Something seems amiss at Zepto. In a matter of days, the quick commerce giant went from raising a massive $450 Mn to laying off 200-300 employees. Besides, it plans to continue trimming its workforce till the end of the year.

At a cursory glance, the two developments seem at odds. However, underneath the equation lies an uncomfortable truth — the massive funding is less of a victory lap and more of a lifeline for the company.

Amid a slowdown, Zepto has been restructuring operations and deferring its IPO (initially planned for this year). With the fresh funding, the startup plans to claw back its market share and expand aggressively once again.

But, how difficult is it going to be for the startup that is valued at $7 Bn to claw back its position otherwise lost to the likes of Blinkit and Instamart? Now, before we answer that, here’s how Zepto, which raised around $2 Bn in just three years, lost its footing in the first place.

Has Zepto Lost Its Mojo?

The answer to this lies in its diversification bets. The company tried to move beyond groceries with Zepto Cafe, a quick snack delivery vertical. But after an initial splash, the cracks began to show.

Growth plateaued, and orders started shrinking. Founder Aadit Palicha, who was once vocal about the vertical’s quarterly performance on social media, has gone silent since February this year.

The startup has since shut down over 50 outlets across multiple cities. The order volumes have halved from a peak of 1 Lakh daily.

Zepto faced another setback when chief experience officer (CXO) Shashank Sharma, who was overseeing Zepto Cafe operations, quit last week to join Foodstores, a move that insiders interpret as a signal that Zepto Cafe is no longer a strategic focus.

According to a person aware of internal developments, several senior-level leaders have exited Zepto Cafe while more cafes are being shut each month.

Adding to the challenges, the rise of Swish and competition from Bistro and Snacc further chipped away at Zepto Cafe’s market share. This has forced Zepto to rethink its vertical strategy and consolidate operations.

Zepto’s other experiment, Zepto Medicine, has also struggled to find its footing. After scrapping its first launch last year over supply chain issues, the service re-emerged in August in limited........

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