How Zepto’s 10-Minute Delivery Bet Fueled $200 Mn Ad Empire - CEO Aadit Palicha Explains

Quick commerce major Zepto has seen a major lead in is advertising vertical, with the company’s cofounder Aadit Palicha revealing a fivefold increase in its annualised revenue run-rate (ARR) over the past year. During a conversation with Y Combinator CEO Garry Tan, Palicha stated that Zepto’s ad business surpassed the $200 million ARR mark --- up from $40 million a year ago.

“If we look at our advertising business, we have gone from a $40 million ARR in ad revenue last year to $200 million ARR now. We have built out a really high-quality, performance ad stack out of India with the entire relevance engine, bidding, attribution, campaign management, and automated keyword suggestions,” he said in the podcast.

He even said that Zepto’s foray into rapid delivery was not a marketing gimmick, rather it was a direct response to consistent consumer feedback.

Zepto’s Early Days

Palicha also recalled the early days of Zepto when the cofounders were making deliveries themselves. At that time, customers used to complain about long waits times, saying “I (buyer) rather purchase from my vendor than wait for 2-3 hours for you”.

“This feedback from customers pushed us to reduce delivery times. It’s not only about convenience, it’s about how customers are accustomed to buying more frequently and easily. The 10-minute delivery became a necessity due to the changing consumption patterns. Hence, we created a doorstep-like experience,” he explained.

Zepto’s original ‘pickup and drop-off’ service failed to retain users, he acknowledged. He further stated that Zepto also did an assessment of the business after which the cofounders realised there was no retention with this model. But they learned from their mistakes and made operational excellence along with talent the company’s foundational pillars.

And today, Zepto has become a quick commerce major in India, competing with Zomato’s Blinkit and Swiggy’s Instamart. However, the Indian quick commerce companies’ cash burn rose to nearly Rs 1,300-1,500 crore amid highly competitive space. The rising cash burn comes at a time when the top three players — Blinkit (owned by Zomato), Zepto, and Swiggy Instamart — have collectively raised close to $3 billion in funding.