Image Source: ShutterStock
The advertisements regulator has questioned Zepto, one of the country’s hottest startups, over whether its ads in a newspaper promote rash driving by its delivery riders, said people familiar with the matter and documents Moneycontrol has seen.
The Advertising Standards Council of India (ASCI) issued a show cause notice to Zepto, following a consumer complaint against a pamphlet ad supplied with The Times of India two weeks ago. “Isn’t it dangerous and not practical all the time? Dangerous because for achieving the time period the delivery person will take risk while riding on road as he/she needs to reach in 10 minutes,” the unnamed complainant is quoted in the notice, which Moneycontrol has seen.
“We have received a complaint against Zepto; however, as the matter is still under process, we are unable to share more details at this stage,” an ASCI spokesperson said in response to Moneycontrol’s queries.
Zepto, founded by two 19-year-old Stanford dropouts, is valued at $570 million and is less than a year old. Its 10 minute grocery delivery service already has investors jostling to fund it at a valuation of a billion dollars--making it a unicorn-- people said, requesting anonymity as talks are private. Zepto is eyeing a market where companies bleed millions of dollars a month in the hope that it can stop discounting and charge customers for delivery once customers are used to Zepto- a chimera according to its critics.
SoftBank-backed Blinkit (earlier Grofers) directly competes with Zepto, while others such as Swiggy’s Instamart and Reliance-funded Dunzo have consciously stuck to more conservative delivery timelines, 30-40 minutes generally, and 15 minutes at the most, in order to avoid burning cash and chasing a market whose size or potential is unclear.
“The 10-minute delivery timeline is a little hard to meet without either being disruptive on density where your stores are not going to make any sense or going ahead and really putting a lot of pressure on the delivery partners,” Dunzo CEO Kabeer Biswas told Moneycontrol in June.
ASCI’s notice says that the 10 minute delivery ad promise could violate Chapter 3 of its code, which says ads should not “show or refer to dangerous practices or manifest a disregard for safety or encourage negligence".
In responses to Moneycontrol’s queries, Zepto said it is “committed to responsible advertising and consumer interests are always our top priority. The "10 Minute Delivery" promise is our core offering and our average delivery time is less than 9 minutes. The actual delivery time varies by location, traffic conditions, etc. and it is communicated upfront to consumers as soon as they open the app.”
Zepto replied to ASCI last week arguing that its dark stores-- warehouses optimised for quick delivery-- are conveniently located within 2-3 kilometres in high density areas, due to which riders don’t ride long distances frequently, reducing road danger, a person aware of the matter said.
Zepto may also amend its ads, saying that terms and conditions may apply for 10 minute delivery to be fulfilled, to avoid further legal issues, the person added.
Usually such a notice demands an explanation, following which ASCI deliberates and rules on the ad. If ASCI rules against the ad, the company may amend or even remove the ads. An ad violating the code cannot be played on TV and faces other restrictions.
Zepto, Blinkit and others are following a global chase for quick delivery, with Jokr, Fridge No More, Getir and others raising billions in the US and Europe based on the same promise. One of them, Jokr, lost $159 per order in New York City, a report from The Information said.
Currently operating in Mumbai, Delhi, Gurugram, Hyderabad, Chennai, Pune, Zepto has captured the imagination of customers and investors, even as its ability to make profits and treat delivery riders equitably amid surging demand remain questionable.
“Zepto is looking at 10 minute delivery as a unique proposition for it to stand apart from everyone else. They are offering a limited set of products with lots of dark stores nearby, so I think the ads are fair,” said Karthik Srinivasan, an independent senior advertising consultant.
“There is no guarantee of commitment in their ads, unlike say when Domino's (Pizza) said 30 minutes or free, which created an issue. Unless they are penalising riders for late delivery, or saying if not 10 minutes, we will give you something, it shouldn’t be an issue,” he added
A Zepto spokesperson said it does not either offer delivery riders incentives to deliver under 10 minutes or penalise them for a breach over 10 minutes
