India’s Zepto Surpasses $1.2 Billion in Annual Sales in Just 29 Months According to Goldman Estimates

December 30, 2024February 6, 2025 EquityExplained

In a remarkable achievement, Indian quick-commerce startup Zepto has surpassed the annualized sales milestone of $1 billion within just 29 months of its inception. According to a note by Goldman Sachs, which cited management from the company, Zepto is also gaining market share and now stands "close to that of the number 2 player."

Table of Contents

Key Takeaways

$1 Billion in Annualized Sales: Zepto has achieved this impressive milestone in just 29 months.
Market Share Gaining Momentum: The startup’s market share is increasing, with a significant gap between itself and its main competitors.
Zepto’s Backers: The company counts YC Continuity, StepStone Group, Glade Brook Capital, and Contrary among its notable backers.

Competitor Blinkit Gaining Ground

BlinkIt, acquired by Zomato for $568 million in 2022, currently holds the top position in the instant-commerce market. Its co-founder Deepinder Goyal recently stated that he believes BlinkIt will surpass its parent company’s size within a year.

Zepto’s Business Model and Operations

Dark Stores: Zepto operates with a network of over 300 dark stores, or micro-fulfillment centers, which enable the delivery of various items, including groceries and electronics.
Delivery Speed: The startup promises to deliver items within 10 minutes of placing an order.
Daily Orders: Zepto currently processes approximately 550,000 orders daily.

Financial Improvements

The company is experiencing steady financial improvements. According to the Goldman Sachs report:

EBITDA Margin: Zepto’s overall EBITDA margin stands at a negative single-digit percentage.
Break-Even Point: The company is on track to break even at the EBITDA level within the next quarter.
Contribution Margin and EBITDA Margin: Steady state contribution margin of 12% and steady state EBITDA margin of 7%.

Newly Opened Dark Stores

Zepto’s management revealed that newly opened dark stores are now turning profitable in just 9 months, with a throughput of 1,500 orders per store.

Quick Commerce Sector Growth in India

The quick-commerce sector has grown significantly in India, surpassing the $5 billion mark. This growth is largely driven by its ability to capture over half of the online grocery market and achieve a scale comparable to prominent Indian supermarket chain Dmart.

Zepto’s Perspective on Quick Commerce

According to the Goldman Sachs report:

Advantages of Quick Commerce: Zepto believes that quick-commerce platforms possess a proximity advantage to customers while maintaining the price, assortment, and quality benefits of organized grocery.
Competitive Advantage: This unique combination of advantages positions quick-commerce platforms as an attractive option compared to other formats of organized grocery in both offline and online domains.

Conclusion

Zepto’s achievement is a testament to the rapid growth of the quick-commerce sector in India. As the industry continues to evolve, it will be interesting to see how Zepto and its competitors adapt to changing market conditions.

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