Zepto: How Two 17-Year-Olds Built India's Largest Seller Of Fruits and Vegetables

Predictions and Expectations:

• Adit Palicha expects to build India's "homegrown version of Amazon or any other e-commerce platform" by cracking the hyper-local e-commerce format, which he believes works "beautifully" and is the "right model for India."
• Adit Palicha believes that if Zepto successfully establishes its urban grocery infrastructure, it can "play a part in growing other businesses" alongside it.
• Adit Palicha expects that over the long term, Zepto can "create 10 more large outcomes in day-to-day consumer brands," potentially allowing new consumer brands to be born on the platform similar to the US model 40 years ago.
• Adit Palicha expects that continuing to scale the business will continue to create "more employment on the ground."
• Adit Palicha predicts a "long way to go" for Zepto, stating they still have "a few more years of high growth" and can unlock "high amounts of operating leverage and efficiency."
• Adit Palicha notes that the advertising business was "very small two years ago or inconsequential" and expects it to become a "very big part of our journey."
• Adit Palicha believes that by 2030 (implied by "four five years" from the conversation time), Zepto aims to be a "large grocer in the country" covering the "top 40 50 cities."
• Adit Palicha expects that maintaining customer delight is where "financial value starts," implying future profitability relies on this metric.
• Adit Palicha believes that if they "nail the customer experience," they will gain "far more throughput and far more volume in our warehouses than people expected," leading to lower costs.

Timelines and Milestones:

• Adit Palicha states Zepto started its journey in "2020" and made a "meaningful pivot" in "early 2021."
• Adit Palicha mentions getting an "early sign of PMF" approximately "eight nine months into the journey."
• Adit Palicha expects to build a large urban grocery platform over the "next four five years."
• Adit Palicha notes that the advertising business was "inconsequential" only "two years ago."

Technology and Product Direction:

• Adit Palicha plans to build "urban grocery infrastructure for the country" by moving away from a pure software model to a logistics and supply chain model.
• Adit Palicha expects to continue "squeezing out more and more efficiency from the supply chain" and "more efficiency on the consumer part of the business."
• Adit Palicha confirms that Zepto is building "industrial grade automation on the back end supply chain" to move products from suppliers like Unilever or Procter & Gamble to dark stores with the "least amount of people."
• Adit Palicha states that "a decent part of our tech team now works on hardware" to support logistics and robotics.
• Adit Palicha expects to continue using AI to build machine learning algorithms that forecast "millions of units per day" without human intervention to make the supply chain more agile.
• Adit Palicha expects to further leverage Gen AI tools to build a search stack for advertising that predicts the "best return on ad spend."
• Adit Palicha expects to maintain a "small team" of about "500 or so engineers" and "150 people on data science analytics, product management, designers, etc," while being "always in the market" for the best talent.
• Adit Palicha expects to reduce "all of our software spends" and "managed services spends" to "almost zero" through internal automation.

Market and Industry Outlook:

• Adit Palicha believes there is a "huge amount of scope" in the Indian grocery market to run the business up to "tens of thousands of crores of top line or billions of dollars."
• Adit Palicha expects Zepto to eventually employ "north of 200,000 people" and mentions they already do "millions of deliveries per day."
• Adit Palicha notes that Zepto operates one of the "largest fruits and vegetable supply chain in the country," sourcing "millions of units per week from farmers across the country."
• Adit Palicha expects the advertising business to generate "hundreds of millions of ARR in ad revenue today."

Company Plans:

• Adit Palicha plans to be a "large grocer in the country" within the "top 40 50 cities" over the next "four five years."
• Adit Palicha plans to create an "e-commerce platform that's unique to India" by cracking the "hyper-local e-commerce format."
• Adit Palicha plans to continue focusing on "customer delight" to drive financial value.
• Adit Palicha plans to keep scaling to create more "employment on the ground."
• Adit Palicha plans to build 10 more "large outcomes in day-to-day consumer brands" down the road.

Financial Guidance:

• Adit Palicha states Zepto is scaling to "tens of thousands of crores of top line or billions of dollars."
• Adit Palicha states the advertising business is currently doing "hundreds of millions of ARR."
• Adit Palicha expects "a few more years of high growth and high amounts of operating leverage."

Risks and Caveats:

• Adit Palicha admits there is a "long way to go" and that they are "still at the beginning of that journey."
• Adit Palicha notes that the initial model was not viable because customers were "not satisfied" and the product market fit was not achieved until the pivot to dark stores.
• Adit Palicha mentions that initially, "all the pundits" believed the dark store model was "not the right way to do it."
• Adit Palicha states that Zepto feels like "peanuts compared to what people in the US have done" with companies like Uber or DoorDash.
• Adit Palicha mentions that they "still want to do on squeezing out more and more efficiency" from the supply chain and consumer parts of the business.