Zerodha Business Model | Transforming the Way You Invest

The recent game-changer financial services company in the Indian stock broking industry is Zerodha. It was established in 2010 by two brothers, Nithin Kamath and Nikhil Kamath. After its inception, it has bamboozled the traditional age-old brokerage model and offered low-cost services, the latest advanced technology, and over-the-top customer services. Today, Zerodha has become the most desired platform for several traders and investors. 

Besides, Rahul Malodia guides entrepreneurs, startups, students, individuals, and homemakers to start earning through online marketplaces and provides them with the strategies to succeed in their businesses.

Everything About Zerodha Business Model  

Keep reading this blog, in which we’ll discuss Zerodha’s business model, strategy, Zerodha revenue statistics, and how it has conquered its competitors. 

Zerodha: Founders and Team

Zerodha was founded by Nithin Kamath alongside his brother Nikhil Kamath in 2010. It is one of the country’s largest online broking firms. The company’s gross profit in FY 2022 was INR 2,094 crore, and the revenue amounted to INR 4964 crore. Zerodha is a USD 2+ billion unicorn company in India with a fun fact: the company is entirely self-funded, i.e., bootstrapped. 

At present, Zerodha employs more than 1100 people. It works in a hybrid mode. A recent statement by the co-founders stated that around 80-90% (950 employees) will work from home regularly. 

Zerodha: Mission and Vision

Zerodha’s motto is to believe in forming a world without brokers. This ideology will enormously aid the stakeholders in the financial markets.  Also, the company aims to provide low-cost trading services and the best customer service experience per an individual’s tailored needs.

The mission of Zerodha is to create a brokerage-free world by leveraging technology, invention, and on-top customer support.

Target Audience of Zerodha

Zerodha’s target audience is people of Delhi, Pune, Bengaluru, and Hyderabad, who are in the average age group of below 30-35 years. The main focus is on this age group because they are new to their jobs, have already had initial savings from their salaries, and are looking for better investment options to increase their incomes. 

The incredible services and products of Zerodha have gained over 1+ crore clients who place millions of orders daily by creating an influential ecosystem.

Business Model and Revenue Model of Zerodha

Zerodha’s business model is based on the motto ‘low margin and high-volume target.’ Zerodha charges a very minimal amount of INR 20 per trade for equity and derivatives to the traders for transactions, regardless of the trade size. For commodity trading, the brokerage fee is 0.03% of the valued transaction. This minimal fee charged from additional clients leads to a significant hike in Zerodha's revenue. 

Another factor for the company’s high-profit margin is its operational costs. Zerodha has lower charges than other brokers because it is an online structure, which results in lower operational costs.

Since its license approval from SEBI in 2021, Zerodha can also offer services like mutual funds. After the approval, Zerodha also launched its asset management company, another crowning accomplishment.

Zerodha Marketing Strategy

So comes another major point about how Zerodha became so popular with its threshold marketing strategy. 

Zerodha had a single aim to give its clients technology-efficient and cost-effective assistance. Many youngsters were skeptical about stock investments because of the higher brokerage commissions and their unawareness of the stock exchange. 

Kamath’s brother felt the need to change this notion and to bring this change and fetch youngsters, they built up a service that didn’t need any prior technical experience. 

Not only this, but to attract more customers, they offered to bring a service that no one could escape. They started to educate young minds about stock trading and bring transparent pricing models.

The company is built around its loyalty. They don’t believe in spending huge amounts on advertisements and referrals, but their major focus is brand credibility and loyalty toward its customers. 

How Does Zerodha Make Money?

‌‌Zerodha is India’s greatest trading network, with the most active users. People from all over India, especially in metro cities, are familiar with using Zerodha for investing and trading. Zerodha makes money through brokerage fees of only INR 20 (0.03%) for every future option and intraday trade. Zerodha’s revenue is generated through other services to its customers, like mutual funds, commodities, bonds, and IPOs.

However, the brokerage charge is relatively low as the number of daily transactions, and the company still gains enough profit margin. 

For the account maintenance fees, the company charges INR 300 annually.

Over the last two years, Zerodha has seen exponential growth in the business; this upshot is a 2% contribution of investors in the stock exchange, which boosts the company’s revenue. 

In 2010, Zerodha Franchise opened its doors to serve customers.

