Zepto said on Friday it has raised $665 million in a funding round that doubled its valuation to $3.6 billion and marks one of the largest financings in quick commerce this year. Indian e-commerce Zepto has raised $665 million in a sale of large blocks of stock in a company in advance of its listing on a public exchange doubling its valuation to $3.6 billion. This funding round is one of the largest in the quick-commerce space this year. The company plans to use this capital to double its stores, or warehouses, to 700 by March 2025.
The funding comes as Zepto preparing for an initial public offering (IPO) in 12-15 months and aims to turn profitable before listing. “We are in a pretty healthy place even with the cash we have in the bank. We look at this funding round more as a pre-IPO financing to build our balance sheet ahead of our upcoming IPO. Having this cash enables us to launch an IPO of meaningful scale,” said Aadit Palicha, co-founder and chief executive officer of Zepto.
Zepto, which promises to deliver anything from groceries to cosmetics within 10 minutes, aims to scale up its quick-delivery snack and meal service, Zepto Cafe, throwing a challenge to food-delivery platforms like Zomato and Swiggy. The company’s ability to raise funds in quick succession indicates investors’ regained confidence in India’s quick-commerce space.
Zepto’s gross merchandise value has multiplied year-on-year to over $1 billion, with around 75% of its stores being fully ebitda positive as of May 2024. The company’s stores take six months to achieve profitability, down from 23 months earlier.
With this funding, Zepto is gearing up for an initial public offering (IPO) in 12-15 months and aims to turn profitable before listing. The company’s focus on technology and efficiency has been key to its success, with small changes like redesigning packaging to save a single rupee on delivery costs making a significant impact.
Zepto’s vision is to become a generational player in the Indian startup world, offering hyper-local commerce for a hyper-local India, with the selection of Costco available for delivery in 15 minutes or less, at better prices than local brick-and-mortar vendors.
In recent months, Zepto has introduced several new initiatives to diversify its revenue streams and improve its margin and also wants to expand non-grocery sales, such as cosmetics and apparel, they avoid products such as smartphones and instead focus on items likely to be purchased frequently. Zepto Pass, its loyalty programme with monthly prices starting at ₹19, saw more than a million customers sign up within a week of launch in February, according to the company. The programme has more than 4.5 million subscribers.
In conclusion Zepto focus on technology, efficiency, and customer experience, Zepto is well-positioned to capitalize on the growing demand for quick and convenient delivery services in India. The company’s ability to achieve profitability in just six months, down from 23 months earlier, is a testament to its operational excellence and cost-saving measures.
Zepto’s ambitious plans to scale up its Zepto Cafe service, which offers snack and meal delivery, will likely pose a significant challenge to established food-delivery players like Zomato and Swiggy. The company’s vision to become a generational player in the Indian startup ecosystem, offering hyper-local commerce with a wide selection of products at competitive prices, is an exciting prospect for consumers and investors alike.
