Zepto has secured $350 million in its third funding round in six months, cementing its position as a leading player in India’s burgeoning quick-commerce sector. The Mumbai-based startup, which plans to go public next year, maintains a $5 billion valuation after the latest round of investments.
Indian family offices, prominent individuals, and Motilal Oswal Asset Management participated in the funding, making it the largest fully domestic primary round in the country. High-profile investors include Raamdeo Agrawal, Mankind Pharma’s family office, RP-Sanjiv Goenka, and celebrities Amitabh Bachchan and Sachin Tendulkar.
The financing is part of Zepto’s strategy to increase Indian ownership in its cap table, with foreign investors currently holding a two-thirds stake. The company has raised over $1.35 billion since June, demonstrating its aggressive expansion ahead of its IPO.
Quick-Commerce Boom in India
Quick-commerce, delivering groceries and essentials in under 10 minutes, is thriving in India. Sales are projected to exceed $6 billion this year and may reach $42 billion by 2030, accounting for 18.4% of e-commerce sales and 2.5% of the overall retail market, according to Morgan Stanley. This rapid growth has pushed established players like Flipkart and Nykaa to slash delivery times to remain competitive.
Zepto currently processes over 7 million orders daily across 17 cities and is on track to achieve $2 billion in annualized sales. It expects 150% growth over the next year, according to CEO Aadit Palicha.
Challenges Amid Growth
While quick-commerce platforms are reshaping India’s retail landscape, they face profitability challenges. Market leaders are expected to reach adjusted EBITDA margins of over 5% by 2030. Currently, Zepto reportedly spends $35 million monthly to maintain operations.
This growth also comes with consequences for traditional retail. The All India Consumer Products Distributors Federation reports that 200,000 neighborhood stores have shut down in the past year, including 90,000 closures in major cities. The federation has called for regulatory intervention to protect these small businesses.
Zepto’s operations have created employment opportunities for gig workers. “From day one, our vision has been to play a small role in nation-building, create lakhs of jobs, and offer better services to Indian consumers,” said Palicha.
Regulatory Concerns
Quick-commerce platforms face looming regulatory hurdles. Indian law prohibits inventory-based operations by firms not majority-owned by Indian entities, posing a challenge for Zepto and its competitors.
Despite these headwinds, Zepto’s rapid funding and growth highlight its strong position in India’s quick-commerce revolution.
