Zaaroz Delivery App Expands Reach in Tamil Nadu's Tier II/III Towns with Innovative Subscription Model

Zaaroz, an all-service delivery app, was launched in 2018-2019 by founders Ram Prasath V.T. and Jayasimhan V., who returned to their hometown of Chidambaram, Tamil Nadu, after two decades in Singapore. They aimed to tap into the demand for delivery services in Tier II and III towns, where such apps were largely absent.

Initially gaining traction in Chidambaram and expanding to Vridachalam, Zaaroz saw a significant surge in demand during the pandemic. Despite numerous local apps entering the market, Zaaroz maintained an edge by expanding its services to 30 towns around Cuddalore and subsequently to 20 more, reaching a total of 50 destinations before strategically pausing expansion. The founders, with expertise in ERP software development, focused on strengthening the technology and software underpinning their operations.

Zaaroz initially operated on a commission model, charging businesses 15% in Tier II towns and 10-12% in Tier III towns. However, they observed that high commissions and hidden charges by major players often led to price mark-ups for customers and reduced profits for merchants. To address this, in April 2025, Zaaroz transitioned to a monthly subscription model, charging Rs 3,000 plus GST for larger businesses and Rs 1,500 plus GST for smaller ones. This model mandates transparency, including zero price mark-ups and online menu listings, creating a win-win situation for businesses and consumers.

Zaaroz has automated many operations, from assigning delivery partners to managing customer queries. They have also introduced features like self-pick-up and scheduling to cater to diverse customer needs. The company uses e-bikes for its delivery fleet to reduce costs and ensure efficient, low-risk deliveries.

Future plans include expanding to Tier IV towns, introducing cost-effective B2B procurement of FMCG products, and potentially raising funds for an IPO after two years of profitability, with a vision to enter Tier I and metro cities.

Impact: This news is significant for the Indian startup ecosystem and the e-commerce delivery sector. Zaaroz's success in smaller towns and its innovative subscription model offer a potential blueprint for other companies looking to serve these markets. It highlights a shift towards more sustainable and transparent business practices, impacting competition and potentially lowering costs for consumers and improving margins for local businesses.

Impact Rating: 7/10

Difficult Terms: ERP (Enterprise Resource Planning): Software systems that help manage and automate core business processes like finance, HR, manufacturing, and supply chain. Tier II/III Towns: Cities or towns categorized by population size and economic activity, following Tier I metropolitan areas. FMCG (Fast-Moving Consumer Goods): Everyday products like packaged foods, toiletries, and cleaning supplies that are sold quickly and in large volumes. IPO (Initial Public Offering): The process where a private company sells its shares to the public for the first time, becoming a publicly traded entity. GST (Goods and Services Tax): A consumption tax levied on the supply of most goods and services in India. B2B (Business-to-Business): Transactions conducted between two businesses. SOP (Standard Operating Procedure): A set of step-by-step instructions for carrying out routine operations.