Quick-commerce unicorn Zepto has set the stage for significant business restructuring ahead of its anticipated IPO later this year. The company has officially created a new entity, Zepto Marketplace Private Limited, which marks a major shift in its operational model.
This new move is expected to simplify Zepto’s business structure and align it with industry competitors.
Currently, Zepto operates under a business-to-business (B2B) model through its Indian arm, Kiranakart Technologies Pvt Ltd, which procures goods from brands and sells them to select companies managing the Zepto platform.
This arrangement has limited Zepto’s ability to scale in comparison to competitors like Zomato-owned Blinkit and Swiggy Instamart, which have already adopted a marketplace model enabling multiple sellers to directly list products for consumers.
Zepto Marketplace Pvt Ltd was officially registered on October 22, 2024, signaling the company’s commitment to moving away from its traditional B2B structure. This shift aims to bring Zepto’s operations in line with its rivals, Blinkit and Swiggy Instamart, as it works to finalize plans for an IPO. Sources close to the development suggest that this new entity will help Zepto clarify its business model and improve transparency for potential investors.
According to a source familiar with the company’s plans, "Zepto’s current model is very confusing and it is likely that the company wants to make its business model more clear and transparent to all investors ahead of its IPO.” This move, in their view, will simplify Zepto's operations, making it easier for investors to understand and evaluate Zepto's performance compared to its established competitors.
Under its current structure, Zepto licenses its brand name and operations to three entities—Geddit Convenience, Drogheria Sellers, and Commodum Groceries—which purchase goods from Kiranakart Technologies and resell them on the Zepto platform. For each sale, the licensee companies pay Zepto a licensing fee. However, this structure limits the diversity of sellers on the platform.
With the creation of Zepto Marketplace Pvt Ltd, the company is expected to reduce its reliance on these three licensees and expand the pool of sellers operating on its platform. Industry insiders indicate that, "Zepto will look to reduce concentration on the three companies (Geddit Convenience, Drogheria Sellers, and Commodum Groceries) and has already added more sellers. It will continue to expand its seller and distribution base, with the help of the new entity."
Zepto has shown impressive growth in FY24, recording revenues of ₹4,455 crore, significantly outperforming Blinkit’s ₹2,301 crore and Swiggy Instamart’s ₹1,100 crore. Despite these high revenues, Zepto’s revenue per transaction is difficult to compare with its competitors due to its B2B model, which reports gross merchandise value (GMV) rather than net revenue. The company’s GMV for FY24 is estimated at ₹5,500–6,000 crore, and analysts believe Zepto's actual revenue would be closer to ₹870–1,150 crore, more in line with Blinkit and Swiggy Instamart's earnings.
This difference in reporting could be an issue for potential investors, who typically prefer to assess companies based on their net revenue rather than GMV. This may explain why Zepto is looking to adopt a model that mirrors its competitors, making it easier for investors to assess the company's financials.
Zepto’s move to register a new entity and overhaul its business model is part of its broader strategy to prepare for an upcoming $500 million IPO. As the company gears up for public listing, it is also diversifying its revenue streams. Apart from expanding its seller base, Zepto is also preparing to launch a separate food delivery app and enter new geographic markets. These initiatives are expected to help Zepto grow its market share in the competitive $6 billion quick-commerce industry.
This restructuring could potentially provide Zepto with the flexibility and scalability to compete more effectively with its rivals. Moreover, the new marketplace model is expected to allow the company to better leverage its platform to drive further growth, especially as it eyes international expansion and increasing consumer demand.
Zepto’s strategic shift toward a marketplace model with the creation of Zepto Marketplace Pvt Ltd marks a crucial milestone in the company’s preparations for its IPO. By moving away from its current B2B model, Zepto aims to streamline its operations and improve transparency for investors.
This restructuring will also help the company better compete with established rivals like Blinkit and Swiggy Instamart, both of which have embraced the marketplace approach. As Zepto diversifies its offerings and expands its seller base, it is positioning itself for long-term growth in the rapidly expanding quick-commerce market.
With the launch of new services and potential international expansion, Zepto is laying a strong foundation to secure its place among the industry leaders in the coming years.