If you have not heard before about it till now, Zepto is an Indian startup that delivers groceries in 10 minutes. You heard it right they claim (attempt or try and do deliver in some SKUs) to deliver groceries in 10 minutes.
To date, the company raised, US$360 million and is valued at US$900 million.
Firstly, I think the 10-minute delivery of most things is unnecessary. The number of things that you need in less than 10 minutes is far and few in between. This is one of those ideas I might don’t ever want to see in fruition because it’s a waste of a lot of resources.
And most importantly this puts the delivery people at risk of getting into accidents and worsens their quality of life further.
In terms of customer experience over the longer-term Zepto like 10-minute delivery ideas won’t work because of the feeling a customer gets of mistreating a delivery person.
Just looking at the effort it takes for a delivery person to get something to you in 10 minutes makes most people question their beliefs and next time they want to order for a 10-minute delivery they will just walk down to the store in their apartment or select the non-10 minute delivery option which they will have overtime or might already be in place (I haven’t checked).
So how will the 10-minute story end? Is there something that we are not seeing? Why did the Venture arm of Kaiser Permanente (KP) invest in Zepto?
And remember KP is not for profit organisation known for running one of the world’s largest hospital networks.
I can see interesting scenarios play out.
Why pursue such an idea?
The justification for about 10 minutes on the outer surface is often talked about as customer experience. But in my opinion, it is business jujitsu. I am not sure if the founders think the way I do, but here is what I think.
Also Read: The future of social and quick commerce for developing countries
The fact that Zepto offers 10 minutes delivery is a good stunt (stunts are not necessarily bad) to acquire new customers, investors including me love a big idea so the money will flow in, you are putting your competition like Swiggy, NinjaCart, BlinkIt and others in an uncomfortable position.
They have to adapt to the new game set by Zepto and they will now be operating from a position of weakness than strength because you are driving the narrative.
So what will the ending be for Zepto?
I think there are a couple of possibilities:
- Zepto in the process of scaling 10 minutes will create one of the largest grocery chains with a significant user base (and losses) and overtime moves to a regular delivery model. In this case, looking back, the 10-minute delivery is the main go-to-market strategy for creating a new grocery delivery business in India. They will continue to execute the business and over time can exist as an individual company.
- Competitors in the space both food and grocery delivery will try the 10 minutes delivery and realise that it is bleeding their cash reserves. Will stumble multiple times. They will realise the best way to solve the 10-minute delivery problem is by acquiring Zepto and then shutting it down (or slowing it down significantly). One of the unicorns in the space will make an acquisition offer with partial cash + stock deal.
- With VC money becoming hard to come by, Zepto might burn through their recently raised US$200M in 36-42 months. Failing to raise further capital because of macro conditions, they might get sold for less than the overall investment they raised.
In either case, the 10-minute mania will end and remain on the back burner model. Most companies will say they will deliver some of their SKUs in 10 minutes but most deliveries will not be in 10 minutes and the status quo will remain in place.
One lesson aspiring entrepreneurs should take away from Zepto is to swing for the fences even if it might end up seeming ridiculous to others.
Even though I don’t like the fact that Zepto as a business is resource-intensive and as a negative side of modern consumerism, I do admire the confidence of the founders to aim for something big and create a narrative that is making bigger players react.
It takes confidence and skill to pull off what they pulled off till now and I admire the gutsy approach!
This post was originally published on the author’s blog here.
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Image credit: Zepto
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