Zepto founder Aadit Palicha denies killing kiranas, says quick commerce will create more jobs than Indian Railways

Let’s start with the current funding round. It started out at $150 million but you’ve closed it at $350 million...

Yeah, so we were fortunate to close the round with $350 million of capital and we did it with 100 percent domestic family offices. We're particularly proud that this financing is most likely, for a private startup, the largest domestic family office financing in the industry.

We decided this is the right time to go aggressive and launch stores aggressively. And as long as our stores are turning profitable, mature stores keep turning profitable, it's a good place to be. Especially if we keep showing that mature store profitability.

Did you consciously raise from Indian family offices to increase domestic shareholding? Does it have anything to do with the regulatory environment?

From our perspective, we would like to just say that we, in our hearts, are an Indian company, Indian management team, Indian board, Indian promoters and aggressively moving to list in India. We took foreign capital because it's very difficult to raise risk capital in India in the early days. There's no one that would give Rs 20 crore seed money to two 18-year-olds with an idea in India. That's the reality. That risk capital doesn't exist.

So, will you raise more money to increase domestic shareholding?

Yeah, we’ll do another pre-IPO round later and then do an IPO, realistically within the next financial year. So, within FY26, I'm quite confident, we'll hit that domestic company milestone.

Kiranas are saying players like you are killing their businesses...

There have been many anecdotal, data-free narratives that have been wrong about quick commerce since we started Zepto. It started with “Nobody wants 10-minute delivery” or “the unit economics will never work”. We’ve disproven them time and again with hard data. Quick commerce hurting the kirana store is another incorrect narrative when you look at the data.

The same Datum Intelligence report that CAIT quoted to try and prove that we are hurting kirana stores also shows $46 billion in added grocery and household essentials consumption between FY23 and FY24. Quick commerce was less than $5 billion in FY24. So if the incremental consumption growth was $46 billion but QC is only $5 billion, then where did the remaining $41 billion go? It went mostly to the kirana store! Their own data shows that it’s impossible for quick commerce to have caused kirana stores to shrink.

The consensus view across multiple credible Indian consumption reports such as Goldman Sachs, CLSA, and Invest India, forecasting $200 billion to $250 billion of consumption growth in the next five years. Even if quick commerce grows at a crazy 1,500 percent rate in the next five years, we will still be at $75 billion, which is less than half of the incremental consumption growth in this country. So, the kirana store will continue to grow, especially since India’s grocery consumption is one of the fastest growing among the major economies in the world. I am sure the CAIT wouldn’t be claiming that India is not growing. We need to study the data, not the anecdotes.

There are also allegations of deep discounting and predatory pricing…

CAIT has accused us of predatory pricing. The reality is that 0.2 percent of the units sold on the Zepto platform were below cost price of the manufacturer in FY24. Even in the hundreds of dark stores that have turned profitable at Zepto, we are cheaper than MRP. Clearly we are not predatory pricing. We are giving the Indian consumer sustainable value by building a supply chain that cuts out inefficient middlemen and goes straight to the manufacturer. In that sense, with no predatory pricing, we are deflationary for the Indian consumer. DMart, for example, is meaningfully cheaper than MRP, but they are highly profitable - are they doing predatory pricing as well? Clearly not. Again, no data to back the allegations being made.

Then where do you see an impact from quick commerce? 

Quick commerce is a net job creator. It’s also a wage additive. We, in fact, formalise the economy.

Forget about Goods and Service Taxes (GST), indirect taxes, those would come irrespective if the products were sold. But direct taxes, tax deducted at source (TDS), which only happens when the economy is formal.

In the next 2-3 years, this industry will generate $1 billion in direct taxes cumulatively for the government. And, $300-400 million would come from Zepto alone. Our peers are also moving which will add more in the form of taxes.

What is the kind of number of jobs quick commerce has created? How much of it goes to Zepto's credit? 

This quarter alone, we are going to onboard 25,000 people across levels (on roll and gig workers).

And the wider industry? 

If I include the delivery partner number as well, that number is about 3-4 lakh for the entire quick commerce industry. Zepto specifically right now has created about 1.14 lakh jobs, including the delivery partner, and others across levels.

