The Twenty Minute VCQ-Commerce in Emerging Markets with the CEOs of Airlift, JOKR, & Zepto | 20VC #892
CHAPTERS
- 0:00 – 3:20
Founders’ a‑ha moments: why each CEO started quick commerce
Harry opens by asking each CEO for the “a‑ha moment” that led them into quick commerce. Usman frames Airlift as solving an acute pandemic grocery-delivery pain; Ralf frames JOKR as fixing global procurement/supply-chain inefficiency; Aadit explains Zepto’s pivot was data-driven, with sharp retention and NPS gains once delivery times dropped under 15 minutes.
- •Airlift: pandemic-driven need for fast, reliable grocery delivery
- •JOKR: opportunity in vertically integrating inefficient procurement/supply chains
- •Zepto: experimentation + data showed 2–3x retention gains and NPS >85 with faster delivery
- •Better freshness, control over quality, and larger assortment emerged as key advantages
- •The conversation sets up unit economics and ops themes for the rest of the episode
- 3:20 – 5:10
Why emerging markets can be the best quick-commerce battleground
The discussion moves to the macro case for emerging markets. Usman argues the path to profitability is more straightforward due to lower labor costs and the ability to build higher-assortment models that drive stronger AOVs.
- •Emerging markets can reach free cash flow faster than many Western analogs
- •Lower wage structures materially improve unit economics
- •Assortment strength can drive higher AOV, lowering cost as % of revenue
- •Profitability speed shapes how large a business can be built over decades
- •Sets up “pros vs cons” comparison with the West
- 5:10 – 9:17
Density, shopping habits, and low retail penetration: structural tailwinds
Aadit and Ralf add additional “emerging market advantages.” Aadit emphasizes population density and existing high-frequency grocery habits, while Ralf highlights low supermarket/convenience penetration and fragmented offline shopping—creating demand for a one-stop, fast alternative.
- •“Density is destiny”: higher urban density enables far higher orders per dark store
- •Rent and last-mile costs can be a smaller % of revenue at scale in dense areas
- •India’s frequent grocery-buying habit boosts natural adoption and frequency
- •Emerging markets often lack ubiquitous supermarkets/convenience stores
- •Fragmented offline trips (market + supermarket + convenience) make one-stop platforms compelling
- 9:17 – 16:07
The hard parts: infrastructure volatility, fresh complexity, and building elite ops teams
The group flips to challenges. Aadit describes infrastructure unpredictability (roads, flooding, routing) and the difficulty of standardizing fresh supply. Usman emphasizes talent and “acquired intelligence” required for operational excellence; Ralf stresses the challenge of meeting supermarket-level assortment while building supply chain capability from scratch.
- •Infrastructure issues create day-to-day operational volatility (routes, weather, roads)
- •Fresh categories are essential but harder due to inconsistent supplier standards
- •Operational excellence is a decisive advantage; building the right team is non-trivial
- •Customers demand comprehensive supermarket-like assortment, not just top-ups
- •Emerging markets require building procurement + supply chain, not only last-mile UX
- 16:07 – 19:21
Choosing warehouse sites & network design: local sourcing + microhubs with DCs
Harry drills into warehousing and real estate decisions. Ralf explains why local procurement is rising (customer demand + sustainability) and why networks must combine microhubs/dark stores with larger distribution centers to enable replenishment and direct supplier relationships.
- •Local brands/products are increasingly important; shorter supply chains improve sustainability and economics
- •Microhubs alone aren’t enough—combine with larger distribution centers for replenishment control
- •Vertical integration enables direct work with producers/farmers
- •Network design is tied to assortment breadth and availability reliability
- •Local procurement can unlock materially higher margin pools in some markets
- 19:21 – 23:44
Procurement margin strategy: fresh as both retention and margin engine
The conversation deepens on procurement margins and assortment choices. Aadit and Usman describe why fresh categories anchor customer behavior and can deliver 40–50% buy-sell margins when sourced directly—if wastage is controlled—supported by vertically integrated farm-to-fork supply chains and high inventory turns.
- •Fresh (F&V, meat, bakery, milk) drives frequency and retention in India/Pakistan
- •Direct sourcing can produce 40–50% buy-sell margins in fresh at scale
- •Wastage control is critical; Zepto claims wastage 350 bps below offline benchmarks
- •Speed and supply-chain rigor improve freshness and quality consistency
- •Usman’s procurement efficiency levers: buy local, consolidate via DCs, maximize inventory turnover
- 23:44 – 30:50
Picking & fulfillment economics: what the numbers look like and how to improve
Harry pushes for transparency on picking costs and operational levers. Ralf, Aadit, and Usman share picking and blended (picking + last mile) cost ranges and discuss how automation, density, stacking, AOV growth, and labor planning can reduce costs.
