Zepto CEO Aadit Palicha: We Could Surpass DMart in a Few Years

Zepto, the quick commerce unicorn, is riding high on the success of its online grocery sales and has set ambitious growth targets for the coming years. The company is optimistic about growing 2-3 times annually and sees itself surpassing the established offline retailer DMart within a couple of years.

Zepto CEO Aadit Palicha: We Could Surpass DMart in a Few Years
Zepto CEO Aadit Palicha: We Could Surpass DMart in a Few Years

Zepto, the quick commerce unicorn, is riding high on the success of its online grocery sales and has set ambitious growth targets for the coming years. The company is optimistic about growing 2-3 times annually and sees itself surpassing the established offline retailer DMart within a couple of years.

Speaking at an event in Delhi on Saturday, Zepto's Co-founder and CEO Aadit Palicha highlighted the company’s growth trajectory and future plans. "DMart is a $30-billion company and they are 4.5 times our size in sales. If we continue to execute well, we can grow 2-3 times every year, and possibly surpass them in the next 18-24 months," he stated. This statement underscores the company’s confidence in its business model and growth strategy.

Palicha emphasized the significant market potential of grocery and household essentials, describing them as the "mother of all categories" on leading e-commerce platforms Flipkart and Amazon in India. He pointed out that the grocery market was around $650 billion in India in FY23 and is expected to grow at a compound annual growth rate (CAGR) of 9%, reaching $850 billion by FY29. "If you look at electronics, apparel, furniture, and combine everything, and double it, it’s still not as large as grocery and household essentials," he noted. This highlights the enormous opportunity that lies ahead for Zepto in this sector.

With a focus on execution, Palicha believes that Zepto can significantly scale its operations. "If we execute well, we can realistically take this business from over Rs 10,000 crore in top line today to potentially Rs 2.5 lakh crore over the next 5-10 years," he said. This ambitious target reflects the company’s confidence in its ability to capture a larger share of the market.

Zepto has already made significant strides in profitability. Palicha revealed that 75% of the company's stores have become fully profitable, a key milestone as they continue to expand into new cities. However, he acknowledged that the biggest challenge for the company is to "hire people with the right attitude," indicating that talent acquisition and retention remain critical for sustaining growth.

The company’s financial performance has been impressive, with revenues growing over fivefold to over Rs 10,000 crore in FY24 from about Rs 2,000 crore in FY23. Last month, Zepto raised $665 million in an investment round, tripling its valuation to $3.6 billion compared to the previous year. Zepto now holds about 29% market share in the quick e-commerce segment, up from 15% in March 2022. The company is also preparing for an imminent public listing, which will further boost its market presence.

Competitive Landscape and Market Dynamics

The rapid growth of Zepto in the quick commerce space underscores the competitive nature of the sector. The company’s ability to scale quickly and capture significant market share is a testament to its strategic execution. With a 29% market share in the quick e-commerce segment, Zepto has positioned itself as a formidable player. The increase from 15% in March 2022 to its current share highlights the company's effective growth strategies and market penetration.

The grocery and household essentials market is vast and growing, providing ample opportunities for companies like Zepto. The projected growth of the grocery market to $850 billion by FY29 presents a significant opportunity for Zepto to expand its footprint and increase its market share. The company's focus on profitability and efficient execution will be key drivers in achieving its growth targets.

Future Prospects and Investor Confidence

Zepto's future prospects look promising, supported by continuous investments and strategic expansions. The recent $665 million investment round is a clear indication of investor confidence in the company’s growth potential. The tripling of the company’s valuation to $3.6 billion in just one year reflects the positive market sentiment and the company's robust business model.

As Zepto prepares for its public listing, the company’s strategic focus on expanding into new cities and achieving profitability across its stores will be crucial. Palicha's emphasis on hiring the right talent to sustain growth highlights the importance of a strong organizational culture in driving long-term success.