Zepto’s Journey from Quick Delivery to Full-Scale Online Supermarket

Zepto, the Mumbai-headquartered quick commerce unicorn, is undergoing a significant transformation. What began as a 10-minute grocery delivery service has now evolved into a comprehensive internet supermarket chain, delivering an expansive range of products including groceries, fresh produce, electronics, fashion apparel, and more.

In a conversation with Y Combinator CEO Garry Tan, Zepto’s co-founder and CEO Aadit Palicha outlined how the company is reimagining its identity beyond just fast delivery.

“People think of us as a 10-minute delivery provider here. If you go into the ground in India, we’re sort of looked at more as a hyperlocal Amazon — not just good serviceability to the customer but also great selection, great quality and great pricing. We’ve almost 45,000–50,000 products that you can order on Zepto, everything from oranges and apples all the way to earphones and hoodies. We’re basically building out an internet supermarket chain,” Palicha stated.

Zepto's Shift from Speed to Scale

A Full-Spectrum Shopping Destination

Zepto now offers over 50,000 products, making it one of India’s most comprehensive platforms in the quick commerce space. From fresh fruits and vegetables to tech gadgets and everyday fashion, the platform is diversifying rapidly to cater to the evolving needs of urban Indian consumers.

Reinventing Customer Experience

Zepto’s co-founder and CEO Aadit Palicha highlighted Zepto's focus on four pillars crucial to the customer experience — speed, quality, selection, and price.

“As a result of owning it (the four pillars), we’re able to do 50,000 products, control the entire supply chain on the back-end, and get better quality of produce and price for customers,” he explained.

While Zepto initially gained popularity as a 10-minute delivery provider, the company is now increasingly seen by customers as their go-to one-stop online supermarket.

“So, the customers’ thinking of us as 10-minute delivery players got our foot in the door, but now they’re basically thinking of us as their go-to supermarket chain in India or their go-to one-stop shop,” Palicha added.

Expansion Across India

Currently, Zepto operates in 50 cities and processes an impressive 1.5 million orders per day. Its aggressive expansion and service reliability have contributed to growing consumer trust and increasing order frequency.

Revenue and Ad-Tech Innovations

Massive Jump in Annualised Revenue Run Rate

Zepto has seen a massive financial upswing this year, achieving an Annualised Revenue Run Rate (ARR) of $200 million, a fivefold increase compared to the previous year.

Building an In-House Ad Stack

Zepto is also capitalizing on its digital infrastructure to build a robust advertising ecosystem.

“If you look at our advertising business, we have gone from a $40 million ARR in ad revenue last year to just crossing $200 million ARR this year. We are innovating in exciting fashion. We built our entire relevance engine, bidding, attribution, campaign management and automated keyword suggestions — I think we’ve built out a really high-quality, performance ad stack out of India,” said Palicha.

Zepto History

Here's a history of Zepto, the quick-commerce company:

Zepto's Founding and Early Days:

• Zepto was founded in July 2021 in Mumbai, India by Aadit Palicha and Kaivalya Vohra, who were 19-year-old Stanford University dropouts at the time.

• The idea for Zepto emerged during the COVID-19 pandemic when the founders, back in India, noticed the inefficiencies and long delivery times for groceries. They aimed to create a service for ultra-fast grocery delivery.

• Their initial venture was KiranaKart, a platform focused on partnering with local kirana stores for grocery delivery within 45 minutes. This initial model, launched in 2020, did not gain significant traction. However, it provided valuable learning experiences.

• Both Palicha and Vohra participated in Y Combinator's accelerator program while developing their platform.

• In 2021, the company rebranded from KiranaKart to Zepto and shifted its operational model to a dark store network for fulfilling orders, enabling faster deliveries. This pivot proved to be a crucial turning point.

• Zepto's core promise became "Groceries delivered in 10 minutes."

• The company began operations in April 2021.

Zepto's Growth and Funding:

• Zepto quickly gained traction in the burgeoning quick-commerce market in India, differentiating itself through its speed and hyperlocal dark store strategy.

• It raised its first funding rounds in 2021, including a pre-seed round for KiranaKart and a $60 million Series A round after rebranding to Zepto.

• Significant funding rounds followed, fueling rapid expansion into major metropolitan cities like Mumbai, Delhi, Bengaluru, and Chennai.

• Zepto's Key funding milestones:

  • Series E (August 2023): $200 million, achieving unicorn status with a valuation of $1.4 billion. This marked the end of India's "unicorn drought."

  • Series F (June 2024): $665 million, raising the valuation to $3.6 billion.

  • Series G (August 2024): $340 million, increasing the valuation to $5 billion.

  • Series G (November 2024): $350 million, maintaining the $5 billion valuation.

• As of November 2024, Zepto had raised a total of $1.95 billion across 8 funding rounds (some sources report 10 rounds).

• Key investors include Y Combinator, Nexus Venture Partners, Glade Brook Capital, StepStone Group, General Catalyst, Lightspeed Venture Partners, DST Global, and Motilal Oswal Private Wealth, along with angel investors like Sachin Tendulkar and Abhishek Bachchan.

Zepto's Key Developments and Strategies:

• Dark Store Network: Zepto's strategy relies on strategically located "dark stores" (micro-warehouses) within cities to ensure quick delivery times within a 2-3 km radius.

• Technology and Logistics: The company heavily invests in technology, developing proprietary logistics software for real-time order tracking, route optimization, and inventory management.

• Hyperlocal Approach: Zepto focuses on a hyperlocal delivery model with a curated selection of fast-moving goods to meet urgent consumer needs.

• "PPB" Formula: Zepto emphasizes "Picking, Packing, Bagging" efficiency in its stores, with employees equipped with tablets to streamline the process.

• Focus on Delivery Partners: The company emphasizes maintaining high employee satisfaction and low churn among its delivery partners.

• Marketing Strategy: Zepto targets a younger demographic through digital platforms, influencer collaborations, and a user-friendly app interface.

• Cafe Division: In April 2022, Zepto launched Zepto Cafe, a division focused on the delivery of coffee and ready-to-eat food in 10 minutes.

• Membership Program: In February 2024, Zepto launched a paid membership program, which had over 4 million subscribers by April 2024.

• Expansion: Zepto has rapidly expanded its store network, aiming for 1,200 stores by March 2025, with over 650 operational as of January 2025, across ten metropolitan areas in India.

• Headquarters Move: In 2024, Zepto moved its headquarters from Mumbai to Bengaluru.

• Reverse Flip: In January 2025, Zepto completed a reverse flip, transferring its domicile from Singapore to India ahead of a potential IPO.

• Potential IPO: As of early 2025, Zepto is reportedly considering an Initial Public Offering (IPO) in late 2025 or early 2026.

Zepto's Challenges and Competition:

• Zepto operates in a highly competitive quick-commerce market in India, facing competition from established players like Swiggy Instamart and Blinkit (acquired by Zomato), as well as other emerging players.

• Maintaining profitability while ensuring rapid delivery and managing logistics in densely populated urban areas remains a key challenge.

• The company has reported significant losses in previous fiscal years, although losses reportedly saw a slight decrease in FY24. However, a significant number of its dark stores have achieved EBITDA positivity.

Despite the challenges, Zepto has emerged as a significant player in India's quick-commerce revolution, driven by its focus on speed, technology, and a localized operational model. Its rapid growth and substantial funding highlight the immense potential and investor confidence in its vision.