New Delhi: E-commerce firm Zepto on Thursday officially announced the launch of its paid subscription service—Zepto Pass—which will offer greater discounts to consumers, boosting competition in India’s growing e-commerce market.
“The company piloted Zepto Pass with 5% of its user base for a month and saw rapid adoption – almost a majority of orders came from Zepto Pass subscribers within two weeks during the pilot,” it said in a statement.
According to the company, those who subscribed to the Zepto Pass increased their spending on the app by more than 30% and showed a 10% increase in monthly retention. The subscription, priced between 19 and 39 rupees per month for most customers, offers unlimited free deliveries and up to 20% discount on groceries.
The move is aimed at spurring customer adoption of fast commerce, said Devendra Meel, vice president of Strategy and head of Zepto Pass.
Founded in 2021 by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, Zepto promises 10-minute grocery deliveries through its network of dark stores nationwide. It competes in the highly competitive fast commerce arena, alongside players like Swiggy’s Instamart, BigBasket’s BBNow, Zomato’s Blinkit and Google-backed Dunzo, all vying for market dominance and profitability.
Zepto hopes to attract a million customers to the subscription program within a month of the launch.
“Even after offering compelling value to customers with Zepto Pass, we are still on track to be close to PAT (net profit) positive in two quarters. This is because our profitability improvement comes primarily from cost reduction through supply chain excellence, which gives us the ability to deliver value to customers sustainably,” said Palicha, co-founder and CEO of Zepto.
Palicha also emphasized that the subscription model is expected to raise the average order value (AOV), offsetting the cost of discounts through a mix of corporate and brand financing.
“We’re in this position where we can afford to take the hit because our supply chain costs have come down dramatically. All of our core productivity metrics have improved, throughput has improved and our waste has been reduced,” Palicha said in an interview.
Zepto’s move comes as fast-casual firms struggle to meet customer demands, expand market presence and diversify their product offerings. Estimates by consulting firm RedSeer suggest that India’s fast-moving business market is expected to touch $5.5 billion by 2025, up from $0.3 billion in 2021.
Meanwhile, Palicha said the company is on track for a public listing in fiscal year 2025-26 (FY26).
“Obviously, it depends on the cost of capital, it depends on where we see private markets going, but right now we’re building all the internal infrastructure—whether it’s the financial controls, whether it’s the reporting, whether it’s having a big board or a statutory auditor , all the core controls needed, we’re building to be a public company,” he said.
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Published: 29 Feb 2024, 14:48 IST