Quick commerce company, Zepto on Friday announced that it has raised $665 million, at a valuation of $3.6 billion. Avenir, Lightspeed, and Avra among others, have come onboard as new investors. DST Global, has also come onboard, as a new investor. Existing investors Glade Brook, Nexus, and StepStone, co-led the round, with participation from Goodwater, and Lachy Groom. In an interaction with businessline, co-founder & CEO, Aadit Palicha said, Zepto is looking at a public listing, in the next 9-12 months, and becoming fully EBITDA positive over the next 3-4 months. Excerpts :
In this fundraise, have there been both new and existing investors ?
We have been lucky enough. Firstly that all our institutional investors internally supported and have doubled down in terms of investments. Everyone that is active on our cap table has invested in a big way. Secondly, we have got the good fortune of having new, high quality investors join the cap table. So we have got a nice mix of internal and external investors.
How critical has it been to get this round closed at this stage and how has your peformance been on growth and profitability metrics ?
In 2022-23 the sentiment was pretty negative.We powered through, primarily because customers love the product. In about two and half years, we have crossed the milestone of $1 billion in terms of annualised GMV. We have grown at 140 per cent year-on-year on this large base. While we have grown rapidly, we have done it with a fiscally disciplined, execution-first mindset. We have this Six Sigma Black Belt style of operating, We have got a deep basis point by basis point, execution rigor. As a result of that, we’re in this place where the atomic unit is sort of the key part of the story, which are our dark stores and micro-warehouses. Each store is basically like a business. Roughly, 75 per cent of the 350 stores are now fully EBITDA positive. Not only are they profitable at scale, but they’re actually turning profitable faster and faster. From 23 months,the time taken to achieve profitability by each store has come down to 6 months. Also, it used to take about 8-9 months for a dark store to hit 1000 orders per day and now we are seeing that they hit this number within 4-5 months. So not only have we been able to grow but we have also been able to drive efficiency. So this has led us to a place where realistically by next quarter we will turn fully EBITDA positive at a company level.
How are you looking to scale up ? Is grocery the biggest chunk for business?
The idea is now to be aggressive in expanding. And so we plan to get to over 700 dark stores by March 2025 from the current count of 350 stores. This will broadly be done across the top 20 cities. Grocery is the mother of all markets and driving quick commerce. All the other categories combined are less than half of the grocery market. Grocery which includes fresh fruits and vegetables is about 80 per cent of the business. It will continue to be the largest chunk of business. We have seen other categories such as toys, home and personal care and skincare among others witnessing tractions
When are you looking to go for an IPO ?
We are pretty close to becoming break even. We will keep focusing on fiscal discipline. The idea is to go public in 9-12 months. We have already begun taking steps in this regard and making changes at the entity level and shifting domicile to India from Singapore
Quick grocery platforms are no longer being just used for last-minute purchases and there has been a shift towards bigger packs and planned purchases ...
We are seeing a lot of planned purchases happening. The spends by a customer per month starts at somewhere around Rs 700 and within a few months we have seen the same customer starts spending over Rs 2000 per month. So once we get the customer to the platform, their spending keeps increasing. I think quick commerce has been able to breach the “Great Wall of grocery”. Being able to build a hyperlocal use case with prices, assortment and quality offered by an ecommerce player gives us the advantage.