Zepto secures $350 million in fresh funding, third funding round in six months, as Indian quick-commerce startup strengthens position against competitors ahead of IPO expected next year did.
Indian family offices, high-net-worth individuals and asset manager Motilal Oswal invested in the round, which maintains Zept's valuation at $5 billion. Motilal co-founder Raamdeo Agrawal, Mankind Pharma family office, RP-Sanjiv Goenka, Cello, Haldiram's, Sekhsaria, Kalyan, as well as celebrities Amitabh Bachchan and Sachin Tendulkar are backers of this new investment. , which is by far the largest scale. First round in India.
The funding drive comes as Zept rushes to add Indian investors to its capital table, with foreign ownership now at more than two-thirds. TechCrunch first reported on the new round of deliberations last month. The Mumbai-based startup has raised more than $1.35 billion since June.
Sales in India of QuickCommerce, which delivers groceries and other goods to customers' doorsteps in 10 minutes, are expected to exceed $6 billion this year. Morgan Stanley predicts the market will reach a value of $42 billion by 2030, accounting for 18.4% of all e-commerce and 2.5% of retail sales. These strong growth prospects are forcing existing players like Flipkart, Myntra and Nykaa to lose business to specialized delivery apps and reduce delivery times.
Although quick commerce has not penetrated most parts of the world, the model seems to work particularly well in India, where unorganized retail outlets have always been present.
In a note this month, Morgan Stanley wrote that in India, quick commerce platforms are creating “parallel commerce for customers who demand convenience.”
Zepto and its rivals Zomato-owned Blinkit, Swiggy-owned Instamart, and Tata-owned BigBasket currently operate on lower margins than traditional retail, with Morgan Stanley saying the market leader has a contribution margin of 7%. We expect to achieve an adjusted EBITDA margin of ~8%. (Zepto currently spends about $35 million a month, according to a number of people familiar with the numbers).
Zepto fulfills more than 7 million total orders each day in more than 17 cities and is on track to record annual revenue of $2 billion, according to an investor presentation reviewed by TechCrunch. CEO Adit Paricha told investors in August that the company expects to grow 150% over the next 12 months. The startup plans to go public in India next year.
However, the rapid growth of quick commerce has had a devastating impact on the independent shops dotting India's thousands of cities, towns and villages.
About 200,000 stores have closed in neighborhoods over the past year, and 90,000 in major cities where quick commerce is more prevalent, according to the All India Consumer Products Distribution Federation.
The federation warns that without regulatory intervention, more neighborhood stores will face closure as quick commerce platforms prioritize growth over sustainable practices.
Zepto said it has created work opportunities for hundreds of thousands of gig workers. “From day one, our vision has been to play a small role in nation-building, create hundreds of thousands of jobs and better serve Indian consumers,” Paricha said in a statement.
Regulatory challenges loom. Unless an e-commerce company is majority-owned by Indian companies or individuals, it cannot operate on an inventory model under current rules. Quick Commerce companies are currently not compliant with these regulations.