Intro:

Zepto is a 10 minutes groceries delivery app that is currently functioning in 9 cities in India (Metro and Tier 1). Having been started by during the Covid Lockdown to facilitate grocery delivery at home, they have come a long way now.

Zepto has its own delivery fleet and dark stores - stores that are able to store, retrieve and manage around 7000 SKUs with breath-taking speed of execution and efficiency. These dark stores are strategically located in Zepto's region of operation to facilitate end to end order fulfillment in under 10 minutes. Zepto became a Unicorn in 2023.

Ready for Acquisition?

Yes!

Product selection framework:

What does the product solve for?

• Inconvenience of visiting a market/ kirana store/ super market and time spent in the same
• Top-up and last minute consumable needs, even at late nights and early mornings

What is the core value prop?

• Instant Gratification
• Convenience and time saving

Convenience and super fast delivery of groceries and other day-to-day items at a slight premium

What are some product insights?

• Super fast delivery - under 10 mins in most areas
• Pricing a bit higher than market rates (Zepto favours branded products. Rates of its non-branded counterparts, that are available in the market, are lower)
• Minimum Order value (INR 200) for free delivery
• The product has the capability to fundamentally alter consumer behavior by removing the need to plan purchases
• Zepto has around 25% market share in grocery quick commerce space but only around 1-2% market share in overall e-grocery space in India
• Zepto is the fastest growing quick commerce app in India
• Zepto has around 6700 SKUs, highest in the industry - where second largest is of Swiggy (~4700 SKUs)
• AOV ~ INR 400, with ~2,70,000 orders processed per day
  [#]

[#] https://www.moneycontrol.com/news/business/lower-burn-longer-delivery-time-what-zeptos-pitch-deck-reveals-about-quick-commerce-space-11201331.html

Users

Insights:

• Most users are price sensitive - Delivery cost, price of goods
• Most users are delivery time sensitive (they will switch app for faster delivery) - ~10-15 mins is a tolerable wait time for most
• Not very comfortable in buying fruits and vegetables:
  - Quality and freshness concern
  - Minimum order quantity of vegetables high - leading to high leftovers and wasteage

These insights were derived after talking to 9 customers (quick commerce apps) and 2 non-customers

Link to the user survey calling sheet - https://docs.google.com/spreadsheets/d/1tOsa4yk44F8YBjcqUo5oLQqMeIVF2-XRDONjeRxQgSI/edit#gid=0

Taking into account the insights from user survey, facts about Zepto and the Indian consumer behaviour norms, the following can be the 5 broad ICPs for Zepto:

ICP Prioritization:

Zepto being in the early growth phase, we will prioritize our ICPs as follows:

The ICPs have been prioritised basis their adoption speed, frequency of purchase, appetite to pay, TAM and Distribution potential

ICPs of interest:

1. Shreya - The College Student
2. Ram - The Busy Bee
3. Anjali - The Juggling Mother

Market:

ICP: Ram - The Busy Bee

• As mentioned in the ICP table above, Ram would typically look for groceries for his top-up or last minute needs. This can include following search keywords:

Note: The pull intent is largely dominated by existing grocery delivery players in the market (non quick commerce). This indicates that there is awareness in the market about grocery delivery services.

TAM

Top down approach:

-Everyone needs groceries (140 Cr) x Internet penetration (~50%) = 70 Cr

-These would be the total market reach that could ideally be addressed by Zepto's solution

-Avg per capita spend on groceries in India is around INR 35,000 (1).

Thus, the TAM = 70 Cr x INR 35,000 = $0.3 Trillion

(1) Source: https://www.statista.com/statistics/1222355/india-grocery-spend-per-capita/

SAM

Basis the current coverage of its service and insights gained during user research, the following constraint shall apply for calculating SAM:
- Metro and Tier 1 cities (currently operational in Delhi, Chennai, Gurgaon, Bangalore, Mumbai, Hyderabad, Pune, Noida, Kolkata, Ghaziabad) - Population = ~9.1 Cr (Source: Census 2011)
- People who are willing to pay a slight premium for the convenience (people in the mid to high income bracket) and are also our ICP = ~ 30% of people in cities

The average per capita spend on groceries is higher for this segment (~ INR 50,000)

Thus, SAM = 9.1 Cr x 0.3 x 50k = $15.6 Billion

SOM

- Right now, quick commerce is mainly used for Top-up and Unplanned purchases (~66% of all grocery purchases) [1]
- Market share of Zepto in quick commerce space (~25%) [2]

Thus, SOM = $15.6 Billion x 0.66 x 0.25 = $2.57 Billion

[1]https://redseer.com/report-viewer/?report_link=https://redseer.com/wp-content/uploads/2022/12/quickcommercereport-p1-31-26sept21-v6-210930032738.pdf

[2]https://www.moneycontrol.com/news/business/lower-burn-longer-delivery-time-what-zeptos-pitch-deck-reveals-about-quick-commerce-space-11201331.html

Channel Strategy

Organic:

Based on the insights about our ICP, the following would be our keywords of interest:

Since Zepto is in the early scaling stage, ease of implementation and scale potential become important. However, since most of the keywords giving quicker results do not have high scale potential and those that have it are more time consuming, we will be using the "best of both worlds" approach here:

We can further experiment with more specific use-case based keywords (eg: diapers, tissue papers, tomatoes etc) which are more aligned with being last minute/ top-up orders.

Referral:

Brag worthy thing:

Grocery Delivery in under 10 mins

Platform Currency:

Discounts - As discovered during customer research, the market is price sensitive when ordering groceries. Hence, discounts act as a good platform currency.