Additionally, they’ve achieved enormous progress in significantly less time. 

With this overall revenue source, Zerodha has raised the company’s valuation to USD 1 billion. At present, the valuation of Zerodha is USD 3.3 billion.

Zerodha Kite app (Zerodha App for mobile users) is a smart investment and trading platform made for modern spans. It is an outstanding, ground-breaking innovation delivered with superior usability. 

Zerodha Kite app (Zerodha App for mobile users) is a smart investment and trading platform made for modern spans. It is an outstanding, ground-breaking innovation delivered with superior usability. 

The Zerodha Kite app offers retail investors and traders a medium to invest in shares, commodities, mutual funds, currencies, etc. You can download the app on Android and iOS mobiles, which is user-friendly and accessible for traders to buy and sell securities in a single go. 

Zerodha Kite App Features 

• Zerodha Kite app is famous for its low-pricing model, i.e., the company levies a flat fee of INR 20 per trade, irrespective of the trade size. This low-cost model has made Zerodha a one-stop option for investors and traders.
• You can also get a wide range of tools, such as real-time market study, charting tools, and technical know-how. This can help traders to make rational decisions and execute trades more efficiently. 
• Another important feature of this app is its integration with other sister products like COIN and VARSITY. Coin is a mutual fund investment platform that allows users to invest in a number of funds without any fees.
• On the other hand, Varsity is an educational platform to get market insights on trading and investing. This can help users with more information about trading. 

All in all, the Zerodha app is an exceptional platform for investors and traders who deal in stocks. Zerodha products are the first choice amongst beginners as well as experienced professionals. 

How is Zerodha Dominating its Competitors?

When it comes to Zerodha, it is distinctive from its competitors because of its approach to educating its users first. Zerodha does not emphasise stock recommendations like a full-fledged brokerage outlet. When new users visit their site, they need to learn the ABCs of trading.

Also, Zerodha has outpaced its competitors because of its par excellence customer service, low-cost model, and visionary technology. 

With its Kite app,  Zerodha offers clients a seamless and intuitive trading experience by making purchasing stocks, commodities, and currencies easy and convenient.

Zerodha’s initiatives include Coin, a mutual fund platform, and Varsity, which was introduced in 2015 and developed to provide education concerning trading and investment.

In 2019, Varsity App introduced the Hindi version for its users, making it more centric towards Hindi-speaking people.

Another reason why Zerodha is reaching the sky is because of the company’s devoted team members who are helping clients with any trading-related queries. They are very much proactive towards resolving customer issues and following the feedback from the clients, which has helped them build a very loyal and dedicated customer base.

Similarly, unlike other broking companies, Zerodha co-founders do not levy any charges for distribution or trading. They only retain the 10% profit margin from the investment.

Overall, Zerodha is one of the most attractive options for traders and investors, dominating its competitors and skyrocketing in the trading world.

Conclusion: 

Zerodha provides investors and traders with a platform to invest in stocks, commodities, currencies, and mutual funds. The mission of this company is to provide low-cost services and transparent trading to its investors. 

It is the most trusted brand for traders in India, and its success is attributed to its versatile technology, low-pricing model, and unparalleled customer support. In short, Zerodha is the largest stockbroker in India, with over 1+ crore clients contributing to over 15% of all retail order volumes in India daily by trading and investing in:

• Futures and Options
• Currency derivatives
• Commodity derivatives
• Direct mutual funds
• Bonds and Govt. Securities
• Stocks & IPOs

Rahul Malodia, one of the best business coaches in India, can help businesses create a perfect strategy like Zerodha, aiming to align with your business, help expand it, and resonate with your target audience. 

Malodia can help you identify your competition, develop a business strategy, and define a better brand identity for your brand to stand out. 

FQAs 

Who are the Top Competitors of Zerodha?

Zerodha’s top competitors in the brokerage industry are Groww, Angel One, Upstox, 5paisa, and ICICI Direct Securities. 

What is Zerodha’s Revenue?

India’s largest stock broking platform, Zerodha, had a profit of INR 2094 crore in FY 2022.

What is Zerodha’s Customer care number?

Zerodha’s customer care number is 08047181888. You can reach out between Monday to Friday from 8:30 AM – 5:00 PM

Who is Zerodha’s Owner?

Nithin Kamath and Nikhil Kamath