**Zepto Raises $665 Million in Funding to Dominate Quick Commerce Market**
Zepto, a Mumbai-based startup, has secured an impressive $665 million in a recent funding round, propelling its valuation to $3.6 billion. The massive investment will allow Zepto to further expand its presence in the quick commerce market in India. Unlike many startups in this space that have struggled in developed markets, Zepto has found success in the thriving Indian market.
The Series F round was co-led by Glade Brook, Nexus, and StepStone Group, with participation from Avenir, Lightspeed, Avra, and existing backers Goodwater, Lachy Groom, and Contrary. DST Global, a backer of Zepto’s competitor Swiggy, also reportedly co-led the funding round. Zepto aims to leverage this funding to solidify its position against rivals like BlinkIt (owned by Zomato) and Swiggy’s Instamart.
One key factor contributing to Zepto’s success is its network of discreet warehouses known as “dark stores.” These strategically located facilities enable the startup to fulfill orders within minutes of purchase by being in close proximity to high-demand residential and commercial areas. This efficient model allows Zepto to create a wider network of stores across a city, resulting in short delivery times.
Zepto plans to expand its network of dark stores to over 700 by March 2025. The startup has reported a 140% increase in revenue compared to the previous year, with its annualized gross merchandise value (GMV) on track to exceed $1 billion. With over 50,000 delivery partners and a monthly addition of 5,000 new partners, Zepto is rapidly scaling its operations.
What sets India apart from other markets is its culture of buying hyper-locally. Customers in India frequently make small-ticket purchases multiple times a week, which aligns perfectly with the hyper-local, high-proximity, and low-ticket offerings of quick commerce companies. Aadit Palicha, Zepto’s co-founder and CEO, emphasized that no other grocery format, even offline, has been able to provide similar offerings to Indian consumers.
While Zepto primarily focuses on categories like household appliances, undergarments, general merchandise, toys, beauty and cosmetics, and home and kitchen products, quick commerce startups in India are expanding beyond groceries. Some companies even promise to deliver high-ticket items like smartphones and gaming consoles within 10 minutes. However, Zepto remains committed to its lower-stake purchases strategy.
Currently operating in major Indian cities, Zepto plans to expand into smaller cities in the near future. The startup has received positive feedback from cities like Jaipur, where offline offerings fall short of meeting customer demands. Palicha believes that if Zepto continues to delight customers and achieve its expansion goals, the company could go public relatively soon.
Avenir, a venture firm based in New York, invested in Zepto after tracking the startup for three years. Ben Jubas, a partner at Avenir, commended Zepto for breaking the traditional trade-offs of retail in India and sees the potential for it to become a massive commerce business due to its value proposition and operational rigor.
As quick commerce companies continue to gain traction in India, analysts predict that they will significantly erode the market share of major e-commerce players like Amazon and Flipkart. Zepto’s management will play a crucial role in capitalizing on this opportunity. According to Goldman Sachs, the total addressable market for quick commerce companies in the top 40-50 cities in grocery and non-grocery categories is estimated to be around $150 billion.