Zepto, an instant grocery delivery startup headquartered in India’s financial capital Mumbai, has secured as much as $100 million in a funding round led by Y Combinator.
The investment has pegged the valuation of the startup at $570 million within five months of starting services in the country’s fast-growing quick commerce segment.
Zepto, founded by two teenangers, claims to deliver grocery and daily essentials in flat 10 minutes. So far, it is present in six cities – Delhi, Chennai, Gurgugram, Bangalore and Hyderabad, besides its headquarters in Mumbai.
Going forward, the startup plans to foray into cities such as Kolkata and Pune, per information available on its website.
Zepto, that competes with SoftBank-backed Blinkit (earlier known as Grofers), Google-backed Dunzo and Naspers-backed Swiggy, besides e-commerce behemoths Amazon and Walmart-owned Flipkart, last raised $60 million at a valuation of $225 million around two months back.
The significant increase in Zepto’s valuation in this small span of time shows how investors are increasingly evincing interest in startups operating in the online grocery market that’s expected to touch $24 billion by 2025, per a report by RedSeer Consulting.
Currently, 95% of the grocery market is managed by unorganised players or kirana stores as they are called, the report further noted.
Mounting competition
Startups operating in the segment are increasingly devising new strategies to fend off competition. Earlier this month, online grocery delivery platform Grofers, that was established in 2013, rebranded itself as Blinkit.
The startup also pivoted to the 10-minute grocery delivery service starting with Delhi, Gurugram, Mumbai, Bengaluru and Jaipur in August this year.
Swiggy, too, has announced the launch of its 15-minute delivery service from January 2022 and is in the process of investing about $700 million in its express grocery delivery service Instamart to double down on quick commerce.
According to experts tracking the sector, competition in the quick commerce segment is only expected to go up with traditional Indian conglomerates also betting big on it.
While The Tata group recently entered the segment by acquiring a majority stake in BigBasket, Reliance Industries Limited (RIL), too, is looking to grab a slice of the sector. However, they are said to be looking at the virtues of an omni-channel existence rather than a pure e-commerce presence.