Zepto Monetization Project
Fast grocery delivery app
Product
Zepto is a startup based in Mumbai that offers a 10-minute grocery delivery service. Aadit Palicha and Kaivalya Vohra launched Zepto to provide customers with ultra-fast grocery delivery. Specializing in delivering groceries before the turn of a year is what Zepto is hailed for. It has worked with 86+ dark store owners in thirteen different areas in 2021, generating over one million deliveries. To fulfill orders promptly, Zepto employs its network of 'cloud shops' or micro-warehouses.
Company Highlights
- Legal Name : KiranaKart Technologies Private Limited
- Headquarters : Mumbai, Maharashtra, India
- Industry : Delivery Service, Grocery Delivery, Quick Commerce
- Founders : Aadit Palicha, Kaivalya VohraFounded : 2021
- Valuation : $1.4 billion (August 2023)
Competitors
There are many businesses that compete with Zepto and have already been driving fast-paced delivery of groceries like:
1. Swiggy Instamart
2. Big Basket
3. Blinkit
4. Dunzo
The Users:
Retention:
Palicha(Founder) claims that month-over-month growth is 200%, with a monthly retention rate of /78%.
Deeper Engagement
Users | Casual | Core | Power |
Age | 20-45 | 25-35 | 25-40 |
Gender | M/F | M/F | M/F |
Marital Status | Married/Unmarried | Married/Unmarried | Married |
Location | Tier 1 | Tier 1 | Tier 1 |
Time & Money Spent | Instagram, Youtube, OTT, Amazon, Swiggy, Whatsapp, Sports, Grocery, Home services, Restaurants/cafe, Rent | Instagram, X, Youtube, OTT, Amazon, LinkedIn, Whatsapp, Swiggy, Shopping, Children, EMIs, Grocery, Home services, Gym/Yoga/fitness/Sports | Instagram, Youtube, OTT, LinkedIn, Amazon, Whatsapp, Swiggy, Bigbasket, Travel, Children, Restaurants, Rent, Grocery, Home services |
Living with | Family/Bachelor | Family/Bachelor | Family |
Frequency of orders on Dunzo | 2 times a month | 2+ times a week | 6+ times a week |
Key competitors for wallet share in the category | Hypermarkets, Supermarkets, Kiranawala, Swiggy, Dunzo BigBasket, Blinkit, Milkbasket, Licious, 1Mg | Hypermarkets, Supermarkets, Kiranawala, Swiggy, Dunzo, BigBasket, Blinkit, Milkbasket, Licious, 1Mg | Hypermarkets, Supermarkets, Swiggy, Dunzo, BigBasket, Blinkit, Milkbasket, Licious, 1Mg |
AOV on Zepto | Rs 150 - 300 | Rs 200 - 400 | 600 |
Price sensitivity | High | Medium | Low |
Perceived value | Convenience and reliability. | Convenience, speed, and reliability. | Convenience, speed, and reliability. |
% of users | 45% | 30% | 25% |
/Willingness to Pay
Casual | Core | Power | |
How much would you pay for the product? | Rs 10 - 20 per order | Rs 20 - 30 per order | Rs 30 - 40 per order |
Would you pay for this just once or on a recurring basis? | - Recurring, for the occasional need. | - Recurring. Frequency is higher than Casual users and would prefer some sort of loyalty program with one-time payment and benefits though. - Users will build larger cart value to cut down on extra fees. | - Recurring, as perceived value is high. - Would prefer some sort of loyalty program with one-time payment and benefits. |
What would make you pay more | -Better pricing. | - Better availability of SKUs. - Better pricing. | - Wider range of SKUs. - fast delivery - Better availability |
Based on all 3 sections above, we can conclude that the product is ready for monetization.
Competitors / Substitute Pricing
The core problem solved by Zepto:
Solves for the convenience (time) and efficiency (effort) gap in people's daily lives. Users are primarily buying into the convenience (time) and efficiency (effort).
Substitute way | Flexibility to use | Physical effort | Time Taken for User & Delivery | SKU availability | Pricing | Core users |
Swiggy Instamart/Dunzo/Blinkit/bbnow | High | Low | User - Low Delivery - Low | Medium | SKUs - Medium Delivery/fee - Low (min basket size) | Working professionals (25-40) |
BigBasket/ | Medium | Low | User - Low Delivery - High | High | Low-Medium | Working professionals (25-40) |
BBdaily/Milkbasket | Medium | Low | User - Low Delivery - High | Medium | Medium | Working professionals (25-40) |
Supermarket/Hypermarket | Low | High | User - High Delivery - N/A | High | Low-Medium | Working professionals (35+), Housewives, Senior Citizens |
Supermarket/Hypermarket home delivery | Low | Low | User - Medium Delivery - High | High | Low-Medium | Working professionals (35+), Housewives, Senior Citizens |
Kirana store/Store in apartment/Street vendor nearby | Medium | Medium | User - Medium Delivery - N/A | Low-Medium | Low-Medium | Senior Citizens, Housewives, College students, Teenagers |
Pricing Design
RFM Analysis
Segment | Frequency/month | AOV | Last Used | Services used | Should we charge? |
Champions | 10+ | 600 | 1-4 days back | Instant delivery, store purchases, courier | Yes |
Loyal Customers | 9+ | 600 | 5-10 days back | Instant delivery, store purchases, courier | Yes |
Potential Loyalists | 6-8 | 500 | 1 - 7 days back | Instant delivery, courier | Yes (need to be smart about it) |
Can’t Lose Them | 10+ | 625 | 11 - 20 days back | Instant delivery, store purchases, courier | No |
Need Attention | 7-8 | 520 | 8-10 days back | Instant delivery, courier | No |
At Risk | 8-10 | 550 | 11 - 20 days back | Instant delivery, store purchases, courier | No |
New Customer | 1-2 | 200 | 1-4 days back | Instant delivery, courier | No |
Promising | 1-2 | 200 | 5-7 days back | Instant delivery, courier | No |
About to Sleep | 1-3 | 250 | 8-10 days back | Courier | No |
Hibernating | 1-3 | 250 | 11 - 20 days back | Courier | No |
We should definitely charge Champions and Loyal Customers as their perceived value and willingness to pay is high. Potential Loyalists can also be charged but the willingness to pay is lower for them.
