Zepto Again Made Headlines As The Firm Declares Its FY23 Financials: Apart From Strategic Approaches, What Personal Traits Are Keeping These Young Entrepreneurs Land And Survive In The Market?

The billionaire Stanford dropouts are again making headlines as Zepto has grown 14x in the fiscal year ending March 2023. To recall, let me tell you, this was the debut unicorn of 2023. With a 14-fold spike, Zepto registered INR 2,024 Cr in revenue in FY23. 

However, if ‘No storm lasts forever and after the storm, the sun will shine again’ is correct, then vice-versa also exists. So, along with a great jump in revenue, there is a great glimpse of losses as well. 

Zooming Into Zepto’s Expenses.

The Mumbai-based firm’s losses also surged more than 3X during the last fiscal year. In FY23, losses broadened to Rs 1,272 crore, an increase of 226% from last fiscal. This was a result of the company’s total expenses that increased from ₹533 crore in FY22 to ₹3,350 crore during FY23. When compared with the last fiscals, The Unicorn posted Rs 142.36 crore in revenue in FY22, with losses amounting to Rs 390 crore. 

Purchase Of Stock-In-Trade Surges: Zepto spent INR 1,804.6 Cr for procurement of grocery things in FY23, a spike of 1,125.9% from INR 147.2 Cr in the previous fiscal. This is a clear signal that the startup has increased its presence across India. 

Employee Benefit Expenses Rise: Zepto’s employee cost surged 419% to INR 263.4 Cr during the year under review from INR 50.7 Cr in FY22. The firm currently has an employee headcount of 3,833, as per the information given on LinkedIn.

So, is Zepto climbing the ladder?

As per the company, the unicorn has significantly improved its profit after tax margin from -277% to -63% in FY23. 

Zepto also mentioned that it is on track to get EBITDA breakeven (excluding ESOP and other statutory non-cash line things) in another 10 months. The monthly cash burn trending lower implies that Zepto was on track to become positive on an adjusted EBITDA basis 10 months from now.

In the whole of FY23, Zepto opened about a century of new stores, mostly in existing locations, as it saw more customers marking their presence on its platform.

Aadit Palicha, the business’s co-founder and CEO, and Kaivalya Vohra, the other co-founder, and their families own roughly 22.4% of the company. Even at the Series E stage, Zepto is one of the rare Indian businesses in whom the founding team owns more than 20% of the company. That’s again a good point.

What are the key strategies made by Zepto that made it a success? How does Zepto deliver in less than ten minutes?

Zepto’s business model is mainly centred on its dark store operations and the development of an efficient supply chain and last-mile delivery through the use of technologies such as real-time demand-based sensing, dynamic pricing strategy, and more.

It purchases stuff and stores it in its dark stores, which are visible on its app. After placing the order, the delivery executive arrives at the dark store, gets the things, and departs for delivery. According to industry statistics, this process takes less than 60 seconds. The company claims to deliver orders from its nearest dark stores in under 12 minutes.

So what made Zepto a success- An insight into the attributes and attitudes of founders.

Talking to customers.

“Speak to the customers. Just use this as a holy grail [to] ensure one is on the right track in finding product market fit. One of the toughest things is actually getting to that node where you have the product that people love. Then, it is much easier and much faster if one is constantly speaking to customers, getting feedback from them and learning from them”. These are the meaning of lines of Mr Kaivalya Vohra, one of the founders and  CTO of the unicorn, in an interview.

To ensure this, during the budding days of Zepto, the founders themselves handled customer support and delivered the groceries to consumers so that they could have a quick chat with them. Well, not only in the early days of founding the firm; the duo did this even in 2022.

“They’ve got millions of customers, with hundreds of thousands of orders daily. They still spend a significant amount of time just speaking to customers, learning from them” are the interpretation of the lines of Mr Aadit  Palicha, the other founder and CEO of Zepto.

This attitude of taking responsibility on your shoulders to know the possible loopholes is one of the good things to learn from young billionaires. 

Self-optimism.

“We are heads down executing today. We still have a huge amount of work to do and problems to solve, but if we nail it, we will build an insanely big business,” said co-founder and CEO Aadit Palicha while declaring the recent financials.

Even while declaring the results (losses) that widened 3X, Mr Palicha was very optimistic about their firm and vowed to work even harder to achieve the vision. This is an appreciating trait of Zepto’s CEO.

Fall in love with your product.

“Palicha and Vohra weren’t always considered seriously — not just because of their young age, but also because of the “craziness” behind an under-10-minute delivery idea. However, their conviction in their product fuelled them to keep running”.

“Kaivalya and Aadit fell in love with the product so much that they just saw themselves as custodians of what would possibly end up being a large event in consumer internet in India“, meant Mr Palicha in an interview. “If the duo don’t build it, somebody else will. When one operate with that mentality, everything becomes less intimidating”.

This attitude of young entrepreneurs is again a wow factor. This is something also said by famous Shark Mr Ashneer Grover, who in a podcast with Ranveer Allahbadia said ‘Mai nahi karta to koi aur kar deta’. 

Be accountable.

For Mr Vohra, it’s their ability to “hold each other accountable” that brought them this far. 

“Kaivalya and Palicha really complement each other’s skills set. Mr Kaivalya has always been more technically sound than the other founder am, so he’s made a great CTO,” mentioned Mr Palicha in an interview. 

And accountability is not just in strengthening relationships with each other. Along with acknowledging each other’s strengths and capabilities, ‘accountability’ also means there should be acceptance of what is inefficient on your part and how you accept and deal with it.

This can be seen in Mr Palicha’s LinkedIn bio and can be heard in his conversation with Mr Nikhil Kamath during a podcast, where he mentions that they decided to shut their earlier business ‘Kiranakart’ as it was not going well.

Conclusion.

Even while Zepto has been surprised with its resiliency in a difficult grocery stores sector, the current bleed rate means it will require at least one more capital round by 2025, if not sooner. That provides a case for the company that pioneered speedy delivery in many aspects in India to rethink the strategy to extract more efficiency and a more viable model in the future. The business has already evolved to a more carefully curated assortment of products, with the firm barely competitive on price.  As a result, with its value offer weakened, the corporation is looking to double up on the convenience element. 

The issue, as Dunzo realised, is that greater ease comes at an even greater expense, with extremely questionable results. The sooner it arrives, as with its delivery time, the better for all parties. Earlier, during its entry into the unicorn club, Mr Palicha mentioned his happiness on being a member of the unicorn family, but he stated that ‘this unicorn thing is more about vanity metrics, what matters is what will be their valuation in 2033’.

This is again an important trait of duo founders who do not want to be entangled in the over-valuation of things and get distracted from what is needed by the business. So, we wish Zepto a high five to dive deeper into the fast-delivery grocery market and make consumers feel that their time and money are valued.