May22 , 2022

‘Want to add 12-20 cities in 9-12 months from current 11’



Quick-commerce platform Zepto, founded by two Stanford University dropouts, has raised $200 million led by Y Combinator and with participation from Kaiser Permanente, Nexus Venture Partners, Glade Brook Capital, and Lachy Groom. In an interview with Pranav Mukul, Zepto’s co-founder and CEO Aadit Palicha said the company would use these funds to expand into 12-20 cities and hire 1,000 people over the next one year. Edited excerpts:

Where are you planning to deploy these funds?

Largely, we’re looking to expand across the country. We want to grow to multiple cities, currently we are in 11 cities. We want to add 12-20 cities across the next 9-12 months. That’s one piece of our expansion. Two, growing the team consistently across tech and product functions. We have built this company tech-first and that has really rewarded us. Now, we are in a position where we want to double down on our tech and product teams. So, we’re expanding teams tech, product, data sciences, business analytics and other functions such as supply chain, marketing, operations ,etc.

How many people do you plan to hire?

We plan to hire roughly another 1,000 people or so in the next year or so.

Which cities plan do you plan to expand into?

We don’t have the exact list as we are in the process of formulating that. But it will include Chandigarh, Ahmedabad, Nagpur, etc.

In terms of demand, how is it different for the company in big cities compared with smaller towns?

Basically this model works very well from the customer side and from an operations side when you have the right density dynamics. What we’ve seen is that the density dynamics for the top 30 cities of the country are very strong. But beyond city number 30, we have to make adjustments to our model to make it a little more conducive to work with different density dynamics.

Some q-commerce companies are not doing that well. What is that Zepto is doing differently than competitors?

For us, we are in a position where we’re building this business efficiently. We have multiple micro-markets that are profitable. We are burning significantly less than some of our competitors. Building this business with high degree of efficiencies is why investors have shown strong degree of confidence. They see a company that is growing very fast and burning less than companies historically have at the same scale.

You have mentioned that your first month buyer retention rate is at 60 per cent. How does this translate into the delivery fee that you charge?

After a customer places more than five orders, they’re hooked. When the delivery fee is implemented, there’s a little bit of downtick in the orders but it comes back up. Once you get repeat customers, they are more likely to pay delivery fees, which is what you saw with food-delivery apps as well. Delivery fees kicked in and people are paying significant amount of delivery fees.

With rising inflation, people tend to cut down on discretionary spends. Has Zepto witnessed any such trend recently?

Not yet, honestly. What we are seeing though is rising petrol prices impacting our last mile operations. It is a cost that we have to deal with. We have revised our last mile rate cards to accommodate for the fuel costs.

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