Daybreak - Zepto isn't just faster anymore. It's also something else

Episode Date: December 1, 2025

Zepto is getting cheaper and everyone has noticed. But the real story is what the company is trying to fix behind the scenes. Aadit Palicha wants Zepto to feel like Dmart for quick commerce: lower prices, better availability, and more value each time you open the app. But this shift comes with big questions. The company is burning more cash. Competitors are calling it out. Senior leaders are leaving. And the IPO clock is ticking. Today, we look at why Zepto is changing its strategy now and what it means for the next year.Tune in.Take this survey to share your best AI prompt.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. The first thing that you should know about Zepto founder, Adid Palija, is that he does not hesitate. Not when he speaks and not when he sets goals either.

And definitely not when he talks about what Zepto should become. It was a packed town hall in Zepto's Bangalore headquarter on a warm October afternoon, which to us, Bangalore folks, seems like a long time ago because it's been a while since we saw the sun. That day, the 22-year-old CEO told his employees something that did not sound like a suggestion. It sounded like a destination. He said, we have to become the demot of quick commerce world. Best value, best assortment, and then, almost casually, he added, don't worry about money.

We have sufficient funding to aim for massive growth. Demart, by the way, is a retail supermarket chain, the stocks of which have been among the best performing this year. Now, to be fair, Belichia was not exaggerating. Earlier that month, Zepto had raised roughly $450 million, and this pushed total fundraising to about $2 billion in just two years, under two years, a valuation of $7 billion. billion dollars. Numbers that most companies never see. Numbers that Zepto has been treating like a

starting line and not a finish line. And maybe to an extent this confidence does make sense. The quick commerce industry in India has been exploding at a CAGR or compound annual growth rate of roughly 150% over the last three years. Blinket leads with about 45% of market share and Zepto follows with around 30%. So the race is very real and the stakes are really high. And the cash for Zepto is in the bank and the IPO2 is on the horizon,

early 2026. But now, something major seems to be shifting inside Zepto. Can a company that was built on speed reinvent itself around value right as everybody is watching? Welcome to Daybreak, a business podcast from the

Ken. I'm your host, Nick Das Sharma, and I don't choose the news cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time. Today is Tuesday, the 2nd of December. Inside Zepto, the mantra is simple. Availability, availability, and availability. A category manager at the Quick Commerce giant put it quite plainly to my colleague Noha Buberi. They said, when a user overhauled, opens the app the thing that they most often buy, which is milk or could be Haldigram's buggia, the everyday staples, should be in stock and visible. The thinking is that availability drives frequency and frequency drives everything else. But availability is only one part of the

pivot. The biggest shift is Zepto's full throttle embrace of EDLP or everyday low prices. It is a strategy borrowed from Demart, which borrowed it from Walmart. Instead of flashy promotions or one-off deals, the idea is, key prices consistently low, simple, predictable, and sticky. So for Zepto, this meant phasing out its earlier Super Saver model, which rewarded larger orders with discounts. Now, the promise is more universal. Free delivery on all orders above $99.

And this was not supposed to roll out until January. January next year, but with the funding secured last month, the company pushed it out live in October. And the industry noticed. Amazon's quick commerce arm and Swiggy's Instamarts soon scrapped delivery and convenience fees too, though Instamarts only started from November and only for orders above $299. Inside Zepto, nobody is pretending that this is going to be cheap. A second category manager admitted it openly. They said, cash burn is the cost of capturing customers. If a company wants to acquire users in huge numbers, this is the way. Because they have seen what happens otherwise. Big Basket used to dominate online groceries. But when the industry shifted

to 10-minute delivery, Big Basket chose not to jump in. Today, it is somewhere near the fifth place. A cautionary tale repeated almost verbatim inside Zepto, which is, In this category, the traditional profit and loss logic simply does not hold. And yet, the cautionary tails cuts both ways. Flipkart tried the heavy discount route in 2014. Now, almost a decade later, the company struggles to increase prices without backlash. Because that perception stuck. The discounts became an identity.

