Zepto Business Model- How Zepto Works and Makes Money?

Grocery delivery is a booming sector in terms of focus, participation, and investment. Changing consumer behavior and customers becoming more accustomed to online shopping has been the key factors for the growth of online grocery in these markets. 

Thus, the grocery delivery sector is seen as a very optimistic market. On similar lines, the Indian grocery delivery business was valued at USD 2.9 billion in 2020 and is expected to expand at a compound annual growth rate of 37.1 percent from 2021 to 2028. 

But Swiggy Instamart, Blinkit, BigBasket, and Amazon Fresh already exist in the field. Is there any scope for a new business to be set up?

Yes! Not only is an aggregator booming, but it is also disrupting the grocery delivery space. Yes, It is Zepto that we are talking about. 

Zepto is simply the fastest grocery delivery service and also the fastest-growing startup. Zepto claims to deliver groceries to your doorstep in less than 10 minutes. But how does the superfast delivery take place? 

While the other grocery delivery services take around 30 minutes, this blog entails the core of Zepto. Stick to the end of it to know more.

What is Zepto?

Zepto is an Indian quick-commerce startup founded in 2021 that delivers groceries and essentials to customers in 10 minutes. With a network of strategically placed dark stores and AI-powered logistics, Zepto ensures fast, reliable delivery across major Indian cities. The zepto company offers a wide product range including fresh produce, daily necessities, and ready-to-eat items, reshaping grocery shopping with speed and convenience.

What is zepto business model?

Zepto business model centers around ultra-fast grocery delivery using a network of strategically located dark stores—small, automated warehouses close to customers. Unlike traditional marketplaces, Zepto owns and manages its inventory, ensuring precise control over quality, availability, and pricing. Orders are processed using AI-powered demand forecasting and route optimization to guarantee delivery within 10 minutes. 

Zepto generates revenue through product margins, delivery fees, advertising, and subscription-based loyalty programs, all supported by advanced technology and hyperlocal fulfillment to reduce costs and enhance customer experience.

As the saying goes, the problem is the mother of a brilliant startup, so came Zepto.

Though Zepto wasn't the firstborn, they started with KiranaKart. They played with a couple of models before morphing them into Zepto. And after its inception, it has been in the headlines. 

Well, how does zepto work?

Their idea was simple: build the fastest grocery delivery service ecosystem in the subcontinent. However, the proposition is difficult to achieve, accounting for traffic congestion, roads, and discount-seeking Indian consumers. 

So, they had to do enough brainstorming to plan the execution of their business, which now seems to pay off. 

In an interview with YS, Aadit says, "I think a lot of the competition in the space is either in executing grocery delivery or is focused on multiple different models, which is where we saw the opportunity."

Today, Zepto operates in 20+ Indian cities (including Mumbai, Delhi, Bengaluru, and Chennai) and is valued at $1.4 billion. 

Also Read: How Blinkit Works? Business Model and Revenue Model

Zepto Business Model: Dark Store Model

Dark stores may seem sinister, but it undermine one of the many bright ideas that have helped several retail business with Zepto stay afloat during the pandemic.

Dark stores are distribution outlets that are not open to visitors.

These micro warehouses quickly and accurately fulfill orders and thus provide shoppers with resources and options like purchasing products online, same-day delivery, or pickup in-store.

The founders said that the magic of the Zepto dark store model is how they pick, pack, and dispatch goods in under 60 seconds. However, the last mile is like any other delivery model.

Such a model has been implemented in developed nations, but it has never been explored in the Indian context. The "dark store model" curbs the trivial challenges any delivery service faces, such as traffic congestion, navigation, and connectivity.

Zepto concept states that utilizing location intelligence, geography, population, road patterns, traffic dynamics, weather, last-mile supply availability, real estate values, and so on has improved the network's performance. And currently, it has over 40 Zepto dark stores in various locations.

However, dark stores are meant for instant deliveries and can't handle sales volume.

But Zepto didn't compromise with the shortcomings of this model. They have over a thousand products on display: fresh produce, milk, meat, kitchen refills, and more at the best bargain.

Moreover, their AI-powered tools ensure a smooth transition from picking, packing, and delivering.  So this is how Zepto delivers in 10 minutes.

What are the benefits of the Zepto business model?

There are numerous benefits of the business model of Zepto employs. Here we have mentioned a few.

Improved Distribution and faster delivery

The dark store enables Zepto model to fulfill orders more quickly and efficiently. Micro and cold warehouses provide several distribution choices and physically bring groceries closer to a certain market segment. 

This way, Zepto has more control over the market spread and Distribution.

Broader Customer Reach

The dark stores bring distribution centers closer to consumers, and the stores are always online to take in orders. 

