L-R: Kaivalya Vohra, CTO, Zepto and Aadit Palicha, CEO and Co-founder, Zepto |
Zepto was started last year by two 19-year-old Stanford
dropouts. Its latest funding round was led by an existing investor Y
Combinator, a prominent Silicon Valley fund.
It also saw participation from a new investor, U.S.-based
healthcare giant Kaiser Permanente, and all of Zepto's key existing investors
including Nexus Venture Partners, the company said in a statement on Tuesday.
Zepto competes with SoftBank-backed Blinkit in India, both
of which promise 10-minute deliveries for groceries. Other rivals including
Dunzo, backed by Indian billionaire Mukesh Ambani's Reliance, and
SoftBank-backed Swiggy are all betting on fast deliveries in the so-called
quick commerce sector.
Aadit Palicha, Zepto's co-founder and CEO, told Reuters the
company was offering services in 11 cities and plans to use the new funds to
expand to as many as 24 new cities within the next quarter.
"The scale that took food delivery companies years to
achieve has taken us months (with groceries). That's the benchmark most people
use and the market size for groceries is far bigger," Palicha said in an
intereview.
SHORT DISTANCESr1
The country's tech startups are attracting huge interest
from foreign investors keen to cash in on growing use of digital payments,
internet and smartphones in the South Asian market.
Research firm RedSeer says India's 'quick commerce' sector,
worth $300 million last year, will swell 10-15 times to $5 billion by 2025.
India’s overall grocery retailing industry is far bigger and worth an estimated
$600 billion.
While the business is booming, Reuters reported in January
quick delivery services in India had raised road safety concerns for delivery
bikers as India has one of the world's most accident-prone roads.
Drivers for Blinkit and Zepto have previously told Reuters
they faced pressure to meet delivery deadlines, which often led to speeding,
for fear of being rebuked by store managers.
Palicha defended Zepto's practices, saying drivers travel
only short distances of an average 1.8 kms (1.12 miles) to deliver orders and
don't rush.
"Quick commerce is about short distances, not going
fast," he said.
Sources with direct knowledge of the matter have told
Reuters Zepto currently records monthly average revenue of $12 million, but
spends about $8 million in marketing, promotion and other activities like free
deliveries each month.
Palicha said "we burn less (cash) than our
rivals".
"This model is proven globally. In Turkey and Russia,
companies have shown operating profits," he added.