Online grocery: Zepto raises $60 million from Glade, Nexus, others

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November 02, 2021 5:40 AM

Zepto offers a 10-minute grocery delivery service mostly focused in metro and Tier-1 cities currently using a network of dark stores.

ZeptoThe delivery start-up will compete with existing hyper-funded firms like Dunzo, and unicorns such as BigBasket, Swiggy and Grofers which have all mopped up millions of dollars in venture and institutional capital in the past few years.

Online grocery delivery start-up Zepto has raised $60 million in financing from investors such as Glade Brook Capital, Nexus, Y Combinator and other individual investors – a rare feat for a start-up in the hyperlocal delivery sector, which hasn’t seen much early-stage activity in the past 5 to 6 years.

The Mumbai-based firm, which has been in ‘stealth mode’ for the last six months, also raised funding from prominent angels such as Lachy Groom, Neeraj Arora, and Manik Gupta. The start-up is currently valued at $225 million.

Zepto offers a 10-minute grocery delivery service mostly focused in metro and Tier-1 cities currently using a network of dark stores. Dark stores are delivery-only stores which allow start-ups to stock up on their own inventory through sourcing tie-ups with wholesalers and brands.

Zepto is in works to expand its dark stores across Mumbai, Bengaluru and Delhi-NCR, and will be launching in key areas across Hyderabad, Chennai, Pune and Kolkata in the next 30 days, according to a statement.

The delivery start-up will compete with existing hyper-funded firms like Dunzo, and unicorns such as BigBasket, Swiggy and Grofers which have all mopped up millions of dollars in venture and institutional capital in the past few years.

Founded by 19-year-old Stanford drop-outs Aadit Palicha and Kaivalya Vohra, Zepto (formerly known as Kiranacart) has offices in Bengaluru and Mumbai. Its management includes senior leaders from some of the nation’s largest start-ups, including Flipkart, Uber, Dream11, Pharmeasy and Pepperfry to name a few.

The 10-minute delivery service, also known as quick commerce, has been a new trend among hyperlocal delivery start-ups in the country which operate using an inventory model. Although start-ups like BigBasket, Swiggy and Dunzo started as pure marketplace businesses in grocery delivery, all of them pivoted to an inventory model using their own dark stores lately.

The dark store model allows delivery start-ups to have greater control over inventory and overall operations, allowing them to provide a superior customer experience compared to the marketplace model where inventory management has turned out to be an arduous operation. The concept was first experimented in India by BigBasket, which currently operates hundreds of such stores across the country.

“Simply put, customers love a rapid delivery experience. 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%+ week-on-week user retention rate, which shows the incredibly strong customer love for our product,” said co-founder & chief technology officer Kaivalya Vohra in a statement.

Aadit Palicha, founder & chief executive officer, added that quick commerce in India is an opportunity of epic proportions and strong unit economics.

“We’ve been ignoring the noise and executing headsdown for a long time to perfect this model, and our efforts are paying off. Today, we’re consistently growing 200% every single month with an unstoppable team, robust product infrastructure, and deep access to institutional capital,” Palicha said.

Board members and I-investors are equally bullish on the company’s trajectory. “Quick e-commerce is poised to transform how many shop around the world. Zepto has emerged as a leader in India, with exponential growth and best-in-class execution. We look forward to partnering as Zepto brings a magical consumer experience across India”, said Paul Hudson, CIO at Glade Brook Capital.

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