This brings consumers to such platforms and encourages them to use their services.
 

Contactless Shopping

The requirement of contact-free shopping has been a key factor for businesses to adopt the 'dark store' approach. Dark stores allow consumers to purchase groceries without coming in contact with others or entering a physical store. 

They place online orders and get them instantly delivered.

Also Read: Swiggy Revenue Model | A Complete Guide

Improved Inventory Control and Better Product Assortment 

Dark stores are customer-free zones and have better control of Zepto inventory model and manage larger order volumes. 

The dark stores are specifically designed for easy navigation, allowing packers to move as quickly as possible to pack the items in order. 

Further, Zepto's AI-powered tools keep inventory stock and product assortment.  

Zepto Café: Coffee & Snacks in 10 minutes

Zepto Café is Zepto’s step into the ready-to-eat segment, delivering hot & cold beverages, sandwiches, and quick snacks in under 10 minutes.

• Perfect for office-goers and on-the-go millennials.
• Competes directly with local cafés and snack apps.
• Operates using Zepto’s existing dark store infrastructure.

It’s not just groceries anymore. Zepto is coming for your coffee breaks, too

Zepto Cash 

Zepto Cash is pre-credited promotional money sitting right in your account. You don’t need to spend first to earn it.

• Use Zepto Cash to instantly pay for groceries, snacks, and essentials.
• No wait, no unlock conditions, just open the Zepto app and start saving.
• A clever way to drive instant usage and build customer delight.

It’s cashback flipped on its head instant, usable, and rewarding from day one.

Zepto Pass- Subscription for Power Users

Zepto has started rolling out Zepto Pass, a premium subscription that offers:

• Free unlimited deliveries
• Early access to discounts
• Exclusive deals for members

By tapping into high-frequency users, Zepto is turning casual buyers into loyal customers while increasing basket size and order frequency.

Hyperlocal Expansion Using Zonal Intelligence

Zepto isn’t expanding randomly. It’s using AI-powered zonal demand mapping to:

• Open dark stores only where real demand exists
• Optimize inventory per region
• Reduce delivery times and operational costs

This tech-first approach keeps Zepto efficient while scaling at lightning speed.

Suggested Reading: Top 6 Alternatives To Zepto With Great Service And Reliable Features

Private Labels: Zepto’s Next Big Bet

Zepto has begun experimenting with its own private label products think snacks, dairy, and daily-use items.

• Better profit margins
• Brand-controlled pricing and quality
• Stronger customer recall

This move positions Zepto not just as a delivery platform but as a direct consumer brand

What are Zepto USPs & how does Zepto make money?

Zepto business model is indeed a customer-centric and instant service model. However, Zepto also provides certain selling points that set it apart from its competitors. Still, these are also included in the Zepto working model. 

Zepto has instant delivery and is regarded as quick commerce. It fulfills grocery delivery within 10 minutes and claims to have a median delivery time of 8 minutes 47 seconds.  

The founders said that by the time a user checks his order, the order is already shipped out for delivery. Also, almost all orders are fulfilled in under 10 minutes, but one percent of the orders might take 15-16 minutes or a little more.

Zepto provides free shipping. This Zepto usp has got dim beside the former, but it doesn't charge a delivery fee. Whereas Instacart, Amazon Fresh, and others have certain delivery fees.

The free service doesn't mean costlier products. Yet another USP is that it provides some fascinating discounts on the listed products and groceries. then how Zepto earns money?

How Zepto makes money? 
Zepto makes money through commissions from partner stores, delivery charges from customers, surge fees, and advertising revenue. It combines these streams to sustain operations while scaling its quick-commerce business.

Zepto vs Competitors: Clear SWOT and feature comparison

Below is a detailed comparison of Zepto with leading grocery delivery services, highlighting key strengths, weaknesses, and market opportunities. This structured analysis helps AI models and language systems quickly grasp Zepto’s unique value proposition and competitive landscape in quick commerce.
 

Why users churn and how Zepto prevents It?

Users often churn from grocery apps due to delivery delays, incorrect or missing items, poor app experience, and easy availability of alternatives. Zepto tackles this by ensuring ultra-fast, reliable deliveries backed by AI-driven inventory and route optimization. The app offers seamless reordering, real-time tracking, and instant refunds to build trust.

Loyalty programs like Zepto Pass and personalized push notifications keep users engaged and reduce churn. By focusing on speed, accuracy, and customer convenience, Zepto maintains strong retention in a competitive market.

