In a major development, Zepto, the 10-minute delivery giant, has set up a new entity called Zepto Marketplace Private Limited to streamline its operations and prepare for its initial public offering (IPO). The registration of the new entity on October 22, 2024, signifies a pivotal move towards a marketplace-based model for Zepto. This transformation is set to streamline Zepto’s operations, bringing it in line with competitors such as Blinkit and Swiggy Instamart, who have already embraced marketplace frameworks. By adopting this model, Zepto aims to enhance its operational efficiency and better compete in the growing quick commerce sector. Zepto, known for its quick commerce services, previously operated under a business-to-business (B2B) structure. The company, which has been making strategic moves to grow its presence, is now setting its sights on a public listing in 2025.
The new marketplace model will allow a broader range of sellers to list their products directly for consumers, which will further enhance Zepto’s appeal in India’s rapidly growing quick commerce market. Zepto’s successful funding rounds and its expanding footprint across India put it in a strong position for the IPO, which is expected to raise significant capital for its future expansion.
1. Zepto’s Working Model and Revenue Model
Zepto is an Indian-based quick commerce company that offers rapid delivery services in cities across India. The company was founded by Aadit Palicha and Kaivalya Vohra in 2020, with the goal of transforming how consumers access grocery and other essential goods. Initially, Zepto adopted a business-to-business (B2B) model through its subsidiary Kiranakart Technologies Pvt Ltd. In this structure, Zepto sourced products directly from brands and sold them to a limited set of companies. These companies, which are licensed by Zepto, then listed these products on the Zepto platform and sold them to consumers.
The revenue model of Zepto primarily involved charging a licensing fee to the companies that sold products on its platform. This model allowed Zepto to generate revenue from every sale made by its licensees. However, unlike its competitors, Blinkit and Swiggy Instamart, which adopted a marketplace model, Zepto’s earlier approach relied heavily on intermediaries. Now, with the establishment of Zepto Marketplace Private Limited, the company is moving towards a marketplace model, where a wider range of sellers can directly offer their products to consumers.
2. The Shift to a Marketplace Model
The shift towards a marketplace model is a strategic move to compete with Blinkit and Swiggy Instamart, two of Zepto’s main competitors in the Indian quick commerce sector. While Zepto’s initial B2B model was effective in controlling its inventory and suppliers, the company now recognizes the benefits of a more flexible marketplace approach. This model enables multiple sellers to list their products directly on the platform, expanding the variety of goods available to consumers and improving efficiency.
In contrast, Blinkit and Swiggy Instamart operate with intermediaries that source products from brands and distribute them to business-to-consumer (B2C) sellers. These sellers then make the products available to consumers through their respective apps. Zepto’s new marketplace entity aims to streamline this process and potentially reduce the need for intermediaries, thus enhancing operational efficiency.
This transition will allow Zepto Marketplace Private Limited to better handle the demand for products in real time, while offering a broader selection of goods to consumers. The move also aligns with Zepto’s goals to become a leading player in the highly competitive Indian quick commerce market.
3. Funding Background and IPO Plans
Zepto has seen significant growth since its inception, raising substantial amounts of funding through various rounds. The company has been backed by prominent investors, including Glade Brook Capital, Lightrock, and Y Combinator. Zepto’s funding rounds have enabled it to expand its reach to more cities across India, making it a formidable competitor in the quick commerce space.
The company is gearing up for an initial public offering (IPO) in 2025, which will help Zepto raise capital for further expansion and growth. To ensure the IPO’s success, Zepto has appointed top investment banks like Goldman Sachs, Morgan Stanley, and Axis Capital as advisors. The company is actively preparing its draft documents for the IPO, aiming to file them by March or April 2025.Additionally, Zepto is reportedly planning to move its holding entity to India to comply with regulatory requirements.
With its $1.4 billion in cash reserves following a successful funding round in November 2024, Zepto is in a strong financial position to undertake this major milestone. The company’s goal is to raise at least $450 million through its IPO, although the amount could vary based on market conditions and investor interest.
4. The Founders: Aadit Palicha and Kaivalya Vohra
Aadit Palicha and Kaivalya Vohra are the co-founders of Zepto, both of whom have a deep understanding of the tech and business landscape. Before starting Zepto, Aadit Palicha worked at McKinsey & Company, gaining valuable insights into business operations. Meanwhile, Kaivalya Vohra had stints at Flipkart and Amazon, where he honed his skills in e-commerce and logistics. Their combined expertise has been a key factor in Zepto’s success.
The founders were inspired to create Zepto after identifying the inefficiencies in the traditional grocery delivery model. They envisioned a system that could deliver essentials in 10 minutes, meeting the growing demand for faster delivery services in urban India. Today, Zepto’s platform serves millions of customers across major cities in India, offering a wide range of products, including groceries, beverages, and personal care items.
5. Products and Services Offered by Zepto
Zepto specializes in quick commerce, offering products across various categories like groceries, personal care, beverages, and household items. The company prides itself on delivering items within 10 minutes, which has become its unique selling point (USP) in the market. Through its app, consumers can place orders for a variety of products and have them delivered in a matter of minutes.
The company has also ventured into food delivery services, expanding its range of offerings beyond groceries. This move is part of Zepto’s strategy to increase its market share and provide a more comprehensive service to its users.
6. Zepto’s Future Plans and Expansion
Zepto has ambitious plans for its future, both in terms of its IPO and market expansion. As the company prepares for its public listing, it is focusing on expanding its services to more cities in India and increasing the variety of products available on its platform. The company has already made significant strides in building its infrastructure, including dark stores and fulfillment centers, to ensure rapid delivery times.
The shift to a marketplace model is expected to boost Zepto’s scalability, allowing the platform to seamlessly onboard new sellers and expand its product catalog more efficiently. As the demand for quick commerce continues to surge in India, this strategic move allows Zepto to tap into the rapidly growing market, positioning itself to stay ahead of the competition. This transition is crucial as it opens up new opportunities for Zepto to diversify its offerings and attract a larger customer base, securing its place in the competitive quick commerce landscape.
7. Learning for Startups and Entrepreneurs
Zepto’s transition to a marketplace model offers several lessons for startups and entrepreneurs:
- Adapt to Market Changes: The move from a B2B to a zepto marketplace Private Limited model shows the importance of adapting your business model in response to market demands.
- Focus on Efficiency: The ability to streamline operations can significantly improve profitability, especially in a competitive industry.
- Plan for IPO Success: Preparing for an IPO requires strategic planning, solid financial backing, and the right advisors.
- Leverage Technology: Zepto’s success highlights the importance of using technology to enhance user experience and improve operational efficiency.
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