Zepto Incurs INR 390 Cr Loss In First Year Of Operations; FY22 Sales At INR 141 Cr

Mumbai-based quick commerce platform Zepto incurred a loss of INR 390.3 Cr on a standalone basis in its first year of operations in financial year 2021-22 (FY22). The Nexus Venture Partners-backed startup’s total revenue stood at INR 142.3 Cr in FY22. Zepto, which began operations in April 2021, had total expenses of INR 532.7 Cr in FY22. 

In FY22, the startup’s revenue from operations stood at INR 140.7 Cr. Zepto primarily engages in wholesale distribution of groceries, fruits, vegetables, and personal care among others. The startup recognises revenue upon transfer of control of promised goods or services to customers. The startup, which claims to deliver grocery and fruits products in 10-20 minutes, was last valued at $900 Mn. This valuation translates to about 48X of its total revenue. 

Meanwhile, Zepto also earned INR 1.6 Cr through other income, which mostly comprises interest earned on investment. In FY22, Zepto’s EBITDA margin was -259.39%

On the expenses front, the startup spent aggressively on marketing during its first year of operations. Its advertising and promotional expenses stood at INR 175.5 Cr during the year, nearly 33% of its total expenses.

Apart from this, the startup spent INR 213.2 Cr for purchases of stock-in-trade in FY22. Supply chain expenses stood at INR 74 Cr, while employee benefit expenses were at INR 50.3 Cr. 

Employee benefit expenses mostly consist of employee salaries, PF contributions, gratuity, and other employee welfare benefits. As per its Linkedin page, Zepto currently has a headcount of 1,950. 

In total, Zepto spent INR 3.7 to earn a single rupee during the year. Quick commerce is a cash heavy business. Both Reliance-backed Dunzo and Zomato-owned Blinkit are in heavy losses. While Dunzo saw its total loss climb 2X to INR 464 Cr in FY22, Blinkit’s loss surged to INR 1,019 Cr in FY22. 

As per media reports, Reliance-backed Dunzo is shutting down multiple darkstores and laying off employees to cut costs.

Zepto was founded in 2021 by the then 19-year-olds Aadit Palicha and Kaivalya Vohra, dropouts of Stanford University. 

Earlier, Inc42 extensively reported on the secret equity battle at the quick commerce startup. Formerly known as Kiranakart, Zepto offers grocery deliveries through a network of dark stores and micro warehouses. 

The startup first turned heads when it raised $60 Mn in its Series A round in October last year from Glade Brook Capital, Nexus, and YC Combinator, along with a couple of angel investors. 

Two months after raising its Series A round, Zepto bagged $100 Mn at a valuation of over $500 Mn from Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and others.  

Earlier this year, the startup raised $200 Mn in its Series C round led by Y Combinator’s Continuity fund. Kaiser Permanente Ventures, along with its existing investors, also participated in the round. 

As per a Redseer report, India’s quick commerce market is expected to witness a 10-15X growth and touch $5.5 Bn mark by 2025.