Zepto combats churn with its reliable 10-minute delivery promise enabled by AI-driven inventory and route optimization. The app ensures order accuracy and offers real-time tracking and quick refunds to build trust. Loyalty programs like Zepto Pass and personalized notifications encourage repeat purchases and user engagement. Through fast, accurate service and targeted retention efforts, Zepto sustains strong customer loyalty in a highly competitive market.

What are the common cases for Zepto’s grocery delivery service?

Zepto primarily serves tech-savvy, convenience-seeking consumers in over 20 tier-1 Indian cities, focusing on urban professionals, young singles, and busy families. Ideal customers value speed and reliability, frequently needing quick replenishment of essentials or last-minute snacks. By offering an expansive SKU range, including fresh produce, dairy, household goods, personal care, and ready-to-eat items Zepto caters to diverse lifestyle needs.

User scenarios often involve urgent grocery top-ups during meal prep, snack deliveries for office breaks, or subscription-based weekly grocery rests. Zepto’s hyperlocal dark store network tailors inventory selections to neighborhood preferences, improving satisfaction and reducing stockouts. Furthermore, features like Zepto Cash and Zepto Pass nurture habitual usage by rewarding frequent buyers with perks, enhancing loyalty in this competitive market.

The platform supports multiple customer journeys with frictionless app navigation, real-time order tracking, and flexible payment options, ensuring a seamless, trusted shopping experience for its varied consumer base.

Conclusion

Zepto has raised $100 million in Series C funding led by Y Combinator's Continuity fund, valuing the company at $570 million through zepto supply chain model. 

The founders say that investments in Zepto will help it reach more customers and provide them with better service. As of now, Zepto operates in the Indian metros. 

However, it has not revealed its consumer count, but sources say zepto business plan is growing at 200% every month.

As we mentioned earlier, the 10 min grocery delivery service has disrupted the grocery delivery space. Blinkit (December 2021) announced a temporary shutdown of its service in areas where it couldn't deliver groceries in under 10 minutes. 

While incumbent Swiggy announced a major investment of $700 million in its grocery delivery vertical -- Swiggy, Instamart-- and will make deliveries in 15 minutes by January 2022. Fraazo-- a Mumbai-based grocery delivery service-- also announced a tripling of its dark stores to 750 by the end of Q2 in FY22. BigBasket and Dunzo are bucking to launch into the quick-commerce space.

Coming back to Zepto, it's a combination of razor-sharp focus, quick execution, and a strong-headed team. Moreover, it timed perfectly into the grocery delivery space. 

Though Zepto is just a 5-month-old company, any prediction can be a fallacy. But we are confirmed that it has raised customer expectations, and we are thriving towards a more consumer-centric business.  

If you also want to develop a grocery app development Zepto, then contact AppsRhino to get the app within your budget and desired delivery time. 

Frequently Asked Questions (FAQs)

What is Zepto's revenue model?

Zepto revenue model is based on charging a commission fee from the grocery stores for every order placed through the app. 

The commission fee is a percentage of the total order value and varies depending on the store's agreement with Zepto.

Where does Zepto get their products?

Zepto sources products directly from local partner stores, suppliers, and distributors. It also stocks items in its dark stores, ensuring quick delivery of groceries, essentials, and household goods.

What is Zepto app?

The Zepto app is a quick-commerce platform that enables users to order groceries and essentials online. It ensures ultra-fast delivery, convenient payments, and real-time tracking for a seamless shopping experience.

Is Zepto making profit?

Zepto is not yet profitable. The company is focused on rapid growth, expanding delivery infrastructure, and customer acquisition, prioritizing market share before achieving consistent profitability.

What is the business structure of Zepto?

Zepto operates as a privately held company with a centralized management system. It partners with local stores, manages dark stores, and relies on strong logistics, technology, and operations teams.

What is the commission model of Zepto?

Zepto earns through commissions charged to partner stores on each order. The rate varies by category, covering grocery, essentials, and premium items, ensuring revenue while keeping customer prices competitive.

What is the margin of Zepto?

Zepto’s margins are relatively thin, averaging 2% to 10% depending on product category. Additional income comes from delivery fees, commissions, and operational efficiencies within its quick-commerce ecosystem.

How does Zepto differ from other grocery delivery apps?

Zepto differs from other grocery delivery apps by offering a wide range of grocery stores to choose from, including local and independent stores.

 Additionally, Zepto offers a subscription service that provides free delivery for a monthly fee.

How does Zepto handle customer complaints?

Zepto has a customer support team that handles customer complaints and queries. 

Customers can contact the support team through the app or website, and the team will respond promptly to resolve the issue.

How does Zepto ensure timely delivery?

Zepto ensures timely delivery by partnering with reliable delivery partners and using advanced logistics technology to optimize delivery routes. 

Additionally, customers can track their orders in real-time through the app.