Quick commerce platform Zepto’s monthly sales are currently the double of what the platform clocked in the whole of financial year 2022, Aadit Palicha, co-founder and chief executive officer of the company, told FE.
The startup, which began operations in April 2021 during the pandemic, generated a total revenue of Rs 142.4 crore in FY22, while its revenue from operations stood at Rs 140.7 crore. In the same year, it incurred a total loss of Rs 390.4 crore.
Asked how the company’s losses compared with FY22, Palicha said the expense to sales ratio was about 8-12X better than what it was in the preceding fiscal.
“Our monthly sales are already 2X of what we did in the entirety of FY22 because of the scale we are growing at while maintaining a healthy expense to sales ratio, because we are seeing our mature markets starting to turn cash flow positive,” Palicha said.
Markets like Mumbai, Bengaluru and Delhi are some of Zepto’s mature markets.
Palicha added that Zepto was currently spending on going deeper into its existing regions and to expand its operations to Tier 2 cities. “We are still burning money because we are in a hyper-growth mode which requires us to spend on marketing, capex, working capital and the likes,” he said.
Further, underscoring the financial performance of Zepto, Palicha said Zepto’s model could turn cash flow breakeven within 18 months from now. “The timeline for profitability doesn’t, however, mean we have set that as our goal. Right now, we want to continue expanding,” Palicha said, acknowledging that the pace of growth would take a hit if the company was to shift its focus towards profitability immediately.
“Most startups are pulling back, but we continue investing because we are seeing healthy trends on unit economics. We’re feeling good that we can continue spending and still have a healthy amount of cash runway left,” Palicha said.
The Y Combinator-backed startup, which is valued at $900 million, competes with quick-commerce companies like Zomato-owned Blinkit, Reliance Retail-backed Dunzo and SoftBank-backed Swiggy’s Instamart.
For comparison, rivals like Dunzo saw its total revenue go up to Rs 67.7 crore in FY22 against Rs 29.4 crore in the preceding fiscal, while its consolidated losses in FY22 jumped to Rs 464 crore from Rs 229 crore in FY21, thanks to the total expenses which doubled to Rs 532 crore.
Zomato’s Blinkit, on the other hand, reported a loss of Rs 1,019 crore in FY22 against a loss of Rs 381.7 crore in FY21, while its revenue from operations grew 18% year-on-year (y-o-y) to Rs 236.3 crore in FY22.
Further, Blinkit’s expenses more than doubled y-o-y to Rs 1,262.3 crore.