10-minute grocery delivery app Zepto comes out of stealth, raises $60 mn

Zepto was founded by two 19-year-old Stanford dropouts and includes investors like Glade Brook, Nexus, Lachy Groom, Y Combinator and Global Founders Capital

After operating in stealth mode for six months, Zepto said it has raised an early-stage round of $60 million to expand 10-minute grocery delivery nationwide. Nineteen-year-old founders, Aadit Palicha and Kaivalya Vohra, left behind computer science degrees at Stanford University to build Zepto, with backing from institutional investors like US investor Glade Brook Capital, Nexus, and Y Combinator, and individual investors including Lachy Groom, Neeraj Arora, and Manik Gupta. The company was started in 2021.

With its optimised network of ‘cloud stores’ or micro-warehouses, Zepto is able to consistently deliver in 10 minutes through a combination of technical and operational excellence. Why 10 minutes?

“Simply put, customers love a rapid delivery experience,” said Vohra. “The data speaks for itself – once we started delivering in 10 minutes, our NPS shot up and has constantly remained at around 85 with a 50 per cent-plus week-on-week user retention rate, which shows the incredibly strong customer love for our product.”

Zepto is expanding quickly across Mumbai, Bengaluru and Delhi-NCR, and will be launching in key areas across Hyderabad, Chennai, Pune and Kolkata in the next 30 days. With its Tech Office in Bengaluru and Operations HQ in Mumbai, Zepto has also built out a strong team to manage their pace of growth. Its management includes senior leaders from some of the nation’s largest startups including Flipkart, Uber, Dream11, Pharmeasy, and Pepperfry.

“Q-Commerce (quick commerce) in India is an opportunity of epic proportions and strong unit economics. We’ve been ignoring the noise and executing heads-down for a long time to perfect this model, and our efforts are paying off,” said Aadit Palicha, founder and CEO of Zepto. “Today, we’re consistently growing 200 per cent every single month with an unstoppable team, robust product infrastructure, and deep access to institutional capital.”

Board Members and Investors are equally bullish on the Company’s trajectory. Paul Hudson, chief investment officer (CIO) at Glade Brook Capital said quick e-commerce is poised to transform shops around the world.

“Zepto has emerged as a leader in India, with exponential growth and best-in-class execution,” said Hudson. “We look forward to partnering as Zepto brings a magical consumer experience across India.”

Suvir Sujan, managing director at Nexus Venture Partners said that Zepto is  disrupting e-commerce in India in a way that they have never seen before. “We’re super impressed by their innovative mindset, technology first thinking, and lightning-fast execution,” said Sujan.

The funding would help Zepto compete with players such as Dunzo, Swiggy, Zomato, Amazon and Flipkart, which are also betting big on the rapidly-growing online grocery market in the country. In August this year, Google-backed delivery and e-commerce company Dunzo said it is offering its ultra-fast grocery delivery service Dunzo Daily in Bengaluru, through which it will deliver essentials in 19 minutes.

Online grocery player Grofers had also announced it was yet again foraying into the 15-minute express delivery segment. E-commerce firm Amazon India this year made a significant expansion of its network providing the specialized infrastructure for Amazon Fresh – its ultra-fast two-hour delivery service of daily essentials and groceries.

Walmart-owned e-commerce firm Flipkart has also expanded its hyperlocal service Flipkart Quick across many cities to provide consumers safe and seamless access to order daily essentials through quick doorstep delivery. The company had said that consumers would not just be able to avail themselves of fresh fruits and vegetables, snacks, and beverages but also household essentials and baby care products - all under 90 mins. Flipkart plans to introduce this hyperlocal service to other cities in a phased manner this year and aims to be present in over 200 cities by the end of 2022.

As per research firm RedSeer Consulting’s estimates, more than 50 per cent of the $570 billion grocery retail space in India is addressable by e-grocery platforms.