Zepto co-founder Aadit Palicha told a group of analysts and investors on Tuesday that the three-year-old Indian delivery startup expects to grow 150% over the next 12 months, a remarkable figure that suggests India’s fast-growing quick-commerce market shows no signs of slowing down.
Palicha shared these findings during a conference call organized by an investment bank. Among the participants were representatives from several prominent investment firms, including Abu Dhabi Investment Authority, Temasek, GIC and Invesco, according to documents seen by TechCrunch.
The company spokesman declined to comment on Tuesday.
Zepto’s annual revenue recently crossed the $1.5 billion mark, Palicha said, adding that growth of about 150 percent would push revenue to over $3.5 billion. Zepto competes with Zomato’s Blinkit, SoftBank-backed Swiggy Instamart and BigBasket, all of which are vying for customers’ attention with their 10- to 15-minute delivery services. Blinkit currently generates about $2 billion.
Quick commerce is fast gaining traction in India’s $1.1 trillion unorganized retail market. Zepto, BlinkIt, Swiggy and BB Now of Tata group company BigBasket are together on track to clock over $6 billion in annual revenue, compared to total e-commerce revenue of about $50 billion. Online grocer BigBasket, which delivers groceries to customers within hours, announced on Tuesday that it is moving entirely to quick commerce.
The Indian e-commerce market, dominated by Flipkart and Amazon India, is growing at around 11 to 12 percent annually, according to industry figures. In contrast, quick commerce has seen growth of over 100 percent in each of the last three years.
Quick commerce companies are “clearly taking market share from larger e-commerce companies,” said Rahul Malhotra, e-commerce analyst at Bernstein. Quick commerce “could account for 40-50% of e-commerce (in some categories) in the next three years, according to our reviews, currently it accounts for 10-15% of the total e-commerce segment,” Elara Capital said in a note.
E-commerce giants are taking notice. Flipkart launched its quick commerce offering called Flipkart Minutes earlier this month. Amazon India, long skeptical of the model, is also considering launching its own quick commerce service as early as the first quarter of next year, Indian newspaper Economic Times reported on Wednesday.
Investors asked Palicha on Tuesday about Quick Commerce’s potential to expand beyond India’s 12 or so largest cities, as these apps are currently used primarily in large metropolitan areas. “Quick Commerce is not a Tier 1 phenomenon,” Palicha said. “Our data clearly points to a huge opportunity in Tier 2/3, regardless of market sentiment.”
During the call, he also confirmed that Zepto has raised $1 billion in the last 90 days. This war chest, he believes, will allow the company to expand more aggressively. Zepto’s backers include Nexus Venture Partners, Lightspeed, Avra, YC Continuity, Contrary and StepStone Group.
TechCrunch previously reported that Zepto, now valued at $5 billion, closed a $340 million funding round led by General Catalyst. The startup closed a $665 million funding round in June.
