Quick-commerce company Zepto is preparing for its next phase of growth as it moves closer to a potential public listing. The company is now focusing on high-margin private label products, a strategy aimed at improving profitability and supporting a higher valuation ahead of its expected IPO.
Industry observers say this shift could help Zepto target a valuation of up to $15 billion in the coming years, provided it can improve margins and show sustainable growth.
Why Zepto Is Shifting Strategy Before IPO
Zepto built its reputation on 10-minute grocery deliveries, competing with other quick-commerce players in India’s fast-growing online grocery market.
However, the quick-commerce model involves high operational costs. Expenses related to warehousing, logistics, discounts, and marketing have made profitability a challenge across the sector. To address this, Zepto is increasing its focus on private label products, which typically offer higher margins compared to third-party brands.
Private labels allow companies to control pricing, sourcing, and branding, which can lead to better profitability.
What Are Private Labels and Why They Matter
Private labels are products that are manufactured by third parties but sold under the company’s own brand name.
In the quick-commerce sector, these may include packaged foods, snacks, beverages, household essentials, and personal care products. These products usually offer higher margins because companies avoid distributor costs and gain more control over pricing. For a company preparing for an IPO, improved margins can make a significant difference in investor perception.
Zepto’s Growing Private Label Portfolio
Zepto has been expanding its range of in-house brands over the past year.
The company has introduced private labels across multiple categories, including ready-to-eat snacks, packaged groceries, and daily household items. These products are often priced competitively to attract customers while still offering better margins than third-party brands.
Industry estimates suggest that private labels could eventually contribute a significant share of Zepto’s total revenue.
The Financial Logic Behind the Shift
Quick-commerce companies operate on thin margins due to intense competition and high delivery costs.
Private labels can help by increasing profit per order, giving better control over supply chains, reducing dependence on external brands, and improving customer loyalty. By improving its margins, Zepto can present a stronger financial profile to investors ahead of its IPO.
Targeting a $15 Billion Valuation
Market discussions suggest that Zepto could aim for a valuation of up to $15 billion over the next funding or IPO cycle.
This would represent a significant increase from earlier valuations and would place the company among India’s most valuable consumer internet startups. However, such a valuation will depend on revenue growth, profitability metrics, market share, and unit economics.
Private label expansion is seen as a key step toward achieving these goals.
Competition in the Quick-Commerce Sector
Zepto is not alone in this strategy.
Major rivals in the quick-commerce space are also focusing on private labels to improve margins. The sector has become highly competitive, with companies trying to balance fast delivery with sustainable economics.
Key competitive factors include delivery speed, product variety, pricing, and private label strength. Companies that can improve margins while maintaining fast delivery are likely to gain an advantage.
How Private Labels Affect Customers
For customers, private label expansion can have both benefits and trade-offs.
Advantages may include lower prices, exclusive products, and better availability. However, customers may also compare these products with established brands before making a purchase decision. If the quality matches expectations, private labels can build strong customer loyalty.
The Role of Dark Stores in the Strategy
Zepto operates through a network of dark stores, which are small warehouses located close to residential areas.
These stores enable quick deliveries and also play a key role in private label distribution. Benefits of using dark stores for private labels include faster restocking, better inventory control, and higher availability of in-house products. This setup allows Zepto to push its private label products more effectively.
Investor Expectations Ahead of IPO
Investors are increasingly focusing on profitability rather than just growth.
In recent years, several startups have faced pressure to show sustainable revenue growth, controlled spending, and a clear path to profitability. By focusing on private labels, Zepto aims to improve its financial metrics and meet investor expectations.
Risks in the Private Label Strategy
While private labels offer higher margins, they also come with risks.
Key challenges include quality control issues, supply chain disruptions, customer trust and brand perception, and inventory management. If customers do not accept the products, the strategy may not deliver the expected results.
Quick-Commerce Market Growth in India
The quick-commerce sector in India has grown rapidly over the past few years.
Factors driving this growth include urban lifestyle changes, demand for convenience, rising smartphone usage, and expansion of digital payments. The sector is expected to continue growing, especially in major cities.
What the IPO Could Mean for the Sector
A successful Zepto IPO could have a broader impact on the quick-commerce industry.
It could set valuation benchmarks, attract more investors to the sector, increase competition, and accelerate innovation. Investors will closely watch how the company balances growth with profitability.
Key Numbers to Know
Zepto is aiming for a potential valuation of up to $15 billion in the coming years. Private labels are expected to play a major role in improving margins before the IPO. The quick-commerce sector continues to expand rapidly in India, driven by urban demand and digital adoption.
The Bottom Line
Zepto’s shift toward high-margin private label products marks a major strategic move ahead of its potential IPO.
By improving margins and reducing reliance on third-party brands, the company hopes to strengthen its financial profile and target a valuation of up to $15 billion.
The success of this strategy will depend on customer acceptance, operational efficiency, and overall market conditions as the company moves closer to its public listing.
Disclaimer: The information presented in this article is intended for general informational purposes only. While every effort is made to ensure accuracy, completeness, and timeliness, data such as prices, market figures, government notifications, weather updates, holiday announcements, and public advisories are subject to change and may vary based on location and official revisions. Readers are strongly encouraged to verify details from relevant official sources before making financial, investment, career, travel, or personal decisions. This publication does not provide financial, investment, legal, or professional advice and shall not be held liable for any losses, damages, or actions taken in reliance on the information provided.
Last Updated on Thursday, February 12, 2026 11:19 am by Startup Magazine Team
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