Indian fast-commerce startup Zepto has achieved a significant milestone by surpassing $1 billion in annualized sales within just 29 months of its inception, as noted by Goldman Sachs in a recent report citing Zepto’s management.
Competing with Blinkit (formerly Grofers, acquired by Zomato) and Swiggy Instamart, Zepto has also seen an increase in market share, now approaching that of the second-largest player in the market, according to the report. As a unicorn company since last year, Zepto has garnered support from investors such as YC Continuity, StepStone Group, Glade Brook Capital, and Contrary.
BlinkIt, acquired for $568 million by Zomato in 2022, holds a leading position in the instant-commerce sector. Zomato’s co-founder Deepinder Goyal expressed confidence that BlinkIt would surpass Zomato’s food delivery segment in terms of size within a year.
Founded by two college dropouts, Zepto operates across seven Indian cities and relies on a network of over 300 dark stores or microfulfillment centers to provide customers with rapid delivery of various items including groceries and electronics. The startup, known for its promise of delivering orders within 10 minutes, currently handles approximately 550,000 orders daily, according to information provided to the investment bank.
Zepto is also making strides in improving its financial performance, aiming for a break-even at the EBITDA level within the next quarter. The company anticipates a steady state contribution margin of 12% and a steady state EBITDA margin of 7%. Additionally, Zepto has reduced the time it takes for newly opened dark stores to become profitable, now achieving profitability in 9 months compared to 15-18 months previously, with a throughput per store of 1,500 orders per day.
The rapid growth of instant-commerce companies in India has not only posed a challenge to traditional supermarkets and local stores but has also impacted e-commerce giants like Flipkart and Amazon. India’s quick-commerce sector, which barely existed three years ago, has now surpassed the $5 billion mark, capturing over half of the online grocery market and reaching a scale comparable to that of established Indian supermarket chain Dmart, according to Goldman Sachs.
Zepto believes that quick-commerce platforms have a strategic advantage over other formats of organized grocery, thanks to their proximity to customers while maintaining competitive pricing, a wide range of products, and quality benefits associated with organized grocery shopping.
