Zepto raises another $31

Zepto raises another $31.25 million in Series E round

Recently turnt unicorn and quick commerce platform Zepto raised an additional sum of $31.25 million in a Series round of funding, with participation from Goodwater Capital, Nexus Venture Partners, and angel investors Oliver and Lish Jung, and Mangum II LLC, according to the company’s filings with Singapore’s Accounting and Corporate Regulatory Authority (ACRA).A company spokesperson confirmed the development without revealing any further details.

This funding comes just a few days after the 10-minute quick delivery platform posted a 14-fold growth in revenue in FY23, reaching ₹12,024 crore compared to ₹142.4 crore in FY22. However, its losses also ballooned to ₹1,272 crore, up from ₹390.4 crore in the previous year, a nearly 4-fold increase.Zepto has been a rare beacon of light in an otherwise competitive market, which is also still trying to figure out a recipe for optimizing unit economics and reducing cash burn. With the latest funding round, the company has now raised a total of nearly $625 million.

Zepto had previously stated its plans to achieve profitability by the end of FY24 and seek an IPO listing by 2025. The immediate focus will be to become Ebitda (earnings before interest, taxes, depreciation, and amortisation)-positive in 12-15 months, as Aadit Palicha had mentioned in August.Last-mile logistics, dark store operations, perishable goods losses, and low margins in the grocery sector have led many analysts to consider the quick commerce business as unsustainable with high cash burn. Zepto competes with the likes of Zomato’s Blinkit, Swiggy’s Instamart, and Tata BigBasket’s BBNow and BBDaily.Some, like BBNow, have steered clear from promising quick deliveries in the 10-15 minute range, instead choosing to bet on 20-30 minute deliveries. However, Zepto has insisted that it would continue to focus on quicker delivery median time, in order to drive customer stickiness and loyalty.

“The whole idea of proximity and speed is something that we realise users care about a lot. As the estimated time of arrival comes down, our conversion and retention rate from the same location goes up,” said Viral Jhaveri, chief growth officer, Zepto. The platforms delivery median stood at 12-13 minutes in August, and intends to bring this down to 8-9 minutes, by the end of the year.

Despite Zepto’s earlier claim of not spending on print ads and minimal outdoor advertising, it has since engaged in both, including an advertising campaign during the ICC Cricket World Cup 2023.As of March 2023, Zepto held the third position in terms of market share determined through order volume and value, with around 20-21%, behind Blinkit and Instamart. Zomato, which owns Blinkit, also recently stated that it considers the quick commerce arm a profitability driver going forward.However, the worrisome cashcrunch at Google-and-Reliance-backed Dunzo, has opened up some room in the market especially in key tier-I metro cities where Dunzo has shut down almost all its dark stores.