Zepto knows that risk looms large as it tries to rival Demarth's reputation for value. Today, the numbers stack up something like this. Zepto offers 11% average discount on MRP. Demart Ready is closer to 15% and Blinket and Instamart hover around 7%. Naturally, this raises the question, is Zepto burning itself into a hole? Belichia says no. He claims that the company is on track for multiple quarters of top line and volume growth along with successive bottom line improvements.

Revenue for the financial year 2025 was more than doubled to around 11,000 crore rupees. And losses for the same year are not public yet, but last year's losses were around 1,200 crore rupees. User numbers are surging too, from around 5 to 6 million monthly transacting users in early 24 to a projected 20 million users by the end of this year. And quarter on quarter growth is up by 20% as well. But while Palicia insists that the burn is under control, competitors are painting a different picture.

Swigy CEO Sri Hersha Majeti publicly criticized Zepto in October, calling out cash burn per order. Earlier in March, Zamato CEO Dipinder Goel said that the quick commerce space was burning $5,000 crore rupees per quarter and that Zepto accounted for over half of it. Now, reports say that Zepto's monthly burn rose to about 75% hitting 700 crore rupees in the nine months that were leading up to August 2025. The company wants to bring this down to 80 to 180 crores ahead of the IPO. Now, for context, Blinket burns about 35 crore rupees per month.

Instamart burned around 870 crores last quarter. A person close to Zepto pushed back, and they claimed that Zepto will soon burn close to half a watt Swiggy burned and not far from Blinkets burn. But inside the company, even managers admit that things got out of hand last fiscal year. Zepto was chasing Blinket aggressively. They tried to improve assortment and pricing at the same time.

They ramped up Super Saver, they stocked up huge assortments across categories, and it became unsustainable. For comparison, Blinket's largest dock stores carry around 25,000 SKUs. Zepto and Instamot, carry around 10,000 with a few dog stores hitting about 20,000. A very senior manager summed it up. He said, we wanted to improve everything at once and it became too much.

The pivot since June has been intentional, slower, strategic, less reactive. The platform currently handles around 2 million orders a day at an average order value of roughly 500 rupees. But heading into the early 2026 IPO, Zep2,000. is in a tightening mode. More on this in the next segment. Stay tuned. Hi, I'm Rachel, the co-host of Daybreak. I'm pausing this episode to ask you something very quickly.

What's the coolest thing you've made using AI? And what are the prompts that helped you get there? Why do we ask? Well, let's be honest. There's a learning curve with AI, and most of us are still figuring it out. So, we are running a short survey to ask you to share your tried and tested

hacks. You share your cool project, you share your prompts, and you get a chance to be featured in one of our episodes. You also get to hear from others like you, all the experimental, efficient folks out there who are using AI to make something new. The link is in the show notes. It will take you just five minutes. We can't wait to hear from you. Now, back to the episode. A person very close to the company told my colleague Nuha that tech, supply chain, marketing and corporate overhead costs have all come down. Tech costs specifically have dropped 30% per order. And the company is pushing to clear inventory before payments are due to brands.

And despite the year-on-year push for 100% growth, they say that cash burn is coming down each quarter. Post the fundraise, Zepto has around $900 million in the bank. Automation has also been another lever. The company has automated enough payroll tasks to save $50,000. to 60 crore rupees, everything from accounting to demand forecasting to quote quality checks.

But tightening has also come with turbulence. There's been a steady exit of senior leadership. And a person close to the company offered a blunt explanation. They said, Zepto can be aggressive and painful with employees. They also acknowledge recurring weaknesses, low SKU availability for long stretches, low average order values, and the choice to not raise minimum order thresholds.

Palicia, however, appears unfazed. He says narratives have always been built by people who do not want them to succeed, going back to Zepto's founding four years ago. He pointed to the company's internal numbers, its audited statements from EY, and repeated what has become a familiar stance. Execution speaks louder than speculation. So it seems like Zepto believes

its financials are improving, and the company is confidently preparing to go public. It has capital in hand, and as somebody close to the company put it to my colleague Noah Buberi, only half-jokingly, we've got good capital too. Our only problem is social media. So, who gives a...

Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily. long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the can.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague Snitha Sharma and edited by Rajiv Sien.