Zepto Business Model : Detailed Analysis

By FY25, Zepto had become a familiar name in urban India, competing head-on with Blinkit and Swiggy Instamart in the quick commerce space. Fast deliveries, rapid expansion, and large funding rounds helped the company grow at record speed.

But rapid growth brings an important question.

This blog explains how Zepto’s business model works, where its revenue actually comes from, and what its financial numbers say about sustainability. We look at Zepto’s growth versus losses, break down its cost per order, compare it with competitors, and examine how cash burn and expansion plans affect its path to profitability and a potential IPO.

Zepto’s Growth Journey

Zepto was founded in 2020 by Aadit Palicha and Kaivalya Vohra, two Stanford dropouts who spotted an opportunity in India’s fragmented grocery delivery market. The company entered the scene with a promise to deliver groceries in under 10 minutes through a dense network of dark stores located close to residential clusters. 

What began as a Mumbai-focused experiment quickly expanded into a nationwide quick commerce platform, backed by aggressive venture funding and a relentless focus on speed and customer experience. In just five years, Zepto moved from a startup to a market leader, operating across major cities and emerging as one of India’s most closely watched consumer internet companies.

Financial Growth Versus Losses

FY25 marked a year of sharp scale-up for Zepto. Total sales jumped 129% year on year, driven by higher order volumes, new city launches, and deeper penetration in existing markets. However, losses expanded at a faster pace, highlighting the strain of aggressive expansion.

The widening loss ratio shows that scale alone has not improved margins. In fact, Zepto lost more money for every additional rupee earned in FY25 compared with the previous year. This trend runs counter to expectations for maturing digital businesses, where costs typically stabilise as volumes rise.

Another layer of complexity lies in how revenue is reported. 

The Rs. 9,669 crore figure reflects gross order value recognised as turnover. Industry estimates suggest Zepto’s actual operational revenue, or commission earned on orders, is closer to Rs. 1,500–2,000 crore. While this accounting treatment is standard in quick commerce, it highlights how thin the retained margins are.

Zepto Unit Economics: An Advantage Under Strain

On a per-order basis, Zepto remains relatively efficient compared with rivals. Its delivery cost structure is lower than that of Blinkit and Instamart, giving it a theoretical edge.

Source: 42 Signals.com

Despite this cost advantage, profitability remains out of reach. Promotional spending and customer incentives continue to offset gains from operational efficiency. In late 2025, Zepto removed delivery and handling fees for orders above Rs. 99, a move aimed at defending market share but one that further compressed margins.

Scaling Operations Without Matching Returns

Zepto’s operational scale has expanded rapidly. By October 2025, annualised gross order value had reached nearly Rs. 33,000 crore, with daily orders touching 1.7 million. Order volumes have grown three to four times in just over a year, while the dark store network expanded at a slower pace.

This gap suggests higher utilisation of existing infrastructure, which should improve economics over time. However, it also increases execution risk. High store density must be maintained without service disruptions, while discounting needs to be reined in for profitability to emerge.

Market Share Pressures

While revenue has surged, Zepto’s relative position in the market has weakened. Competitors with deeper pockets have expanded faster, particularly in physical infrastructure.

Zepto’s market share has slipped from close to 29% earlier in 2025, while Blinkit has continued to pull ahead. User engagement has also softened, with daily active users declining in the first half of FY26, even as rivals gained traction. In quick commerce, where speed and availability drive repeat usage, infrastructure scale has become a decisive factor.

Cash Burn and the Profitability Timeline

Zepto has stated it aims to reach EBITDA and operating cash flow breakeven by the March quarter of FY26. Management has indicated that burn has been reduced by about half in recent quarters. Even so, estimates suggest monthly cash burn remains in the Rs. 250–300 crore range.

With cash reserves of roughly Rs. 7,600 crore, Zepto has a runway into 2027. But the margin for error is narrowing. Each new dark store takes over a year to break even, meaning expansion continues to weigh on cash flows unless order density rises sharply.

Funding, Valuation, and IPO Plans

Since its inception, Zepto has raised close to Rs. 16,500 crore across multiple funding rounds. Here are the Zepto funding rounds info:

Its valuation climbed rapidly to around Rs. 58,000 crore by late 2025. However, recent rounds have shown limited valuation uplift, reflecting growing investor caution.

Zepto filed confidential IPO papers in December 2025 and is targeting a mid-2026 listing, aiming to raise around Rs. 10,000crore. The success of that issue will depend heavily on whether the company can show a clear and credible path to profitability over the next few quarters.

Read more about Zepto IPO: Details, Timelines and Valuations

Future Of Zepto

India’s quick commerce segment is projected to grow sharply over the next decade, driven by urbanisation and changing consumption habits. But the sector is also moving toward consolidation, where only a few players are likely to survive at scale.

For Zepto, the challenge is no longer about growth alone. It is about proving that rapid delivery can be profitable without constant incentives. Until margins improve meaningfully, the company remains a high-risk bet, balancing operational discipline against the pressure to defend its position in one of India’s most competitive consumer markets.