In the second part of a conversation, Aadit Palicha, co-founder and CEO of Zepto, speaks about navigating controversies—from hygiene concerns in dark stores to experiments with delivery fees that sparked debate. Palicha reflects on what went wrong, how the company responded, and why transparency and customer-centricity remain non-negotiable.
He also speaks about the conviction that led him to bet on quick commerce in India, the unique consumption patterns that make it work, and the next phase of growth—from scaling non-grocery categories to unlocking deeper wallet share among existing customers. Palicha discusses Zepto’s advertising model, why visibility doesn’t guarantee sales, and how large FMCG brands dominate ad revenues while smaller D2C players struggle to scale.
Part 1: We do not raise funds because people like my smile: Zepto’s Aadit Palicha
A college dropout, he also speaks about the role of product-market fit in that choice, and how he continues to learn as a young leader—without formal training—by surrounding himself with experienced mentors and throwing himself into the deep end.
Edited excerpts:
Q. How do you deal with questions about hygiene issues in dark stores?
I think that situation was a bit blown out of proportion. There was an honest misunderstanding, and by the time we could clarify it publicly, it was too late.
The expired product that people were talking about in one of our stores wasn’t actually in the sellable section. In our stores, we have a sellable section and a non-sellable section. The non-sellable section is where we move products that have expired. For example, if bananas go bad, we move them to the expired bin.
What happened was that someone took a photo of the non-sellable section—the expired bin—and claimed it was being sold to customers. But that wasn’t the case. We weren’t selling it, and that’s why the store was reopened within a couple of days.
When the audit was done, the store was found to be in a pretty decent state. We also conducted audits across dozens of our stores in Maharashtra, and overall, our operational processes were found to be up to the mark.
So that incident was more of a media thing. And when the inspection was completed, it was deemed a false alarm.
Q. And what about dark patterns?
I think we ran experiments on delivery fees and pricing—we tried different approaches and figured things out. A lot of it wasn’t received well on social media or by consumers, and honestly, much of the feedback was valid.
There wasn’t any regulatory angle to it—it had nothing to do with government intervention. We just felt it wasn’t the right thing for consumers. The feedback was negative so we voluntarily decided to roll it back. Within 45–60 days, we had addressed it and moved on.
Things like the expired product issue were a bit blown out of proportion. But the dark patterns concern was something we genuinely could have solved—and we did. I’ll be candid: It was a mistake. We killed it. It won’t happen again.
Q. That’s wonderful—you’re not in denial, and you’re not making excuses.
Absolutely. We want to be a customer-centric company. When we started getting consistent negative feedback from consumers, we realised this isn’t who we are. So we killed it. It’s been gone for a while now. Even though you might still see some remnants online from the past, it’s mostly done.
Q. You have decided to pretty much dedicate your career towards quick commerce. Was there something that told you it was going to work here?
So primarily it was customers, right? Like when we started this service in Bandra four years ago, the customer delight was just incredible. I personally delivered orders to people's doorsteps. You can see the spark in their eye. And that is far more conviction than a business journalist or an investor or an industry stakeholder... like all of that is important, but the most important opinion is the customer's opinion.
And so the customer basically came and told us that, 'Hey, we love doing this'. We are used to buying our grocery multiple times a week. India is a fairly unique consumption ecosystem where 80 percent of household spend happens within a 3km radius of the average house. That doesn't exist.
If you go to the US, it's exactly the opposite. It's like a suburban style of retail and consumption. You drive down to the local Walmart, you pick up a huge lot of grocery, you come back home and you store it in your pantry.
Grocery in India needs to be hyper local. It needs to be multiple times a week at your doorstep, and that's why, eventually, in hindsight, it worked. But at the beginning, what gave us conviction was that consumers just love the service, and that was more than enough evidence for us to say we should keep doubling down on this.
Q. In terms of scale coming in the future, some reports suggest that when it comes to high value items, there is a bit of dissonance with quick commerce. One because, you know, a lot of people are promising laptops, MacBook, etc. in 10 minutes, and iPhones, but apparently the cost of delivery in quick commerce is much higher, three to four times compared to regular commerce, and the return rate is higher in the high value items. Is that a roadblock?
Actually, contrary to what you might expect, our return rate for apparel is about a third or a fourth of standard e-commerce benchmarks. If you look at categories like electronics, apparel, general merchandise, and cosmetics—18 months ago, they barely existed on our platform. Since then, they’ve scaled dramatically and continue to grow. In fact, we expect them to grow about 1.5x faster than the overall platform over the next 12 months.
We’re seeing strong traction in categories like toys, hoodies, earphones, keyboards, and high-value cosmetics—Estee Lauder recently launched with us, for example. We feel very good about these segments.
