Quick-commerce company Zepto is expanding its dark store network to stock a wider range of products, including high-value items like electronics and luxury goods, aiming to enhance its non-grocery delivery capabilities. This move aligns with Zepto's strategy to improve quick commerce while maintaining its focus on 10-minute grocery deliveries. Zepto, which operates around 250 dark stores in major cities, plans to set up larger storage facilities and replenish smaller stores based on demand. Despite substantial revenue growth, Zepto faces financial challenges with significant losses. The company is preparing to raise over USD 1 billion ahead of a potential 2026 IPO.
Quick-commerce company Zepto is planning to expand its dark store network by setting up larger facilities, aiming to stock a wider assortment of products and move significantly into non-grocery deliveries. According to two sources familiar with the company's plans, Zepto will establish one or two large storage hubs in major cities over the coming months. These hubs will enable the company to deliver high-value items such as electronics, appliances, luxury goods, and gaming consoles within minutes.
Currently, Zepto offers some non-grocery items in select cities. However, larger dark stores will allow the company to stock more stock-keeping units (SKUs) than smaller, grocery-focused stores can accommodate. These larger facilities will also support the replenishment of smaller dark stores within a 2-kilometre radius, based on demand.
One source noted that Zepto is adopting a model similar to Swiggy Mall and Blinkit, maintaining specific stores for non-grocery items while increasing the number of small stores for fast-moving goods. Despite ramping up e-commerce sales, Zepto remains committed to quick commerce, particularly its 10-minute grocery delivery promise.
Zepto currently operates approximately 250 dark stores across major cities, including Mumbai, Bengaluru, Hyderabad, and Delhi-NCR. These dark stores, which are not accessible to consumers, fulfil the company's online orders. Although Zepto considered creating a separate tab in its app for e-commerce orders, it decided against it to maintain its focus on rapid grocery deliveries.
Quick commerce firms are increasingly turning to non-grocery items to boost order values and volumes. Consumer brands benefit from this strategy, with quick commerce platforms becoming a vital sales channel. For example, Honasa Consumer, owner of the Mamaearth brand, reported that sales through quick commerce are outpacing traditional e-commerce. Pankaj Makkar, managing director of Bertelsmann India Investments, described quick commerce as an evolution of e-commerce.
Financial data underscores the rapid growth of the quick commerce sector. Market leader Blinkit's FY24 operating revenue reached INR 2,301 crore, up from approximately INR 724 crore in FY23. Although Zepto's FY24 revenue is not yet available, its FY23 revenue grew 14 times to INR 2,024 crore from INR 142 crore the previous year. However, losses widened 226% to INR 1,272 crore, highlighting the challenges of operating a high-burn business.
According to an HSBC Global Research report, Zepto has increased its quick-commerce market share to 28%, while Blinkit holds 40%. Founded in 2021 by Aadit Palicha and Kaivalya Vohra, Zepto quickly secured over USD 150 million in funding from investors like Y Combinator and Nexus Venture Partners. It achieved unicorn status last year with a USD 200 million Series E funding led by StepStone Group. Zepto is now preparing to raise over USD 1 billion ahead of a potential 2026 IPO.
The renewed investor interest in quick commerce reflects growing optimism in the sector, which was previously seen as a cash-intensive proposition. Improved performance has boosted Blinkit's implied value to USD 13 billion in March 2024, up from USD 2 billion a year earlier, according to Goldman Sachs. Zepto's initiatives, such as the Zepto Pass subscription program and Zepto Cafe quick snack and meal delivery option, aim to enhance brand loyalty and expand its service offerings.
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