- •JOKR: picking ~2–3% of revenue; blended delivery+picking ~12–15% trending to ~10%
- •Zepto: picking ~3–3.5%, blended ~10–11%; mature stores can push picking toward ~2.5–2.7%
- •Airlift: picking ~3–4%, delivery ~6–7% (blended ~10–10.5%), targeting ~7%
- •Key levers: scale/density, order stacking, warehouse automation, and better capacity planning
- •Usman reframes costs as outputs; inputs are labor efficiency (orders/hour) and idle time
- 30:50 – 37:29
Delivery fees: when to charge, how users react, and AOV vs adoption tradeoffs
The panel debates delivery-fee strategy as a major economic lever. Aadit argues fees can be layered after early user maturity with minimal churn; Ralf downplays fees as a “concept of the past,” preferring basket building and inclusive pricing; the discussion ties fees to rider productivity and throughput.
- •Zepto: introduce fees after early orders; mature users show minimal drop-off, slight frequency decrease offset by higher AOV
- •Faster delivery can lower last-mile cost by increasing orders per rider-hour
- •Ralf’s stance: focus on basket building/AOV; fees risk capping adoption and skewing to higher-income segments
- •Possible hybrid: fee below a minimum basket size to encourage larger baskets
- •Pricing strategy is intertwined with positioning as a true retail alternative, not just convenience
- 37:29 – 41:58
Average Order Value (AOV) and the real North Star: gross profit per order
Harry asks for AOV levels and how they evolve. Usman shares Airlift’s AOV and argues assortment and DC networks drive higher baskets; Aadit cautions AOV alone is low-nuance and pushes gross profit per order as the better metric; Ralf shares notably higher AOVs in LATAM markets.
- •Airlift AOV (Jan): ~$9.20 vs local benchmark ~$6; attributed to assortment + replenishment infrastructure
- •Zepto mature-market blended AOV ~ $6; emphasizes category mix affects AOV and margin differently
- •Aadit: optimize for gross profit per order, not AOV, especially with high fresh penetration
- •JOKR group AOV ~ $25; mature areas see $35–$40 baskets (more “grocery” than “top-up”)
- •AOV tends to rise with customer maturity; basket building is a profitability engine
- 41:58 – 46:45
Two models debate: ultra-fast vs slower delivery—capital intensity and density requirements
Usman proposes a split between ultra-fast, low-AOV models and slower, higher-AOV models, claiming the former needs extreme density and capital. Aadit counters that faster delivery can actually improve economics via higher fresh penetration, better throughput, and lower per-order labor costs—especially in very dense Indian cities.
- •Model framing: 10–15 min delivery often correlates with lower AOV; 30-min models can target higher AOV
- •Usman: ultra-fast/low-AOV can be profitable but requires far more density and capital
- •Aadit: faster delivery can reduce last-mile and packing cost via higher orders/hour and better throughput
- •High-density cities can support 3,000–4,000 SKUs while maintaining 10-min promise
- •The real optimization depends on category penetration, margins, wastage, and operational throughput—not AOV alone
- 46:45 – 59:58
Retail media & advertising: a new profit lever in emerging markets
Ralf introduces JOKR Media and argues retail media is unusually powerful in LATAM due to limited targeting options in existing channels and restrictions on out-of-home ads. Usman and Aadit share their monetization levels and expand the concept beyond ads to include brand-funded discounts and off-invoice margins.
- •JOKR: retail media launched recently; ~5% of revenue in month one; aims for 10–15% near term
- •LATAM context: limited geo-targeted online ad inventory + OOH restrictions increases advertiser demand
- •CPG dominance in LATAM raises competitive spend appetite
- •Airlift: currently ~1.3–2% ad revenue; cites Delivery Hero ~3% benchmark; believes can grow materially
- •Zepto: ~4% of revenue from brand monetization (ads + off-invoice + brand-funded discounts), targeting ~5% soon; argues proximity to purchase drives high value
- 59:58 – 1:06:15
Quick-fire closing: myths, market structure, naming, cash-flow timelines, and West vs EM differences
Harry ends with a quick-fire round on core takeaways. Usman argues the biggest myth is that quick commerce has inherently broken economics; Aadit predicts a few winners driven by operating excellence; Ralf wants a rebrand to “e-commerce 3.0” and highlights vertical integration; the finale contrasts Western vs emerging markets through the lens of supply-chain inefficiency and direct procurement.
- •Misnomer: economics aren’t inherently doomed—multiple viable paths to profitability (especially in EM)
- •Market outcome: not winner-take-all, but a small number of strong operators will emerge
- •Reframe: “quick commerce” is really e-commerce 3.0 (speed + personalization + vertical integration)
- •Cash flow: timelines depend on density needs and model choice; Airlift targets broad FCF within ~6–9 months in first market
- •Biggest West vs EM difference: severity of supply-chain inefficiency and the margin unlocked by going direct
