Zepto success story | Business Case study

ZEPTO CASE STUDY

Zepto created hype in the initial stages of its launch that it will make delivery in just 10 minutes, now it kept us thinking how can they deliver so fast? So we can focus on 2 things by which this hindrance can be overcome, first is Packaging that means how fast can a packaging be done, and second is the delivery time that means how fast can a Zepto delivery person can deliver a order.

For that they have near by warehouses or dark stores where they have all the products, Zepto delivery boys are on the stores itself to optimize the distance time thats the reason why they have opened dark stores or warehouses at very close distance to their customers.

Zepto Overview

Founded Year	2021
Location	Mumbai, India
Company Stage	Series C
Total Funding	$161M
Last Funding Round	$100M, Series C, Dec 20, 2021
Valuation	$570M as on Dec 20, 2021

Steps took by Zepto

Now, Grofers and Bigbasket also do the same thing right then how Zepto is more effective? To answer that, Big basket and Grofers have darkstores which is generally 2000-3000 sq.ft area which stores 3000-3500 products, on the other hand Zeptos’s darkstores are less than 1000 sq.ft. Small dark stores automatically reduces expense and they keep very limited items that is between 1000-1500 items which maximum people order.

Next comes how they reduce packaging time, it takes 58 seconds for them to pack one order so they use a lot of Data Analytics and AI which helps them to locate the products in dark store not only that but also the AI shows the shortest route within the store to reach that product. They hire a bunch of people for this work, there are almost 10-15 boys for packing and 10-15 delivery boys.

People you must be contemplating how can 19 years old boys can build so sophisticated a system? So this wasn’t their first startup, Zepto was their third startup, Zepto’s founders are Aadit Palicha and Kaivalya Vohra, they both are friends. When Aadit Palicha was in 11th class he made his first-ever startup that was carpooling app for youngsters – “Go Pool”, he also raised a $15,000 Grant.

How ZEPTO started?

Despite the fact that this app wasn’t successful but he learnt a lot of essential lessons which is require to run a startup like team building, scaling business, etc. Then they both took admission in Stanford University for Computer science program, before lockdown in 2020 they came mumbai and after lockdown they couldn’t go back to Stanford. That time they realized, it is taking a long for groceries to arrive at their home, they thought why so much big companies takes so much time to get the products delivered.

Therefore he thought to turn this into opportunity, that’s when he started Kirana Mart where he collaborated with the near by kirana stores and hired few people to get orders delivered, they got their funding from Y contributor. When they use to delivery the order in less than 20 minutes, the customer satisfaction increased and when they delivered in less than 10 minutes, the customer satisfaction went really high, eventually this returned them into regular customer.

This made them think, if they build a system in which they get deliver products under 10 minutes then this startup can touch the height of success. Gradually, they started ideating on this plan, kirana mart was then dissolved and commenced Zepto in 2020.

In April, they started experimenting and by August they somehow figured out how they can improve their algorithm and deliver within 10 minutes. In August when they launched Zepto, it created a lot of buzz amongst people but we can’t win without challenges.

Challenges

First challenge was What will be Zepto’s business model on the basis of which they will be working and how much it will be profitable for them? They are planning to charge convenient fees after a while just like Swiggy and Zomato. But every delivery service is switching to fast delivery service, Swiggy Instamart is delivering within 30 minutes, Grofers even changed its name to Blinkit where they will only deliver to those areas where they can reach in 10 minutes. Zepto is definitely going to face a tough challenge and how will it differentiate from its competition.

Indian customers always go after discounts, so the company with more funding would give more discounts. Bigbasket have funding from TATA whereas Grofers, Amazon, Flipkart are already backed by huge investors. One question arises, Zepto will ever be profitable in front of these giant competitors? Looking at the present scenario Swiggy, Dunzo are still struggling to earn profits over that Zepto is stating to charge convenient fees, so will it be able to retain its customers?

Do you also think how did Zepto hire so many delivery boys in such a short period? The reason behind this is delivery boys are hired on a salary basis, they have to work for 10 hours, they don’t have to travel much and they get incentives on their salary as well. This seems a good deal for any delivery boy. Although there are numerous questions and chaos we cannot forget the learning we get from this case study. Let’s have a glance –

Zepto Funding Rounds

Date	Funding Amount	Funding Round	Investor Details
Dec 20, 2021	$100M	Series C	Y Combinator, Glade Brook Capital, and 5 others
Oct 31, 2021	$60M	Series A	Y Combinator, Glade Brook Capital and 5 others
Jan 07, 2021	$730K	Seed	Global Founders Capital, 2am VC and 1 others
Nov 01, 2020	$125K	Seed	Y Combinator

Conclusion

-First lesson is age doesn’t matter but knowledge does.

-Second is always find that one opportunity, try to find gap and fill that gap with your ideas.

-Third is having well optimized data can help you boost your business at fullest.

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