When to charge
Active user for Zepto A user who has ordered at least 2 times in the last 1 month.
Perceived value is generally high at,
- Checkout
- Post order delivery (on time + quality)
What to charge for
As we have seen earlier, convenience (time) and output (effort) are what are valued most by Zepto customers.
- Convenience (time) - Charge for the distance and travel time per order
- Output (effort) - Charge for the service and effort put in to deliver an order. Extra charges on rainy days, and mid night orders.
Delivery fee = distance and travel time + Charge for the service and effort
Surge pricing = Rainy days, and mid night orders.
- Attract new customers (activate them)
- Charge for delivery/handling (till the user is activated) at checkout, at prices similar to the competition while ensuring that unit economics at near break even. There is a willingness to pay while it may be low-medium.
2. Convert customers to Champions and Loyal Customers
- Charge for delivery/handling (after the user is activated, perceived value is good) at checkout, at prices similar to the competition while ensuring that unit economics at break even. Surge pricing at checkout can be used to capture higher willingness to pay.
- Provide a loyalty program (tired subscription) which will mean no extra/fluctuating delivery charges at each checkout. The program will be explicitly pitched once the user is activated.
3. Continued business from Champions and Loyal Customers
- Charge for delivery/handling (after the user is activated) at checkout, at prices little higher than the charges for the above set of customers.
- Provide a loyalty program (tired subscription) which will mean upfront payment of a larger sum, helping with cashflow. The program will be explicitly pitched on the first screen and post order placement.
- Provide subscription for popular items so that users don’t have to place repeat orders. They will be delivered as per the subscription. Prior planning and clubbing of such orders will help reduce delivery costs for Zepto. Users will pay more for the reduced effort. Charge the users on the day of delivery before the order is packed with auto payment via Zepto cash/pay later etc. This will include delivery and convenience charges
How much to charge.
Grocery or other essential needs:
Persona (Working professionals 25 - 40) | Avg earning/hour | Avg Time Saved x Perceived value of time saved, per order | Perceived Effort | Frequency/month | Perceived Value vs Perceived Price, per order | How much to charge per, order |
New user - bachelor | Rs 800 | 20 mins x 1x = 20 mins | 1.5x | 2 | Rs 400 vs Rs 10 40x | Rs 10 |
New user -married | Rs 1000 | 20 mins x 1.25x = 25 mins | 1.25 | 2 | Rs 520 vs Rs 15 35x | Rs 10 |
Recently Activated user - bachelor | Rs 800 | 20 mins x 1x = 20 mins | 1.5x | 3 | Rs 400 vs Rs 15 27x | Rs 15 |
Recently Activated user - married | Rs 1000 | 20 mins x 1.25x = 25 mins | 1.25 | 4 | Rs 520 vs Rs 20 26x | Rs 15 |
Champions/Loyal Customers - bachelor | Rs 800 | 20 mins x 1x = 20 mins | 2x | 9 | Rs 540 vs Rs 30 18x | Rs 30 |
Champions/Loyal Customers - married | Rs 1000 | 20 mins x 1.25x = 25 mins | 1.5x | 10 | Rs 625 vs Rs 35 18x | Rs 4 |
loyalty program will change this pricing for subscribed customers.
How to show pricing:
Zepto is a high-frequency product as well as low AOV. The buying experience needs to be quick. System 1 design should be used for Zepto.
1. Landing Screen
- The time to delivery is a key value prop and shown upfront. 6 mins is fast compare to any other player.
- As per my history recommendation, really help to order quickly.
- In order to show the loyalty program to users (as per the criteria mentioned earlier), the hero image can be a carousel to show this.
- The hero image could help communicate effort saved which is the other key thing users are looking for.
Checkout Screen
- Strikeout effect (scratched pricing) is used in the first screen for the product.
- The time shows here which is great, reenforcing the potential time saved for users.
- The loyality program is missing in the zepto which can be used here in this screen like Instamart, to make core user power users subScription program can be used.
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