes launching new categories and expanding initiatives like Zepto Pass. To support this growth, Zepto intends to hire top talent in engineering, product, growth, finance, operations, and category management. 

Quick commerce platforms, including Blinkit, Instamart, and Zepto, are diversifying into categories such as electronics, toys, and beauty care. These items were only available on e-commerce platforms such as Amazon and Flipkart. 

IPO Plans of Zepto

Zepto aims to launch its IPO next year. Speaking to the Economic Times, Palicha said that they are looking at this fundraise as a means of strengthening the balance sheet in preparation for the IPO. 

Meanwhile, the Quick Commerce platform is also in the process of shifting its domicile back to India. Currently domiciled in Singapore, Zepto will complete the process of shifting its domicile to India in the next couple of months, as per Moneycontrol. Start-ups such as Groww, PineLabs, and PhonePe have already shifted their domicile back to India. Other start-ups, such as Meesho, Udaan, and RazorPay, are in the process of doing the same. 

The intensifying race of quick commerce

With a $2.8 billion market currently, quick-commerce is positioned to become a disruptive force and change the retail landscape, as per Redseer Strategy Consultants. Many industry professionals are shocked by Q-commerce's success in India, mainly due to the numerous failure tales of comparable businesses around the world, adds Redseer Strategy Consultants. 

“Q-commerce platforms have mastered understanding their target customers’ purchase patterns and accordingly customizing the selection and experience,” adds the research. 

Dabur India anticipates that 25% to 30% of its revenues will come via quick commerce, as per TechCrunch. Similarly, Nestle India feels that Blinkit has become as important as Amazon. 

Indian customers frequently buy small-ticket items multiple times a week within their local area, and quick commerce caters to this demand by offering hyper-local, high-proximity, and low-ticket solutions, said Palicha to TechCrunch. 

With the growth of quick commerce platforms, Goldman Sachs recently mentioned that Zomato’s Blinkit is more valuable than its core business. While the food delivery business of Zomato is valued at Rs 98 per share, Blinkit is valued at Rs 118 per share. 

Eyeing the quick commerce segment, several other players, such as Flipkart and Reliance’s JioMart, are planning to enter the space. 

Zepto had a long way to go from starting as a start-up in 2021 to becoming a unicorn last year. The company started during the second wave of the COVID-19 pandemic, at a time when everyone was confined at home and the demand for quick commerce increased. 

After raising $200 million at a valuation of $1.4 billion, Zepto became the first unicorn in 2023. Amid the intensifying race in the quick commerce segment, it will be interesting to observe how Zepto fares in the long run.

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