The Zepto Business Model: How a Grocery Delivery Startup Works and Makes Money

Online grocery deliveries gained massive popularity during the pandemic era. The primary driver of the online grocery delivery business has been shifting customer behavior. Customers these days are more likely to purchase online. This has resulted in encouraging many delivery businesses like Zepto to launch their delivery service and cater to customers’ growing needs with faster delivery. If you’re looking to jump into the market, then understanding the Zepto business model can help you a lot. Read this article to learn more.

The grocery delivery business is growing in terms of involvement, financial commitments, and attention. In 2020 the online grocery market in India was valued at US$2.9 billion in 2020. The market is projected to grow at 37.1% of the compound annual growth rate (CAGR) between 2021 and 2028. The online grocery market has gained immense traction over the years due to customers changing lifestyles, the shifting shopping habits of tech-savvy generations, and growing urbanization.

There are a lot of delivery companies, among them Instamart, Swiggy, BigBasket, Blinkit, and Amazon Fresh. Because of the tough competition in the market, you may be wondering whether there is room for new startups to launch their venture. The answer is yes.

You might have heard about Zepto, which launched in April 2021 and has gained immense popularity. Let’s take a look at the Zepto business model – what it is, how it works, and how it makes money.

What is Zepto?

Zepto is the fastest-growing grocery delivery platform in India. The company promises less than 10 minutes of delivery to customers’ doorsteps. But how does a quick delivery company work to provide the best experience? Unlike other grocery delivery platforms, which deliver in 30 minutes, the Zepto business model helps the company to deliver the daily essentials within 10 minutes.

The Success Story of Zepto

Kaivalya Vohra and Aadit Palicha, Stanford University dropouts, founded Zepto in April 2021. The quick commerce startup is planning to launch pharmacy delivery services online. It is a category we will be excited to enjoy on the Zepto platform in the future.

Aadit Palicha, the Zepto founder, said, “There are a lot of innovations that are required to be done in the digital space. It’s something we will find in the medium to short to long term. Zepto has raised more than $200 million in a new financing round as it plans to expand its 10-minute delivery service to more Indian cities and its network of dark stores.

Existing backer Y Combinator led Zepto’s Series D round, valuing the Mumbai-based startup at $900 million, up from $570 million in its Series C round, along with $225 million in a round unveiled in 2022. The size of an order placed on delivery services is about $6 in India, followed by $12 to $15 for traditional online grocery orders.

A Mumbai-based startup, Zepto operates instant grocery delivery services, which has doubled its valuation to $570 million, raised from $225 million less than two months ago as it extends into newer cities. Nexus, Lachy Groom, Glade Brook, Breyer Capital, Global Founders, and Contrary Capital also participated in the round, which drove its to-date increase to $160 million.

The Indian startup, Zepto, has captured immense interest from the local startup community as more individuals began voicing their opinion about the business. Zepto uses mathematical terms to define its business and delivers a ten-minute grocery delivery service, a time period that is popular in various parts of the world.

Seeing the growing demand for instant Grocery delivery, BlinkIt and Swiggy have also entered into the same business. If you’re also looking to give a digital touch to your traditional grocery delivery business with an app similar to Zepto’s, White Label Fox is here to help you.

Gain insight into working for an on-demand grocery delivery app here. Also, don’t miss checking the features and modules that can make your grocery delivery business activities easy and faster than ever before.

The Zepto Business Model: How a Grocery Delivery Giant Provides Instant Service

The Indian e-grocery market is predicted to reach around $24 billion by 2025. Online grocery penetration is forecasted to grow 3 to 5% in the same period, which was less than 1% in recent times. Long-term structural drivers include lower-tier consumption, rising income, e-commerce penetration, increasing affluence, and the demands of a young population.

The Zepto business model was developed by a couple of teenagers focusing on top instant grocery players. The company’s name was termed after the small unit of measurement.

The Zepto Business Model: Dark Stores

Dark stores might seem ominous. They undercut clever strategies that kept some retail establishments afloat during the COVID-19 pandemic. They are distribution centers that are not accessible to the public. Often small warehouses, they precisely fill orders and give consumers access to resources and choices, including same-day delivery, in-store pickup, and online shopping.

