Zepto Founder Aadit Palicha On E-Comerce Growth | Startup Central - The Big Interview | ET Now

Summary

In this insightful discussion, the CEO of quick commerce company Zepto highlights the surge in demand during religious festivals and special occasions, attributing it to the convenience of 10-minute delivery. The company has seen significant growth, with over 600,000 orders per day during holidays like Holi. Zepto aims for 30% of its GMV to come from event days, leveraging this trend for buyer base expansion and profitability. The CEO also addresses concerns about high platform fees, emphasizing Zepto's commitment to customer-friendly actions and supply chain efficiency to achieve profitability, with plans to go public in the next 18 to 24 months.

Takeaways

• 🚀 Quick commerce is experiencing significant growth and is well-established as a convenient delivery option for consumers, especially during religious festivals, holidays, and family gatherings.
• 📈 Zepto has seen a substantial increase in sales during events like Holi, with over 600,000 orders per day, and a 3 to 5x spike in white t-shirts sales.
• 💡 The company is focusing on expanding its buyer base by attracting new buyers and reactivating old ones, which has led to a 40-50% increase in those buyers week on week.
• 🎨 There is a strategic emphasis on the assortment of products offered during events to drive conversions and customer retention post-event.
• 📊 Zepto aims for 30% of its GMV to come from event-led days, both organic and platform-created, contributing to significant incremental sales and profitability.
• 🛒 The average order value has increased during special events, and the company is targeting to achieve EA (Earnings Before Amortization) positivity in 4 to 5 months.
• 🏙️ Metro cities currently drive the majority of Zepto's volume, with a focus on the top 40 cities for growth and profitability.
• 🛍️ The introduction of Zepto Pass has led to a reduction in delivery fees for customers, contributing to an increase in subscription and a more attractive value proposition.
• 💼 The company is working towards profitability through supply chain optimization, assortment expansion, and a growing advertising business, rather than increasing delivery fees.
• 🌐 The entry of Flipkart into quick commerce is seen as a significant validation of the business model and its potential for growth and profitability.
• ⏳ Zepto has ambitions to go public within the next 18 to 24 months, with a focus on creating value for shareholders and leveraging the momentum in the quick commerce space.

Q & A

What is the current status of quick commerce in terms of demand trends during religious festivals and holidays?

Quick commerce is well established for use cases like religious festivals, holidays, parties, and family gatherings. It has seen deep growth and retention benefits with limited to no cost due to traffic spikes and the right assortment selection, leading to a 40-50% increase in first-time and long-time buyers week on week.

How did sales of juices and mixers in the evening correlate with the holy event?

During the holy event, there was a 2X spike in the sales of juices and mixers in the evening, presumably due to evening parties after the day's festivities.

What was the highest number of orders per day achieved during the holy event this year?

The company achieved over 600,000 orders per day during the holy weekend, marking a significant win.

What was the unexpected spike in sales related to the holy event?

There was a 3 to 5x spike in the sales of white t-shirts, especially those with holy colors all over them, as people needed fresh t-shirts after the event.

How does the company plan to leverage special occasions for business growth?

The company targets 30% of GMV to come from event-led days, including both organic events like festivals and platform-created events, aiming for a 15 to 20% growth week on week during these event days.

What is the contribution of special events and days to the overall sales of the company?

Special events and days are expected to contribute significantly to the overall sales, with the company aiming for 30% of GMV from events and an incremental sales boost of 400 to 600 crores due to event execution and planning.

How does the company view the entry of Flipkart into the quick commerce space?

The company views Flipkart's entry as a big validation of the quick commerce space, indicating a shift from skepticism to recognition of the business's potential for scale and profitability.

What are the city-specific trends in quick commerce between metros and small cities?

The majority of the company's volume comes from metros, with a deep customer base and value spent on grocery and fast-moving goods. The company projects that the top 40 cities will contribute significantly to the profit pool.

How does the company plan to achieve profitability?

The company is focusing on supply chain excellence, assortment expansion, increasing AOVs and margins, and growing its advertising business to achieve profitability in four to five months, without increasing delivery fees.

What is the company's strategy regarding delivery fees and the introduction of Zepto Pass?

The company has introduced Zepto Pass, offering unlimited free delivery for a low subscription price, which has reduced delivery fees for customers and contributed to the company's value proposition.

Is there a plan for the company to go public, and if so, when?

The company has ambitions to go public within the next 18 to 24 months, aiming for an IPO by the end of 2025 or early 2026, depending on market conditions and the company's readiness.