Zepto's monthly employee costs near Rs 100 crore, reaching 80% of larger rivals Zomato and Swiggy

Zepto CEO and co-founder Aadit Palicha

Quick commerce unicorn Zepto paid out a total of Rs 95 crore in salaries to its 3,000 employees in April, sources privy to the information told Moneycontrol.

While the Rs 95 crore figure was a slight improvement from Rs 115-120 crore that Zepto paid out in March and Rs 105-110 crore in January and February, it was still a sizeable amount when compared to the wider food delivery and rapid delivery industry. It also shows fixed costs at Zepto are growing on a year-on-year (YoY) basis.

The company’s employee costs assume significance because Zepto has positioned itself as an aggressive company that is willing to pay higher, sometimes even 2-3X more, than industry averages to attract and retain top talent, per sources.

Moneycontrol had reported that Zepto was burning Rs 250-300 crore (over $35 million) each month late last year but the company has since then been called out by rivals for its higher cash burn.

Eternal (formerly Zomato) chief Deepinder Goyal had said in March this year that quick commerce companies are burning Rs 5,000 crore a quarter and Zepto alone accounted for substantially more than half of that cash burn amount.

Zepto chief Aadit Palicha, however, dismissed those claims as “verifiably untrue.”

Zepto, Zomato (Eternal) and Swiggy did not reply to Moneycontrol’s queries on employee costs.

80% of what Swiggy pays

Zepto, which primarily delivers groceries and other essentials, mainly competes with Blinkit and Swiggy Instamart. However, through Zepto Cafe, which sells short eat items such as coffees, pizzas, noodles and other snacks, the company is also taking on Eternal (formerly known as Zomato) and Swiggy.

“Zepto’s employee costs of about Rs 100 crore is already 80 percent of what Swiggy pays out, despite the latter being a much larger organisation,” one of the persons cited above said.

Swiggy, which is over a decade old and has several business units such as food delivery, quick commerce, dining out, events and more, has a workforce of around 5,500 employees.

Swiggy’s monthly wage bill totaled to around Rs 120-130 crore during the same period “which is much smaller when compared to Zepto’s figures given Swiggy has a workforce almost double of Zepto and has several other business units,” a source said.

Company insiders told Moneycontrol that Zepto covered relocation expenses for employees as it moved them from Mumbai to Bengaluru, and also shifted into a new office a few days ago, which led to increased costs in March. From April onwards, employee costs normalised back to around the Rs 100 crore mark.

The quick commerce industry has been red-hot for over a year now. The intensifying competition between the top three players – Blinkit, Zepto and Swiggy Instamart – has made it difficult to attract and retain top talent.

Companies with deep pockets are poaching talent, offering them higher pay, more employee stock ownership options (ESOPs) and better incentives. Quick commerce wars have also ensured pay packages swell and companies shell out more to maintain an edge over rivals.

80% of Zomato’s monthly wage bill

Not just Swiggy, Zepto’s monthly wage bill looks large when compared even to Zomato, especially because Zepto is a leaner organisation and does not have a food delivery arm.

Eternal (formerly Zomato), an organisation founded in 2008, operates a food delivery business, runs quick commerce unit Blinkit, has events and ticketing, a dining out arm and even a B2B business.

“Zomato has over 5,000 employees and pays around Rs 160-170 crore in wages each month but Zepto, which is at a much smaller scale, paid Rs 100 crore,” one of the persons cited above told Moneycontrol.

At a company level, Zomato and Swiggy were doing more business than Zepto.

While Gurugram-based Zomato had an annualised gross order value (GOV) of Rs 80,825 crore (over $9.5 billion), Bengaluru-based Swiggy had an annualised GOV of Rs 51,552 crore (over $6 billion), as per latest regulatory filings.

Zepto chief Aadit Palicha, on the other hand, had recently said the company had clocked a GOV of $5 billion.

In an evolving space, quick commerce companies are poaching talent from more established firms like Flipkart, Amazon and others to grow their business at an exponential pace for which they have been paying more in salaries to take market share from other rivals.

Quick commerce, however, is still a nascent industry and will see many more cycles before a clear winner emerges.