ALEXANDRIA, Va.—Zepto, a 10-minute grocery delivery company based in Mumbai, has raised $200 million in its Series D financing round, bringing its valuation to $900 million, reports Tech Crunch.
Its 10-minute grocery service operates in 11 cities across India, and it’s looking to expand to 12-20 more cities over the next 12 months and grow its network of dark stores by a few hundred. Zepto is also testing prepared food delivery, including hot beverages and snacks within its 10-minute delivery promise in select areas in Mumbai.
The company processes hundreds of thousands of orders each day, Aadit Palicha, Zepto’s chief executive, told TechCrunch, and Zepto is current annual revenue is between $200 million to $400 million, but Palicha wants to grow that number to “at least $1 billion” by the quarter ending March next year, he told TechCrunch.
TechCrunch reports that the company has consistently grown by over 50% each month in recent months. In the most recent quarter, the startup grew its revenue by 800% while cutting expenses per order by more than five times.
India is leading other global markets in the adoption of quick commerce, according to analysts at Sanford C. Bernstein, and the market is worth $45 billion. Customers in India are willing and able to pay premium for quality products and the growing market for home delivery have both contributed to the growth of quick commerce in the country.
The Indian food delivery space includes Swiggy, which is India’s most valuable food delivery startup and is looking to invest more than $700 million on its quick commerce service called Instamart. Also competing with Zepto is Blinkit, which was recently acquired by larger food delivery company Zomato. Zomato is testing a 10-minute delivery model for food items in Gurugram.
Basket size for instant delivery service is currently about $6 in India, whereas traditional online grocery order basket sizes are between $12 and $15.
“But recent cohorts have shown improving stickiness, with basket size increasing with increase in usage. Quick commerce models have seen improving monthly order frequency (mature cohorts at 3-4 times a week, with healthy AOV of 400-500 Indian rupees). Quick commerce players are focused on driving a high frequency basket which will drive better economics,” the analysts told TechCrunch.