Zepto CEO Aadit Palicha has openly denied Zomato CEO Deepinder Goyal’s claim regarding the quick commerce company’s financial situation. In a recent Economic Times interview, Goyal suggested that Zepto is responsible for burning over ₹2,500 crore per quarter, a statement Palicha firmly refuted. He clarified that these figures are incorrect and will be proven so once Zepto publicly files its financial reports. Despite the disagreement, Palicha emphasized his deep respect for Goyal, stating that the Zomato founder has been a role model in the Indian startup ecosystem. The debate underscores the competitive landscape of India’s quick commerce sector, where companies like Zepto, Blinkit, and Swiggy Instamart are vying for market dominance.
1. Zepto: Business Model, Revenue, and Growth Story
1.1 Founders and Background
Zepto was founded in 2021 by CEO Aadit Palicha and Kaivalya Vohra, two Stanford University dropouts who returned to India to revolutionize quick commerce. The duo saw a massive market gap in delivering groceries within minutes and built Zepto as an ultra-fast delivery service.
1.2 Working Model
Zepto operates on a dark store model, meaning it sets up small warehouses in high-demand areas to fulfill orders within a rapid timeframe. The company promises delivery times of under 10 minutes, a feature that has propelled its rapid growth.
1.3 Revenue Model
Zepto generates revenue through:
- Commission on orders: Charging a small percentage from sellers.
- Delivery fees: A nominal fee per order from customers.
- Private labels: Selling its own branded grocery items.
- Advertising and partnerships: Collaborations with FMCG brands.
1.4 Funding and Valuation
Zepto has attracted substantial investor interest, securing funding from major venture capitalists such as Y Combinator, Nexus Venture Partners, and Glade Brook Capital. The latest funding round valued the startup at nearly $1.4 billion, making it one of India’s fastest-growing unicorns.
2. The Controversy: Zepto vs. Zomato
2.1 What Deepinder Goyal Said
In an interview with Economic Times, Deepinder Goyal estimated that India’s quick commerce industry is collectively burning nearly ₹5,000 crore per quarter. He claimed that Zepto alone accounts for more than half of this figure, implying a cash burn exceeding ₹2,500 crore every quarter.
2.2 Zepto CEO Refutes the Claim
Aadit Palicha took to LinkedIn to strongly deny Goyal’s assertion, calling it “verifiably untrue.” He reassured stakeholders that once Zepto’s financial reports are made public, the truth would be evident.
Palicha further suggested that Goyal’s remarks may have been taken out of context or were an honest mistake. Despite the claim, he reiterated his admiration for Goyal, stating:
“Deepinder started Zomato when I was 5 years old and he has become a role model for the Indian startup ecosystem.”
2.3 Industry Context: Quick Commerce Competition
The quick commerce sector has seen intense competition with players like:
- Blinkit (Zomato-owned)
- Swiggy Instamart
- Dunzo
- Zepto (the only independent player)
According to Goyal, Blinkit burns only 2-3% of the total industry burn, which stands in contrast to Zepto’s alleged ₹2,500 crore per quarter.
However, Zepto’s counterargument suggests its financial situation is more sustainable than perceived. The company has been expanding aggressively, targeting profitability in the near future.
3. Quick Commerce Industry Insights
3.1 Market Growth and Consumer Trends
The quick commerce market in India is projected to grow at a CAGR of 24%, fueled by:
- Increasing consumer preference for ultra-fast delivery.
- Rising adoption of online grocery shopping.
- Heavy investments by venture capitalists.
3.2 Cash Burn vs. Long-Term Sustainability
The quick commerce model requires heavy initial investment due to:
- Warehouse and logistics costs.
- High customer acquisition expenses.
- Competitive discounts and promotions.
While high cash burn is common in scaling startups, industry experts believe sustainable unit economics and customer retention will determine long-term success.
4. Learning for Startups and Entrepreneurs
4.1 Transparency in Financials
Palicha’s response highlights the importance of financial transparency for startups to maintain investor trust and market credibility.
4.2 Competition vs. Collaboration
Despite competing fiercely, startup leaders should foster healthy industry relationships and avoid misinformation.
4.3 Sustainable Growth Over Cash Burn
While aggressive expansion is key in quick commerce, focusing on sustainable unit economics ensures longevity.
4.4 Leveraging Social Media for Brand Communication
Palicha’s LinkedIn response demonstrates how founders can control narratives and engage directly with their audience.
The Startups News: Your Go-To Source for Startup Insights
At The Startups News, we bring you factual, insightful, and engaging stories from India’s vibrant startup ecosystem. Whether it’s funding updates, market trends, or startup strategies, we ensure you stay ahead in the business world.