On smartphones and laptops, a couple of things. First, on cost to deliver—candidly, based on conversations with scaled D2C brands doing a few hundred crores on Amazon or Flipkart, the feedback we’ve received is that our CODB (cost of doing business) is quite competitive.
In fact, we’ve heard the opposite—that our CODB is more competitive. Quick commerce has 1,000 dark stores, so while the working capital overhead is higher, the cost to deliver is lower because delivery distances are shorter. The challenge is that it’s working capital intensive, not P&L heavy.
In Photos: Behind the scenes of Zepto's 10-minute delivery
We’re solving that by aggregating inventory in clusters. For example, if we have 10 dark stores in Andheri, instead of stocking all 10, we’ll stock 2–3 and show availability across all 10. That way, we reduce the number of units needed from the brand while maintaining coverage.
So yes, we’re optimising that. But we don’t think CODB is a problem. We could scale smartphones—not to Amazon or Flipkart levels—but to a reasonable volume. It’s just a matter of prioritisation.
Smartphones are also working capital intensive and not high-frequency or high-repeat purchases. From a customer perspective, we don’t see a strong need there. That’s why we haven’t gone aggressive. We do sell a few hundred phones a day—around 300—but that’s not a lot. It could scale 3–6x easily, but it’s not a priority right now. If you put a phone on a shelf and have footfall, it’ll sell. But it’s not a focus area.
Q. When you look ahead at future growth impetus for quick commerce in general, which areas do you think will be the big ones for future growth?
Right now, we’re seeing meaningful growth in our existing markets. Even our metro cities grew over 150 percent last year, and we believe that momentum will continue. My thought process is that the biggest way to unlock scale in quick commerce today is by increasing wallet share from our existing consumers.
Over the last 12 months, we focused aggressively on customer acquisition because our base was relatively small—just 5 million customers. The incumbents had a much larger funnel of new users. Now that we have more than doubled that base, and the scale is quite meaningful, we’ll continue acquiring customers organically. But we don’t need to go all out anymore—we don’t have to put the pedal to the metal.
We’ll get a baseline rate of organic acquisition anyway. The focus now is on increasing spend per customer—unlocking more wallet share.
That means expanding selection, adding more use cases to the platform, and figuring out how to pass more value back to the consumer over the next 12 months. Can we operate with lower fees and prices? Can we reduce friction on the platform? Can we structurally bring more people onto the platform by offering lower prices and fees? To do that, we need to lower our cost structure—make it lean enough to afford passing on that value to the consumer. That’s the thought process.
Q. We’ve heard that companies are spending a lot of money on advertising but the revenue they are generating is not that much. Is that true?
Look, there are a lot of small brands trying to get off the ground—new brands building from scratch—and they often rely heavily on ad spend to gain scale. But the platform can’t guarantee scale.
At the end of the day, the consumer isn’t buying your product because the price point is too high, or the cataloguing isn’t right, or the pack size doesn’t work, or the quality isn’t excellent. The consumer ultimately makes that decision.
What we can guarantee for advertising spend is visibility. You’ll be front and center in your category. For example, if you’re selling a feminine hygiene product—say, pads—and you bid on keywords like ‘pads’ or ‘period’, we’ll make sure you appear as close to the top of search results as possible.
But if the consumer still doesn’t choose your product because the price is 2x the average, or the quality isn’t right, or the cataloguing doesn’t effectively communicate the value, then our ads business can’t solve that. What we do guarantee is visibility, impressions, top-of-mind presence, and strong search rankings.
That said, the vast majority of our advertising revenue comes from large, established brands—Coca-Cola, Unilever, Pepsi, Procter & Gamble. These companies already have excellent, tried-and-tested products, and we help accelerate their revenue growth by bringing new customers into their funnel.
Of course, there are dozens of small D2C brands that have tried to build their brand from scratch on Zepto, and it hasn’t worked out for various reasons. But in absolute terms, that’s a relatively small part of our revenue. These small brands make up only single digits of our ad business.
Q. How do you look back at dropping out?
I think I have a very boring answer. I think people think that KV [Kaivalya] and I took some crazy decision and dropped out on a whim, not a whim... a big conviction, big idea.
We took a year off from college for a gap year. First, took that year, built the business to a point where we found product-market fit. And when the PMF was there, that's when we really started going for it.
So the decision to drop out of college fully was in a place where we already had a pretty good thing going with our business. Before that we had not fully dropped out yet.So we had the first year 2020 to 2021, up until we had found PMF in that dark store in Bandra. And we started seeing scale, and we started seeing customer love, and we were getting capital to keep scaling. That was when we said, okay now we are at a point where actually we can go all in and drop out.
