India’s quick-commerce sector is now at a new turning point. Zepto’s preparations for an initial public offering (IPO) worth about $1.3 billion have brought the sector under the direct scrutiny of the public market. As soon as Zepto is listed, the country’s three largest quick-commerce companies Zepto, Blinkit and Swiggy Instamart will be present in the stock market. While this will make the competition more intense, the scrutiny of investors and the market will also become deeper than before.
Transparency will increase in public market
Market experts believe that after Zepto’s IPO, it will be difficult to avoid questions regarding expenses and profits in this sector. Till now these companies were expanding rapidly on the basis of private funding, but after becoming a public company, every data will be in front of the investors. Store-level profits, time taken to get money back from dark stores and demand from deep discounts will all now be monitored openly.
Zepto IPO: Big Bet
Four-year-old Zepto could become the youngest venture-capital backed company ever to enter the stock market. The company has raised funding of about $2 billion so far. In a recent big round alone, hundreds of millions of dollars came into the company’s account. Zepto is planning to raise about Rs 11,000 crore more through IPO, so that it can keep itself strong in the rapidly increasing competition.
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Already listed players are also in the field
Zepto is not alone, in the last one year Swiggy has raised a huge amount through IPO and QIP, while Blinkit’s parent company Eternal has also already raised funds from the public market. Blinkit is currently considered to be the biggest player in this sector, but Zepto and Instamart are growing fast behind it. In such a situation, the fight for market share between the three is going to intensify.
Growth leads to profit war
The faster the quick-commerce business looks from outside, the more expensive it is from inside. Opening new dark stores, creating fast delivery infrastructure and offering offers to woo customers, all cost a lot of money. Experts say that the patience of investors in the public market is limited. If there is no clear picture of profit along with growth, then pressure on companies will increase.
Increasing competition, increasing challenge
Big e-commerce companies like Flipkart and Amazon have also ventured into 10-minute delivery. Due to this, the field of quick-commerce has become even more crowded. New stores will open next year, spending will increase and the competition to attract customers will intensify. It can be said that Zepto’s IPO is not just the listing of one company, but a test for the entire quick-commerce sector. Now it will be interesting to see how well this business model of fast delivery can withstand the strict scrutiny of the public market.