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Q-Commerce startup Zepto has reported a Rs 390 crores loss for FY22, its first year of operations.
The Covid pandemic marked the inception of the quick commerce startup as Aadit Palicha and Kaivalya Vohra started Zepto from Mumbai. They initially launched KiranaKart where they delivered groceries in 45 mins and 15 mins for people living close to their 'dark stores'.
The idea gained traction, but KiranaKart was acquired by Y Combinator in the winter of 2021. The duo, who turned down their Stanford dream, ultimately came up with the idea of 10-minute delivery.
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They were not taken seriously by investors initially but found a few investors who acknowledged the idea and backed them. However, the same platform raised $200 million in May 2022 at a valuation of $900 million and is pegged to turn unicorn in the next round of fundraising.
Both founders have had their net worth catapulted to around Rs 1,000 crores each as Zepto is now a competitor for a slice of the Indian q-commerce segment, which is reported to grow to $5.5 billion by 2025.
Revenues for the q-commerce company for FY22 came in at Rs 142.3 crores. The company had total expenses of around Rs 533 crores of which Rs 175 crores or 33% of total expenditure was for advertising and promotional charges.
The company incurred a loss of Rs 390.3 crores in its first year of operations as its EBITDA margin for the period was -259.39%.
Comparably, other q-commerce players like Dunzo and Blinkit have also reported record losses with Blinkit reporting a loss of well over Rs 1,000 crores!
Early-stage startups cannot focus on profitability since they need to expand aggressively to capture market share. If a startup keeps focusing on profitability in its early stages, it would be limiting its own growth prospects.
Investors continue pumping money into such startups because they see the potential of the startup. They keep funding the startup as it burns through funds in order to help the startup realize its full potential and increase the value of its stake.
Article by Aman Agarwal.
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