Stanford dropouts raise $60 million for grocery startup Zepto
A new startup company founded by two Stanford University dropouts is threatening to restructure the grocery delivery industry in India.
19-year-old former Stanford classmates Aadit Palicha and Kaivalya Vohra founded Zepto in April of this year. In less than 8 months, the company has raised over $60 million from investors.
The idea for a startup came when the pair were locked in the house due to pandemic restrictions back in 2020. Zepto’s main selling point is its speed. The service advertises that groceries are delivered to customers' doors within 10 minutes, with delivery areas extending throughout Delhi, Mumbai, Bangalore, Chennai and several other Indian cities.
“So in a nutshell, we're basically building out 10-minute grocery delivery for India,” Palicha told Yahoo Finance Live on Thursday. “The way we do that is through a network of optimized micro warehouses that we build from area to area.”
In India, Vohra said, most grocery stores are focused on next-day delivery services. Delivery for small baskets of a few items is a market that has gone mostly unnoticed by larger companies.
“It's changing the way people are shopping in India because today, most online grocery [stores] in India… [were focused on] larger baskets delivered in very, very long delivery times, like anywhere between 12 to 48 hours,” Palicha said. “And today we're seeing sort of a shift of the whole top up use case and the, you know, last-minute replenishment use case of your household grocery shift onto platforms like Zepto.”
With Zepto, consumers missing a couple of ingredients in their cabinet can open the app and get those ingredients within a few minutes. Investors have identified promise in the service, leading to a frenzy of tens of millions of dollars coming in from investors over the past few months.
If it gains popularity, Zepto could redefine grocery shopping for consumers by establishing lower expected wait times and shortening time in the store. Zepto capitalizes on small, relatively focused grocery trips which can be easily made at low costs.
A recent note prepared by Sanford C. Bernstein analysts found that, as a percentage of income, online grocery spending is expected to reach ~3%-5% by 2025 from less than 1% today.
“I think the one sort of key thing is that no one's really focusing on this, right?” Vohra noted. “We're virtually the only company that is largely just focused on getting deliveries done this quickly.”
Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter @IFanusie.
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