Mumbai-based Zepto, the popular 10-minute delivery platform, is making big moves as it prepares for its $500 million initial public offering (IPO) in 2025. In a strategic step toward solidifying its market position, the company has launched a new entity called Zepto Marketplace Private Limited. This shift is designed to streamline its operations and set up the company for the transition into a marketplace model, a structure already used by its competitors.

Let’s break down what this move means for Zepto, its IPO plans, and the broader landscape of India’s growing quick commerce industry.

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Zepto’s New Marketplace Entity: A Step Toward Growth

Zepto, founded by Aadit Palicha and Kaivalya Vohra, has quickly become one of the biggest players in India’s quick commerce space, offering lightning-fast deliveries in just 10 minutes. To keep up with growing competition and expand its business model, Zepto has registered a new entity, Zepto Marketplace Private Limited, as it prepares for its upcoming IPO.

According to reports, this new company was registered on October 22, 2024, and will help Zepto shift its focus to a marketplace-based model, which is widely used by competitors like Blinkit and Swiggy Instamart.

But what exactly does this new model mean, and why is Zepto making the shift now?

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What is Zepto’s Current Business Model?

Zepto’s current business model operates differently from many other players in the quick commerce industry. Right now, the company uses a business-to-business (B2B) model under the umbrella of Kiranakart Technologies Pvt. Ltd. Here’s how it works:

• Kiranakart sources products directly from brands.
• It sells those products to a select group of licensed firms—including companies like Geddit Convenience, Drogheria Sellers, and Commodum Groceries.
• These licensed firms then list the products on the Zepto platform and sell them to consumers.
• Zepto earns a fee for every sale completed on its app by these third-party sellers.

This model contrasts with the marketplace approach used by competitors like Blinkit and Swiggy Instamart, where sellers list their products directly on the platform without needing to go through a licensee.

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What Does the Shift to a Marketplace Model Mean?

Zepto’s decision to create the new marketplace arm is a significant pivot for the company. The marketplace model it’s now adopting is similar to what its rivals have already implemented. In a marketplace model, sellers list their goods directly on the platform, and customers can choose from a more diverse range of products.

Here’s a breakdown of how this marketplace model works:

• Sellers list their products directly on the platform.
• Consumers can then browse and buy goods from multiple sellers.
• Zepto would charge a fee or commission for each transaction made through its app, but without being involved in the direct sourcing and distribution of products.

This model is not new in the quick commerce space. For example:

• Blinkit works with intermediaries like Hands On Trade and 90Minutes Retail, who source products from brands and then sell them to business-to-consumer sellers.
• Swiggy Instamart follows a similar framework where wholesalers supply products to dark store operators, who then sell them to end customers.

By moving toward this model, Zepto aims to make its platform more user-friendly for sellers and give consumers a wider selection of products, which is essential to remain competitive in a crowded market.

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Zepto’s IPO Plans: Aiming for $500 Million in 2025

As Zepto prepares for its initial public offering (IPO), the company is clearly making all the right moves to strengthen its position. Reports suggest that Zepto’s IPO could be worth $500 million and is likely to launch in the second half of 2025.

To guide the company through this critical process, Zepto has selected prominent financial institutions such as Goldman Sachs, Morgan Stanley, and Axis Capital as advisors for the upcoming IPO. These heavyweights will help Zepto navigate the complex world of public offerings and ensure that it is ready for the scrutiny and challenges of being a public company.

The decision to set up a marketplace model now could also be part of a broader strategy to show investors that the company is shifting towards a more scalable and sustainable business model as it prepares to go public. With the new marketplace arm in place, Zepto will likely be in a better position to expand its reach and increase its revenue potential, both of which are key selling points for potential investors.

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Why This Move Is Important for Zepto’s Future

Zepto’s decision to pivot toward a marketplace model comes at a crucial time. The quick commerce industry in India is growing rapidly, and Zepto is facing fierce competition from both new entrants and established players. Here’s why this shift is important:

1. Scalability: The marketplace model is more scalable than the traditional B2B model Zepto currently uses. By allowing multiple sellers to list their products on the platform, Zepto can expand its inventory without taking on the burden of managing inventory directly.
2. Diversification: With the marketplace approach, Zepto can offer a wider range of products to consumers, increasing the chances of attracting a more diverse customer base. This will be especially important as consumers demand more variety in their deliveries.
3. Improved Profit Margins: In a marketplace model, Zepto’s role is primarily as a platform provider, which means it can lower operational costs and increase profit margins. Instead of buying and distributing products, Zepto will focus on connecting sellers with consumers and taking a cut of the sales.
4. Preparing for IPO: As Zepto gears up for its IPO, investors will be looking for a company with a clear, scalable business model. The marketplace model provides that, and it positions Zepto as a strong contender in the competitive quick commerce space.

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Conclusion: Zepto’s Bold Move to Stay Ahead in Quick Commerce

Zepto’s decision to create a new marketplace entity is a smart move that reflects the company’s growing ambition to maintain its leadership in the quick commerce sector. By shifting to a more flexible and scalable model, Zepto will be better equipped to meet consumer demands, expand its product offerings, and position itself for future growth.

With its IPO just around the corner and an expanding business model, Zepto is clearly taking steps to strengthen its financial foundation and remain a dominant player in the world of 10-minute deliveries. If it can execute this transition successfully, the future looks bright for the company—and its investors.

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