Quick commerce platform Zepto closed a $450 million round in a mix of primary and secondary transactions on Thursday. Founder Adit Palicha told ET in an interview that the firm plans to invest the proceeds in growth, adding a “few hundred” dark stores, and focus on volume expansion over the next 12 months. This is likely to increase competition and intensify cash burn in the industry, as platforms focus on expanding and discounting, according to analysts.
This funding comes a few months after Eternal-owned Blinkit and Swiggy’s Instamart were estimated to have gained market share in the April-June quarter, when Zepto witnessed a slowdown while cutting costs, according to a report by ICICI Securities.
To put things in perspective, rival Blinkit, which leads the quick commerce pack, had 1,814 dark stores at the end of September, and plans to hit 3,000 by March 2027. Instamart, which is in a tight competition with Zepto, had about 1,062 such micro-warehouses in the June quarter. Zepto currently has about 1,000 dark stores.
“Blinkit has been adding more dark stores, especially in metros, to gain market share,” said Satish Meena, founder of Datum Intelligence. “Zepto had slowed down its expansion but now it's going to add more stores. We are likely to see rivals accelerate their growth too.”
Also Read: Quick commerce companies slow dark stores buildout to control cash burn
Focus on market share
According to Meena, Zepto’s growth plans are directly related to its initial public offering.
“Being the third largest player in quick commerce may not ensure a good listing for Zepto, when the top two players are already listed,” he said. “It needs to have better market share as well as better financials.”
Blinkit currently has a more than 50% market share in the 10-minute delivery space, according to a research note by brokerage firm BofA Securities.
A November 2024 report by another brokerage, Motilal Oswal, had pegged Blinkit as having a 46% share, with Zepto having 29%, and Instamart 24%. However, in recent months, as ET has reported, Instamart has gained ground with Zepto slowing down.
Simply put, to gain market share, platforms need to have more customers. One of the ways to do this is by entering new geographies through more dark stores and offering discounts.
Data shared by Datum Intelligence shows that Blinkit had about 75 million active users and Zepto about 73 million as of September. For Instamart’s standalone app, this number was about 25 million as of August. Instamart is also available on Swiggy’s main app.
According to Karan Taurani, executive vice-president at Elara Capital, Instamart's strategy is likely to be more impacted by Zepto’s growth plans since they are in a close competition than Blinkit. “Instamart can either expand fast while incurring losses, or grow slower and keep its losses in check,” he said.
As of the June quarter, Instamart’s losses ballooned to Rs 896 crore, raising the company’s cash burn to Rs 1,053 crore.
Also Read: ETtech Explainer: Swiggy's losses balloon despite push to improve economics
Meanwhile, as per its latest quarterly results, Blinkit’s losses reduced less than expected on account of marketing spends. “This was largely because of our investments to drive higher growth and (net order value) market share,” explained Blinkit chief executive Albinder Dhindsa.
According to Taurani, discounting will continue and will, in fact, increase as these platforms focus on growth. However, experts add that the companies are also wary of losses.
“For a company like Zepto, which is looking at an IPO, the focus should be on controlling losses and breaking even,” Taurani said.
This funding comes a few months after Eternal-owned Blinkit and Swiggy’s Instamart were estimated to have gained market share in the April-June quarter, when Zepto witnessed a slowdown while cutting costs, according to a report by ICICI Securities.
To put things in perspective, rival Blinkit, which leads the quick commerce pack, had 1,814 dark stores at the end of September, and plans to hit 3,000 by March 2027. Instamart, which is in a tight competition with Zepto, had about 1,062 such micro-warehouses in the June quarter. Zepto currently has about 1,000 dark stores.
“Blinkit has been adding more dark stores, especially in metros, to gain market share,” said Satish Meena, founder of Datum Intelligence. “Zepto had slowed down its expansion but now it's going to add more stores. We are likely to see rivals accelerate their growth too.”
Also Read: Quick commerce companies slow dark stores buildout to control cash burn
Focus on market share
According to Meena, Zepto’s growth plans are directly related to its initial public offering.
“Being the third largest player in quick commerce may not ensure a good listing for Zepto, when the top two players are already listed,” he said. “It needs to have better market share as well as better financials.”
Blinkit currently has a more than 50% market share in the 10-minute delivery space, according to a research note by brokerage firm BofA Securities.
A November 2024 report by another brokerage, Motilal Oswal, had pegged Blinkit as having a 46% share, with Zepto having 29%, and Instamart 24%. However, in recent months, as ET has reported, Instamart has gained ground with Zepto slowing down.
Simply put, to gain market share, platforms need to have more customers. One of the ways to do this is by entering new geographies through more dark stores and offering discounts.
Data shared by Datum Intelligence shows that Blinkit had about 75 million active users and Zepto about 73 million as of September. For Instamart’s standalone app, this number was about 25 million as of August. Instamart is also available on Swiggy’s main app.
According to Karan Taurani, executive vice-president at Elara Capital, Instamart's strategy is likely to be more impacted by Zepto’s growth plans since they are in a close competition than Blinkit. “Instamart can either expand fast while incurring losses, or grow slower and keep its losses in check,” he said.
As of the June quarter, Instamart’s losses ballooned to Rs 896 crore, raising the company’s cash burn to Rs 1,053 crore.
Also Read: ETtech Explainer: Swiggy's losses balloon despite push to improve economics
Meanwhile, as per its latest quarterly results, Blinkit’s losses reduced less than expected on account of marketing spends. “This was largely because of our investments to drive higher growth and (net order value) market share,” explained Blinkit chief executive Albinder Dhindsa.
According to Taurani, discounting will continue and will, in fact, increase as these platforms focus on growth. However, experts add that the companies are also wary of losses.
“For a company like Zepto, which is looking at an IPO, the focus should be on controlling losses and breaking even,” Taurani said.