Q. So are you saying that if the product-market fit had not been discovered, you would have gone back to college?
I think you should always have product-market fit. I mean, I tell people that all the time that you don't have anything until you have product-market fit, at an early-stage startup. There is nothing there. So if you drop out without a product or a service that is actually adding value to consumers, then you're just dropping out randomly. Then you're just deciding that I don't want to go to college, which is also a different thing, but then you need to be clear that you don't have a business. You're just dropping out on a whim.
Dropping out was more a thought-out decision than an impulse decision... It was not like, 'Let's go for it', 'crazy stuff, we'll see what happens’.
Q. Were your parents okay with it?
No, they were not okay, not initially. But now they're okay with that. KV's mom was very upset with me with for a year or year-and-a-half. She was pretty upset. But now she’s fine.
Q. There is some value to completing college, which is why people do 100 percent but as the leader of a large and growing company, and being answerable to investors, and soon, when you go public, that thing will increase in terms of addressing all these regulatory things and shareholders. How do you add to your skills and learning as a leader? Do you do this consciously while on the job?
I think the biggest blessing I've had is that I'm surrounded by people far more intelligent and experienced than I am, particularly our leadership team, and also our board that are just well-intentioned, good faith people.
They keep pushing me to be better and to learn. Mostly, I proactively, like most of what I do during a day is just learning, right? I sit with, let's say, our finance team or our category team or our growth team or an ops team, and I say, okay, these guys are brighter than I am, and I want to learn what they're doing to see where I can add value or give an input or help unblock something, but I basically just learn from them. So everything I know about the inputs of our business have come from our team, and I've just been lucky with such an excellent team to have gotten there.
Q. You've never felt the need for any formal course or training, or getting a CEO coach or something like that?
Not really. I think the best teacher is action. I’ve always thrown myself into the deep end and said, ‘I have to figure this out’. If something is critical for the company, I can’t let it be held back because of a personal gap in my skills. I have to learn and solve it.
Q. You’ve mentioned being younger than some of your interns. In a corporate world where youth is often equated with inexperience, how do you establish credibility as a leader and ensure your voice is taken seriously?
I think the best way of doing it is just to show results, right? You know you bring together a good team, you're able to add value and input conversations. You're actually setting the team in the right direction. So people can see that you're actually adding value, when you know what you're doing, when you're making sense. Then all these superficial things sort of fall away.
If I was young and had no idea what I was doing and I was in a meeting and saying random stuff, then no one would have any credibility in that. But that would be true even if I was 45, right? So that's the kind of culture at Zepto. To an extent, at least, whatever said and done, it's very substance-oriented. So we try to do our homework, know what we're doing, get into details, discuss things rationally. We're not infallible, but mostly that's what we try to do.
Q. How do you avoid founder burnout?
I’m very lucky to be in the position I am, and I feel I should give it my all. I love what I’m doing, and I’m surrounded by wonderful people. The way I avoid burnout is simple: I genuinely enjoy the work and the people I work with. I find it fun, so it doesn’t feel overwhelming. Honestly, I don’t think the workload is that crazy—it’s about 70–80 hours a week, but that’s manageable.
Back in 2021–22, things were much tougher. In the early days—the first 7–8 months—we were working 90–100 hours a week. That was intense. I’ve personally worked harder then than I do now. But even that wasn’t unprecedented; I’ve seen people work harder.
I’ve also seen CEOs of excellent companies in India, twice my age, consistently put in 60–70 hours a week and love what they do without a fuss. So I don’t feel like this is difficult. It’s sustainable—especially because I love what I’m doing.
Q. How do you look at your journey so far—the ups and downs, the good and not-so-good?
I feel incredibly grateful to have been on this journey. I consider myself one of the luckiest people to have had the opportunity to build an incredible service in an incredible industry, alongside people who are much brighter than I am—and I get to learn from them every day. So I’m grateful for that, and honestly, just excited for the next 20 or 30 years of doing this. If I had to sum it up in one word, it would be: Grateful.
Q. What one thing do you feel less grateful for in your journey so far?
Of course there are rough patches—that’s part and parcel of life. There are lots of ups and downs, and most of the challenges are internal things we have to solve on a day-to-day basis. But overall, I’m content and grateful.
All the curveballs that come your way when building a company—they’re really just learning experiences. You can either victimise yourself and say, ‘Oh my God, life is so hard’, or you can say, ‘This is an opportunity to learn and grow’. I haven’t always done that, but lately, that’s been my mindset, and it’s helped a lot.
So yes, there have been hardships, but in the long run, they’ve been net positive. And the great, amazing things about doing this are 10x more than the difficult things we have to solve every day.
First Published: Nov 14, 2025, 13:49
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