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    Zepto raises $60 million to deliver groceries in 10 minutes

    Synopsis

    Venture capital fund Nexus Venture Partners and Silicon Valley’s Y Combinator also participated in the funding round along with prominent angel investors including former chief business officer of WhatsApp, Neeraj Arora.

    Kaivalya VohraETtech
    (From left) Kaivalya Vohra, CTO, Zepto and Aadit Palicha, CEO and cofounder, Zepto.
    Mumbai: Quick commerce grocery delivery app Zepto has raised $60 million in a funding round led by US -based investment fund Glade Brook Capital, at a post-money valuation of $225 million.

    Venture capital fund Nexus Venture Partners and Silicon Valley’s Y Combinator participated in the fundraising, as did prominent angel investors including WhatsApp's former Chief Business Officer Neeraj Arora. Glade Brook Capital is an investor in US grocery startups like Instacart and Good Eggs. It has also invested in food delivery app Zomato.

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    Founded by Aadit Palicha and Kaivalya Vohra, Zepto promises to deliver groceries in 10 minutes. Zepto is entering the quick commerce space — defined as delivery under 45 minutes — at a time when well-funded and bigger startups like Swiggy, Grofers, Dunzo, and BigBasket are doubling down on the sector as well.

    In a blog post on October 18, Grofers said it had partnered with 86 dark store owners in 13 cities, clocking over one million orders in the last three months. Swiggy’s Instamart service is present in more than 11 cities, while BigBasket is expected to roll out its express delivery services in the coming months. Dark stores are typically small warehouses populated in dense areas in a city through which platforms try to service orders quickly.

    Zepto operates out of its network of ‘cloud stores’ or micro-warehouses, which it owns, to fulfil orders within the time frame. The company was set up in September last year and it launched services in April this year.

    The Mumbai-based startup will utilise the funds to expand the number of dark stores in newer cities to expand its customer base and hire more employees. It is also present in Bengaluru and Delhi-National Capital Region and will launch in Hyderabad, Chennai, Pune, and Kolkata in the next 30 days. It plans to expand to 100 dark stores, thereby servicing around 100 pin codes, by the end of this year.

    “Nobody has really perfected commerce in India, comprehensively. If you look at some of the older companies that are trying to execute on this model, a lot of them are terribly unfocused, they just don't have the discipline of execution on operating one model. They get into multiple different things, which is sort of the biggest downfall for any large company,” cofounder Palicha told ET.

    The company has 300 corporate employees — excluding the warehousing staff — and plans to quadruple that over the next few months. Palicha said that the service was growing 200% month on month in terms of revenue, without disclosing numbers. According to him, Zepto’s median delivery time is about eight minutes.

    Express delivery as a concept is not new as most of the existing e-grocers have tried it before, without much success. Over the last few months, following the accelerated adoption of online grocery due to the Covid-19 pandemic, these platforms are bringing back quick deliveries to consumers, mostly through the dark-store model.

    “We have seen our median delivery times stabilise if not decrease, mainly because as we scale our coverage and our expansion, it ends up being a factor of individual cloud stores and how they perform,” he said.

    According to research firm RedSeer, quick commerce is estimated to touch $300 million by the end of this year and is expected to grow to $5 billion by 2025.

    About 20 million households are addressable by quick commerce in India, with an estimated addressable market size of almost $50 billion in 2020, it said.

    “Quick e-commerce is poised to transform how many shop around the world. Zepto has emerged as a leader in India, with exponential growth and best-in-class execution,” said Paul Hudson, chief investment officer, Glade Brook Capital.
    ( Originally published on Oct 31, 2021 )
    The Economic Times

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