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Zepto Business Model: The Beginning
During the pandemic, the online grocery model gained immense popularity. Customers like to choose online shopping for their purchases. This has set the tone for alluring delivery businesses like Zepto to serve customers with faster delivery.
If you want to get deep into the market, you should know the Zepto supply chain order model and how it may help you.
Zepto was launched in 2021 and created ripples in the grocery delivery business in a short span of time.
What is Zepto business model?
Zepto has over 100 dark storefronts or tiny fulfillment centers in high-demand neighborhoods. These dark stores rely on technology for undertaking tasks like placing goods.
A few tasks they perform include deciding on store locations and avoiding heavy traffic congestion by mapping traffic routes.
The company on record is delivering around 2500+ items, including fresh produce, groceries, house cleaning items, snacks, and beverages.
The Zepto business model’s premise of a 10 minute delivery app has proven to be a game changer. This was stated by Zepto founder Kaivalya Vohra.
New sources of Zepto funding have emerged, meaning that the Mumbai-based start-up can target new markets to extend its outreach.
Zepto Business Model Infographic(How Zepto Works)
Zepto Marketing Strategy
Zepto marketing strategy is as follows:
Growth’s experience advocates extensive user research. Before you arrive at any solution, you must understand your customers and their needs. In the Zepto company case, it is fair to say they have identified their customers and their problems well.
An example is the fruit and vegetable section of Zepto. From peeled onions to loose corn or cut carrots, they have identified ways to take existing vegetables, customize them, and increase their prices.
In e-commerce and product marketplaces, product ads are a viable way to earn predictably. Zepto also resorts to product ads as a monetary lever.
It is a simple concept if you are a retailer, you give money to Zepto to feature your ads in specific categories or searches.
Competitors of Zepto
The competitors of Zepto are as follows
- Blinkit– It is a unique platform for grocery delivery. It also went on to make additional commonplace objects accessible.
- Swiggy Instamart– A famous example of a grocery application that enables easy delivery of groceries.
- Dunzo– It is an on-delivery demand app that provides users with whatever they require at any location.
How Zepto makes money
You may be aware that Zepto operates on a micro and macro level. The groceries are stored in a dark store and delivered to customers via delivery partners. However, all of them are costly to run.
There are overhead costs involved, like paying rent to dark stores, salaries, and payments for delivery partners. They are fixed operating costs for Zepto.
Combined with the costs of technology, product, and marketing, it indicates how much money is required to keep Zepto running.
Now the question emerges: how does Zepto make money selling groceries?
Margins on individual products
A common way grocery start-ups earn money is to levy a margin on every individual product. Such a model is similar to that of retailers, who purchase goods at a low cost and sell them at a higher price.
For example, Zepto sells potatoes to their customers at Rs 24 per kg. They earn margins on this by purchasing in bulk quantities from distributors at a low price. Potato is just one of the categories here, as Zepto deals in numerous fruits, vegetables, and perishable items.
For a grocery start-up, this is the second-most profitable venture. Coming to profitability delivery
- Irrespective of the size of an order, Zepto has to pay the same delivery fee to every delivery partner.
- The high delivery charges could be one of the reasons preventing users from buying from Zepto.
The critical effect of the Zepto business model is to strike a balance between profitability and delivery charges. Zepto has chosen to cope with this problem by charging customers for orders with a low-value basket size.
But if you break a certain threshold, you are entitled to free delivery.
Benefits of the Zepto business model
During the pandemic, the founders had a fair idea about Zepto, which increased the demand for food and grocery delivery businesses.
There was a vacuum of fast delivery as this know-how provided expertise for the Zepto business model. For the unexpected pandemic, the model was a blessing in disguise.
- Enhanced distribution and faster delivery: Using the dark store business model, Zepto executes multiple orders quickly. Cold and micro warehouses provide numerous distribution options for delivering groceries closest to the marketing group. The grocery delivery platform controls the distribution part.
- Wider customer reach: the cloud makes distribution hubs accessible to customers. They accept round-the-clock services online. Hence, customers are attracted to these grocery delivery platforms and use their services.
- Contactless shipping: contactless shipping positively impacts businesses opting for a dark store approach. There is no need for personalized interaction or heading over to a physical store, as cloud kitchens allow customers to shop for groceries or meals online. The list of things is noted and delivered on time.
Future Plans of Zepto
Zepto is keen to enhance its customer base by hiring more staff for smooth operation and opening dark stores. They have plans to expand their services to other countries.
They intend to cover around 100 pin codes in the future; the fastest delivery is a fresh idea. The delivery platform provides the fastest service to customers through the dark store concept.
Frequently Asked Questions (FAQs) about Zepto Business Model
Wrap Up on Zepto Business Model
To conclude, the concept of fastest delivery services has quickly grabbed the grocery market.
At a time when prominent companies like Big Basket and Swiggy are planning to complete deliveries within 15 minutes, Zepto has entered the market at the right time. Within a short period, they have tasted success, and the future looks promising.
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