Zepto Establishes New Entity Ahead of IPO to Streamline Operations
- ByStartupStory | January 2, 2025
Zepto, India’s quick-commerce unicorn, has established a new entity named Zepto Marketplace Private Limited as part of its preparation for an Initial Public Offering (IPO) later this year, according to sources familiar with the development. The move is aimed at simplifying the company’s operations and aligning its business model with publicly listed peers like Blinkit and Swiggy Instamart.
Zepto, co-founded by Aadit Palicha and Kaivalya Vohra, currently operates under a business-to-business (B2B) model through its Indian arm, Kiranakart Technologies Pvt Ltd. The company procures goods from brands and sells them exclusively to three licensee companies—Geddit Convenience, Drogheria Sellers, and Commodum Groceries—which then sell to end consumers on the Zepto platform.
Transition to a Marketplace Model?
The new entity, Zepto Marketplace Private Limited, registered on October 22, 2024, signals a potential shift toward a marketplace model, similar to that of rivals Blinkit (owned by Zomato) and Swiggy Instamart (operated by Swiggy). A source close to the matter commented, “Zepto’s current model is very confusing, and it is likely that the company wants to make its business model more clear and transparent to all investors ahead of its IPO. By registering a different entity, Zepto Marketplace Pvt Ltd, the company will likely rejig operations to ensure that its business model is the same as rivals Blinkit (owned by Zomato) and Swiggy Instamart (operated by Swiggy) since these business models are known and already understood by investors.”
This shift could allow Zepto to diversify its seller base and expand its distribution network. Sources revealed that the company has already added more sellers to reduce dependency on its three existing licensee firms and plans to continue doing so with the help of the new entity.
Focus on Operational Clarity
Another source, however, clarified that the creation of Zepto Marketplace Private Limited is primarily a structural move to separate the internet platform and intellectual property (IP) from the core business. The source stated, “The company is anyway running an e-commerce platform with that IP. The business model, despite a new entity, doesn’t fundamentally change.”
This structural adjustment could streamline operations and help investors better evaluate Zepto’s metrics against its rivals, ensuring compliance with India’s foreign direct investment (FDI) norms.
Comparison with Rivals
Unlike Zepto, Blinkit and Swiggy Instamart have additional layers of sellers and distributors in their business models. These layers allow them to report final revenue from transactions rather than gross merchandise value (GMV), a metric Zepto currently follows.
Zepto’s GMV for FY24 was approximately ₹5,500–6,000 crore. However, the company’s comparable revenue, based on industry-standard take rates of 15–20%, would range between ₹870–1,150 crore, more aligned with rivals Blinkit and Swiggy Instamart.
IPO Plans and Market Expansion
The establishment of Zepto Marketplace Private Limited comes as the company prepares for a $500 million IPO. Zepto is also diversifying its revenue streams by launching a separate food delivery app and expanding into new geographies. With revenues of ₹4,455 crore in FY24, Zepto outperformed rivals Blinkit (₹2,301 crore) and Swiggy Instamart (₹1,100 crore) despite having a lower market share and average order values.
The Indian quick-commerce market, valued at $6 billion, remains fiercely competitive. By adopting a marketplace model and streamlining operations, Zepto aims to capture a larger share of this red-hot segment while ensuring transparency and scalability as it heads toward a public listing.
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