Also read: Zepto’s cash burn zooms to Rs 250 crore a month on rising capex, closes Rs 2,500 crore funding round

What’s the pay structure like?

Today, on average, the industry pays Rs 23,000 per month to the ground force. Before Zepto, Zomato and Swiggy, they were making Rs 10,000-15,000 each month, probably lower than that.

Quick commerce will generate more jobs than the Indian Railways would do in the next 2-3 years, which we should celebrate.

You say quick commerce is deflationary… But when we buy fruits and vegetables on any of the rapid delivery platforms, we find them 20-30 percent costlier than what a neighbourhood store would have charged…

So today, for example, if you buy on Zepto, I mean if you buy a mango on Zepto, it's 100 percent carbide free. On Zepto, the product quality is far superior than what you would get at a neighbourhood store.

So, are you charging a premium for better quality on fruits and vegetables (F&V)?  

In F&V, we're investing in quality, infrastructure, packaging and so on. It matters. For example, where was the product stored? At Zepto, it's stored in a refrigerated facility. The moisture level in that facility is controlled.

All these things matter because that limits the risk of infection and infestation. Quality things will always be there. But at scale, it's very small.

When you get the product, how much is it clean, untampered, versus off-season.

The allegations that have come out and said that we are meaningfully cheaper, there's no doubt about it. But it's because of structural value. But even if we debate whether we're cheaper or not cheaper, then we should not be debating whether we're credit repricing or not credit repricing. Because we are definitely not selling below cost.

Speaking about consumption, what’s your view on traditional FMCG companies saying there is a consumption slowdown? 

My point of view is simple. We have provided a platform for the first-time founders. We have democratised access to the Indian consumer or the Indian entrepreneur. For the first time, there's a level playing field between Indian entrepreneurs starting their own brand and the big guys.

So, the reports that the middle class is shrinking is not going well. When I see our data, I see new Indian brands, with a much higher market share on our platform giving big heat to the big guys. And so, from my lens, I think that there's definitely a big opportunity in Indian consumption right now. You can't reconcile 7 percent GDP growth with shrinking consumption.

The conversation around consumption shrinking, to me, everyone would agree, is a bit far-fetched.

There are allegations that quick commerce companies sell products at a deep discount. How do you want to counter that?

I just think paying the maximum retail price (MRP) is unfair to the consumer. Because you can build structural value in the supply chain and give back to the consumers.

And I think this being able to give customers better prices, structurally, better selection, better quality, and deliver it to their doorstep, make their lives better. So, it's unfair that it's being criticised. The reality is that we are working extremely hard, right, to build real value. We've created hundreds of thousands of jobs. We're creating real value for consumers. We're going to create value for Indian shareholders at scale, Indian promoters, Indian board. And this innovation and the technology that we've built is Indian. Like, nobody has built this anywhere in the world.

How would like to sum it up?

We're only saying that only evidence that we are shrinking other people's pie is anecdotal, subjective and qualitative, which in my mind is just not the right way to build a narrative. At the end of the day, as a country, we have to decide deeply whether innovation like this, and this is going to be a very big innovation, is good for this country or not. We unapologetically, unabashedly think that this is genuinely good for the country, and that's why we're doing this.

You’re headquartered in Singapore and are preparing to flip your base back. Do you have an update on that?

We’re in the process of flipping our base back, it’s going to happen soon. We are in spirit an Indian company. This is not Amazon or Walmart.

We’ve got Indian founders, Indian board, Indian management team who will list in India. Next year, a majority of our ownership is also going to become Indian, very quickly, as a four-year-old company.

Yes, we raised startup capital from Silicon Valley. We did that seed Series A capital at that level, it does not exist in domestic rupee capital. That is a reality. But what I can say is that we are moving towards an Indian company and we would have happily raised all our capital in India if we had an opportunity. Reality is that Kaivalya Vohra (Zepto co-founder) and I didn't have a rupee of our own money to put into this business. If we had to raise capital somewhere, this is the only capital that was available.

We're going to become Indian owned next year. We're not strategically controlled by Americans.