Zepto Case Study - The 10-Minute Miracle

Zepto, a quick commerce start-up in India, has a USP of delivering groceries in under 10 minutes. Two Stanford dropouts, Aadit Palicha and Kaivalya Vohra, founded Zepto in 2021. Zepto was earlier named as Kirana Mart, which was similar to big basket and grofers.

    Image source:Zepto 

The quick commerce segment, characterized by rapid delivery of groceries and essentials, has become a hotbed of competition with players like Swiggy Instamart, Blinkit (formerly Grofers), and Dunzo.

Zepto compete with the competitors by 

• Serving groceries in just 10 minutes 

• Building Dark Stores to service clients within 3 kilometre radius 

• Locus product

• PPB Approach 

Dark Stores

Dark Store are micro warehouses that help in delivering groceries under 10 minutes. These are located in urban areas within 3 kilometres radius. They are retail distribution channel which caters exclusively to online orders. Dark shops are optimised for picking, packaging and dispatching the orders quickly. Dark stores use less space and hence maximize space utilisation. The inventory systems ensures that products are available always. 

Zepto leverages advanced technology to optimize its supply chain and delivery processes, and one of the key components of this technological infrastructure is Locus AI. 

Locus is an AI application which zepto uses to track the customer geostatistical data which also helps in choosing whether to build the dark store in a particular area. It enables the company to deliver on its promise of ultra-fast deliveries while maintaining cost efficiency and scalability.

PPB Approach 

Picking: In Zepto's dark stores, employees use tablets to manage orders. When an order is placed, it is sent to a central hub and then to the relevant dark store. The employees see the order details on their tablets, which show exactly which items are needed and where they are located on the shelves. This makes the picking process very fast.

Packing: Once all the items for an order are collected, they are quickly packed together.

Bagging: After packing, the delivery agent receives the order and must leave the warehouse immediately. Zepto ensures that the combined processes of picking, packing, and bagging are completed within 60 seconds.

Partnership with suppliers also helped zepto deliver groceries under 10 minutes.

Zepto is growing rapidly and also extended its services to multiple cities. 

Zepto raised seed funding from Y Combinator,

Series A and B led by Glade Brook Capital and Nexus Venture Partners. 

Series C: Zepto, in 2022, raised $100 Million, valuing the company at $570 Million.

Recently Zepto raised $665 Million reaching valuation of $3.6 Billion, this funding round was led by Avenir Growth Capital and Lightspeed Venture Partners.

Zepto also started Zepto Cafe providing quick access to freshly prepared beverages and snacks alongside their regular grocery shopping.

With the competitive advantage like dark stores and instant delivery, there are many challenges. Few of them are stated below- 

• Cost/Expenses - Infrastructure expenses for dark shops and operational cost makes the journey tough for Zepto.

• Competition- Sharks like Blinkit, Swiggy Instamart are well established players and lately read the news about Flipkart and Amazon focusing on providing grocery services. So the quick commerce space is highly competitive, with established players also vying for market share. 

• Retaining Customers is difficult for Zepto as there are well established players in this space.

Conclusion -

One can learn following lessons from Zepto:

1• Ultra-fast delivery models can revolutionize traditional markets.

2•Technology is essential for operational efficiency. Application like Locus helped Zepto to build dark stores only in a particular area.

3•Efficient processes in picking, packing, and dispatching are critical.