Quick commerce startup Zepto is planning to make a larger foray into the instant food delivery market, as it looks to expand its reach and tap into the growing demand for quick delivery services. The startup plans to set up cloud cafes similar to cloud kitchens within large neighbourhoods in metro cities, offering customers a variety of quick bites and beverages that could be delivered within 10 minutes.
“ Zepto is not keen on diluting its equity shares to fund this expansion, hence it has been working with alternative forms of funding such as inventory and asset financing for the infrastructure,” said a source close to the developments.
During its pilot for Zepto Cafe last year, the startup partnered with food brands such as Mumbai’s A1 Samosa, Chaayos, Blue Tokai Coffee Roasters and Rachel’s Sassy Teaspoon to source inventory. The q-commerce firm will now expand its inventory by opening dark stores in high-demand neighbourhoods, sources said.
This is the first instance of a delivery startup getting into instant food delivery. Zepto‘s move into instant food delivery doesn’t necessarily put it in direct competition with established players like Swiggy and Zomato. Zepto had earlier clarified that it has no plan to get into full-fledged food delivery service, and will only focus on cafe food items such as tea, coffee, buns, and other snack items.
“ Zepto’s expansion into the instant food delivery market is a strategic move in response to the growing demand for instant deliveries. With the rise in consumer expectations for speed and convenience, it is important for delivery startups to innovate and expand their services,” said a spokesperson for Nexus Venture Partners, one of Zepto‘s investors.
Zepto competes with quick commerce companies like Zomato-owned Blinkit, bigbasket.com’s BBNow, Reliance Retail-backed Dunzo, and SoftBank-backed Swiggy’s InstaMart. The startup, which began operations in April 2021 during the pandemic, generated total revenue of Rs 142.4 crore in FY22, while its revenue from operations stood at `140.7 crore. In the same year, it incurred a total loss of Rs 390.4 crore.
“ Zepto‘s plans to expand into the instant food delivery market come at a time when the delivery industry is experiencing a surge in demand for quick delivery services. With the promise of 10-minute deliveries at low charges fast fading, it is crucial for startups like Zepto to remain competitive and find new ways to grow and scale their business,” said an industry expert.
Zepto has so far raised over $360 million from investors like Nexus Venture Partners and Glade Brook Capital Partners LLC and is valued at $900 million. Its valuation more than doubled to $570 million during its Series C round and surged to $900 million after its Series D round.