Who to ask for Referral:

The "AHA" moment in the product journey is when the user places the order and sees the <10 mins delivery timer ticking. The user would have already completed the order flow and would also have some spare time at this moment. These users would be best suited to target for sending a referral.

How will user discover? Communication and Design?:

The existing referral discovery screen of Zepto is well placed - on the same screen as the timer - and the messaging is apt as well

How will they share? Communication and creative?:

WhatsApp is the most widely used app across our ICPs. Hence we can continue to use the same as the primary mode of sharing referrals. Apart from WhatsApp, the referral link can also be sent via other communication channels/ apps in the users device.

How will they track?:

A referral tracking dashboard in the app: Zepto already has a dashboard for this. However, it lacks transparancy - I do not know what is the status of my referrals. After making relevant changes to the dashboard, it can look as below:

On clicking on each referral, they can see the coupon code and its status (redeemed/ available etc)

Invite look and feel for the non-user:

The invite will be a WhatsApp based/ other communication channel based invite that will directly take the non-user to the playstore to download the app. The look and feel will be as seen in the WhatsApp invite in the "How will they share? Communication and creative?" section above.

Encourage to continue referring:

Showing how much he has saved due to referrals and the next milestone. Eg. Earn 1000 Rs a Zepto cash on 10 referrals. Zepto already has this in place.

Paid Ads:

LTV = AOV x margin x Frequency x Retention
= 400 x 5% x 3 times per week x 5 months (20 weeks) [For our ICP, based on user research]
= INR 1200

Assuming an average CAC of INR 300 (based on external references)

CAC/ LTV = 300/1200 = 1/4

Since Zepto is in a very competitive market, has high customer retention and CAC/ LTV of 1/4, paid ads do make sense.

Since Zepto is in the Early scaling stage, we will experiment with various hypothesis and iterate if needed. The goal is to discover what will work the best for us - something which we can double down on.

Channel selection:

The goal is to optimize for higher scale, lower effort and more flexibility. So we will go with channels that have maximum scale for our ICPs.

Hence, the following channels will be prioritised:

1. Google Search
2. Google Youtube
3. Instagram

Audience selection and Ad:

Ad Creatives

Instagram Ad:

Target ICP for this Ad: Ram - The Busy Bee

Google Search Ad:

Target ICP for this Ad: Anjali - The Juggling Mother

Budget Allocation:

40% in High Scale and Low effort channel (Instagram), 30% in Medium scale and low effort channel (Youtube) and 30% in High scale and medium effort channel (Google Search ads)

Product Integration

The following products can be the sources of intent creation to buy groceries:
- Youtube/ Instagram/ Facebook (cooking videos) - the creators can display a QR code at the end of the video. On scanning the QR, relevant items automatically gets added in the Zepto cart. Similar implementation for cooking shows like masterchef can also be experimented with.
Incentive for the partner: The content creators can then be given a referral based incentive.

- Mygate (cook has checked in to your society).
Incentive for the partner: Addition of the Zepto CTA on being notified of the cook having reached will increase the engagement of Mygate for the partner. It will also complement the offering on mygate by making it a more comprehensive and helpful app. We can also think of some incentive based partnership on successful order placement

- Ola/ Uber (reminder to buy groceries when going back home in a cab)
Since Ola and Uber have a high customer base, the partnership with them will have to be incentive based, where for each order completion we can give some incentive/ revenue share to them for order lead generation

ICP : Anjali - The Juggling Mother

Anjali loves trying out new receipes she comes across on Youtube. On platforms like Youtube and Instagram, there is a huge market of content creators who regularly post cooking videos.

Zepto can be integrated with the products of these content creators - their cooking videos. At the end of the video, the creators can display a QR code. On scanning the QR code, the user will be prompted to downloaded the Zepto app. And on launching the app, the Cart screen will open up with all the ingredients needed fo the recipe already added to the cart in its required quantity. Users can choose to remove the items they might already have some stock of. They can then proceed to directly order the needed items without much visiting nearby grocery stores or having to manually add items to the cart. In 10 mins, they will be cooking!

Market estimation for this product integration:

In India, a ball park number of total video views of these content creators (food recipe) can be estimated to be around 3 Cr per year.

Assuming ~10% views from here are from Metro/ Tier 1 areas, relevant views = 30 L

Further assuming a 5% conversion and AOV of INR 300, total opportunity from this integration = INR 4.5 Cr

Integration Flow:

User side:

A QR code will be displayed by the content creator during the most relevant part of the video (where the intent to prepare the dish is high)

On scanning the QR code - the app will directly open with the below cart (Post Download and signup for 1st time user; directly for existing user) :

Content creator/ partner side flow:

1. Creation of a Cart (with items that will be needed for the recipe)
2. Generation of a QR code that is mapped to the Cart
3. Ability to share and download the QR code

Prioritizing integrations discussed above:

Content Loops:

Background: Since there are strong competitors in the market, we need to figure out our footing and differentiation.

Hypothesis: All our ICPs are educated and socially aware groups of people who have an idea of what enables Zepto to deliver the aha experience for them - The delivery partners. Given the hard work the riders put in to enable this 10 minute fulfillment of their grocery needs, it is natural to feel some gratitude towards them. We can use content loops to make this more apparant.

Experiment:

Upload stories of riders (background stories/ touching order delivery instances/ delightful customer sharings) on instagram -> Customers engage with the stories (like/ comment/ share) -> Customers are encouraged to share similar stories of the riders/ their experience