Zepto’s cash burn has increased to Rs 250 crore ($30 million) in the last two months amid increasing competition in the quick commerce segment. This increase in cash burn comes at a time when Zepto has raised Rs 2,500 crore from high net worth individuals (HNIs) in India. Actually, the company intends to keep reserve funds to compete with its rivals.
Sources familiar with the matter told Moneycontrol that in May this year, Zepto’s monthly burn was in the range of Rs 35-40 crore, which has increased more than 6 times in the last 3 months as the company made improvements in operations, digital marketing and hiring. Investment has increased.
Zepto’s cash burn picks up pace
Sources said that in September the company’s cash burn was Rs 250 crore, while in October this figure was Rs 300 crore. It is likely to remain around Rs 300 in November also. This time also coincides with the annual festive season in India, which is the busiest quarter for e-commerce. Zepto’s CEO and co-founder Adit Palicha has also confirmed this. He said, ‘More than 70 percent of our existing stores have touched the EBITDA profit mark. The capital we are spending is mainly for capital expenditure, working capital and set-up related to launching 100 new stores per quarter.
According to sources, Zepto is spending aggressively on digital marketing and performance marketing. Also, it is spending money to buy keywords on Google and Meta.
Keywords, increase in talent cost
“Keyword buy rates have increased in the last one month because Zepto’s bids are very high,” a source told Moneycontrol. Some companies have stopped spending on it because it doesn’t make sense to acquire customers at this rate. Zepto is spending approximately Rs 120 crore per month on digital marketing and is the leading app in its category. This can be understood by looking at its download on Play Store.
