How Zepto Is Turning Grocery Orders Into a High-Margin Ad Business

When most people think about Zepto, they think about 10-minute grocery delivery, dark stores, and the rapid growth of quick commerce in India. But alongside the grocery business, another part of Zepto has been growing much faster and could become very important for the company’s future profits.

Zepto’s advertising revenue jumped from just ₹49 crore in FY24 to ₹1,636 crore in FY26, according to its IPO prospectus. That is a 33x increase in just two years. This shows that Zepto is gradually becoming more than just a grocery delivery app.

This matters because grocery delivery usually operates on thin margins, meaning companies keep only a small profit from each order. Advertising, however, is a much higher-margin business. In simple words, groceries bring users to the app, while advertising is increasingly helping Zepto make stronger profits from those users.

The Profit Engine Behind Zepto’s Growth

Here is what happened to Zepto's ad revenue across three years, per its updated DRHP:

• FY24: ₹49 crore (just 1.11% of total receipts)
• FY25: ₹651 crore (a 1,224% jump year-on-year)
• FY26: ₹1,635.7 crore (another 151% growth, now 7.78% of total receipts)

Zepto's overall operating revenue doubled between FY25 and FY26. But ad revenue grew 2.5 times faster. The advertising business is outpacing the core delivery business.

Here is why this matters: grocery retail operates on 3-5% gross margins. Digital advertising operates at 70-80% gross margins. So even though ad revenue is roughly 7% of Zepto's total receipts, it is contributing a disproportionately large share of gross profit. The small slice is doing very heavy lifting.

How Zepto Is Turning Shopping Data Into Profits

To understand how Zepto is building an advertising business, it is important to understand what 10-minute grocery delivery creates at scale: a massive stream of real-time consumer data.

Every order tells Zepto what people bought, what they searched for but did not buy, which brands they preferred, and which locality they live in. Now multiply that across 47.97 million active users in FY26, up from just 10.57 million in FY24.

The real advantage is how this data deepens over time. A new Zepto user typically shops across 2-3 product categories in the first month. Within a year, that rises to more than 12 categories, and within two years, over 18. Over time, Zepto starts understanding a household’s daily buying habits across multiple products within a specific neighbourhood.

Traditional digital platforms usually know what users search or watch. Zepto knows what users actually purchased. For brands, that is extremely valuable because it gives direct insight into real consumer behaviour at a local level. That becomes a strong competitive advantage.

What Zepto Is Actually Selling to Brands

By FY26, 2,468 brand partners were actively spending on Zepto’s platform. But they are not just paying for simple banner ads. They are paying for direct access to real consumer buying behaviour.

Zepto Atom, launched in May 2025, gives brands neighbourhood-level sales and market share data within their category. For example, a shampoo brand can see which localities are buying more of its products and where competitors are gaining market share.

Zepto GPT takes this a step further. It is an AI-powered tool that lets brands ask questions in simple language and get answers directly from Zepto’s shopping data. This helps companies track demand trends, improve campaigns, and identify fast-growing areas without needing large analytics teams.

Zepto has also started selling ad space to companies that do not even sell products on its app, including brands like AU Small Finance Bank and CRED. The order-tracking screen, where users wait for deliveries, is now becoming valuable advertising space for brands trying to reach active consumers.

Why Brands Are Increasingly Spending on Quick Commerce Ads

According to the Redseer Report cited in Zepto’s DRHP, brands on quick commerce platforms are generating a Return on Ad Spend (RoAS) of 5-8x. In simple words, for every ₹100 spent on ads, brands are generating roughly ₹500-₹800 in sales.

The biggest reason is timing. Zepto ads reach users when they are already planning to buy something, not when they are casually scrolling through content. In many cases, the gap between seeing an ad and making a purchase is just a few minutes.

This makes quick commerce advertising far more effective than many traditional digital ad platforms. As long as brands continue getting strong sales from these ads, advertising spends on platforms like Zepto are likely to keep growing.

How Advertising Revenue Helps Zepto Keep Prices Low

Zepto has been steadily lowering delivery charges and reducing commissions from sellers to remain price-competitive. In a normal business, that would usually hurt profitability. But Zepto has been able to offset part of that pressure through its fast-growing advertising business.

Despite lower fees and aggressive pricing, Zepto’s gross profit stayed stable at 18.56% of net receivables in FY26. This is part of its Everyday Low Prices (EDLP) strategy, where the company keeps prices attractive to drive higher customer usage.

In simple words, grocery delivery helps Zepto attract and retain users, while high-margin advertising revenue helps support the economics behind those lower prices.

Also Read: Inside Zepto’s ₹8,000 Cr IPO: 5 Crucial Insights Investors Should Know

The Key Risks Behind Zepto’s Advertising Model

The business model is strong, but it also comes with risks.

Zepto’s advertising revenue depends on brands continuing to see strong sales from the platform. If brands start getting lower returns on their ad spending, they may reduce marketing budgets. The reported 5-8x Return on Ad Spend (RoAS) is a key reason brands are spending heavily today.

Zepto also handles large amounts of consumer purchase data. Any major data privacy issue or tighter government regulations around digital advertising and consumer data could affect user trust and limit how this data is used.

Notably, Zepto had earlier received a notice from the Central Consumer Protection Authority (CCPA) over alleged “Disguised Advertisement” and “Drip Pricing” practices. This shows that regulatory scrutiny around its digital business practices is already increasing.

Final Take

Zepto is now running two businesses inside the same app. The first is grocery delivery, which helps the company attract users, increase order frequency, and collect consumer data. The second is digital advertising, a much higher-margin business that is becoming increasingly important to the company’s economics.

This model is not entirely new. Amazon built a similar advertising business on top of its shopping platform, and other quick commerce players like Blinkit are also moving in the same direction. But Zepto’s 33x growth in advertising revenue within just two years shows how quickly this business is scaling.

For retail investors, delivery metrics help explain Zepto’s current scale and growth. But the advertising business may be more important for understanding the company’s future profitability potential.