The immediate success of Zepto is its ability to deliver more than 2,500 items in 10 minutes regularly. It is at the center of everything the online grocery business does; it’s how the industry has grown so swiftly while retaining such strong client loyalty.

Zepto has decreased the time it takes to deliver goods to ten minutes by utilizing the dark store concept. The grocery delivery sector is experiencing great profit, and startups like Zepto are the fastest growing sector in the delivery sector.

The Advantages of the Zepto Business Model

Due to the increasing demand for food and grocery delivery services, there has been a vacuum of speedy delivery. This fact gave birth to the Zepto business model, which proved very beneficial during the unexpected COVID-19 pandemic.

Faster Delivery and Improved Distribution

Zepto fulfills multiple orders swiftly, all thanks to its dark stores. These cold and micro warehouses offer different distribution options, physically delivering groceries closer to target markets. The grocery delivery platform regulates the distribution.

Boost Customer Reach

The cloud kitchen makes distribution hubs accessible to consumers. It accepts round-the-clock services online. Consumers are drawn to these grocery delivery platforms and employ their services as a result.

Contactless Shopping

Contact-free shopping has influenced businesses to opt for a “dark store” approach. Cloud kitchens or dark stores enable consumers to shop for meals and groceries without interacting with others or moving to physical stores. They access things online and get them delivered right away.

Improved Product Assortment and Inventory

Dark stores provide excellent inventory control, handle large order quantities, and have no consumers. Zepto’s AI-powered platform enables inventory stock tracking and product assortment.

How Zepto Works

Zepto has 100 places that are known as micro fulfillment centers or dark stores that lie in higher-demand neighborhoods. Such types of stores use modern technology to perform tasks such as the placement of products. The company finalizes store locations and maps delivery routes to avoid heavy traffic congestion.

The company delivers almost 2,500 items, including fresh produce, cooking necessities, personal care items, home cleaning items, and snacks and beverages. The company founders have brought an execution like Doordash to their q-commerce Zepto business model.

The startup is looking forward to satisfying the growing needs of more than 1,00,000 new customers. Customers need to follow simple steps to get their daily essentials delivered to their doorsteps.

• Customers can download an app or visit the website to check the product list
• After completing the registration and login process, they are allowed to place an order
• Dark stores nearby receive the notification related to customers’ orders
• Stores pack the items and hand them over to a delivery partner
• Delivery partners collect the order and deliver it to customers’ doorstep
• Customers can make payments and give feedback

You can consider following the Zepto business model and workflow while launching a similar business. Investing in a ready-to-use anything delivery app can prove to be a profit-making option.

The Future Plans of Zepto

Zepto is looking to expand its client base, open dark stores, and hire more staff to ensure smoother operations. The company is operational in Delhi, Bengaluru, Hyderabad, Pune, Chennai, and Kolkata. Zepto is looking to offer its service in more countries in the future.

The company is planning to cover about 100 pin codes. India’s quick commerce market is expected to reach around $5 billion by 2025. It’s projected to reach $300 million. Zepto founder Palicha has stated that no one has fully grasped marketing in India. When you look at older organizations that are trying to follow an effective approach, you will find that many lack the consistency to run on a single model and are unfocused. They engage in many activities, which is the largest problem in each major company.

Adding further, the founder has concluded that, “we have noticed median delivery times have stabilized because we have scaled our expansion and coverage. It ends up being an aspect of single cloud stores and how they perform.”

Express delivery is a fresh idea; most e-grocers have tried the same in the past, with varying degrees of success.

Get Your Zepto-like App Deployed Today

Quick delivery services have disrupted the grocery delivery market. Delivery giants like Swiggy, BigBasket, and Instamart are planning to complete deliveries in less than 15 minutes by the end of this year. Fraazo, another company, is planning to triple the number of its dark stores to 750. BigBasket and Dunzo are vying to enter the quick commerce market.

Zepto entered the supermarket delivery area at the right time and grabbed great success. If you’re looking to set up an on-demand grocery delivery business, you can get in touch with White Label Fox. We can help you deliver faster to your customers.