ZERODHA BUSINESS MODEL
In this blog, I will share the business model of Zerodha…
Stock Market is a world of games and Zerodha has been an abiding player for the past ten years. Zerodha Broking Ltd. is an Indian company which is a member of NSE, BSE, MCX, MCX-SX, and imparts financial services like brokerage facilities, a platform for trading, Mutual Funds and Bonds, and trading of commodities at low prices. The company was established in 2010 and its headquarters is in Bengaluru. It is the largest retail stockbroker in India with 2,474,663 active clients.
ZERODHA’S BUSINESS MODEL ?
Zerodha was one of the first companies in India to offer brokering services, which gives them a “first-mover advantage”. The ideal mantra for their success is that it works on the concept of discount. The company provides discount broking which means they charge low brokerage or minimal transaction fees as compared to other brokers. This attracts a lot of customers, generating revenue in high volume. This is one of the main reasons for such a heavy client base which is more than 1 million. Also, the Operational Cost of the company is also low as compared to other stockbroker companies. The reason behind low Operational Cost is its online structure which reduces the cost. It’s a digital platform with all features like biometric, Console widgets, ChartIQ, instant status update and push notifications have made the process easy going and cost-effective.
OTHER FACTORS CONTRIBUTING TO THE BUSINESS MODEL –
The company is now counted in the list of top volume contributors because it has an average daily turnover of Rs 10,000 crores. There are other factors also which attracts clients in a heavy amount –
• It also gives add on advantages to new traders and investors in equity by opening their Demat Account instantly with Aadhar Card.
• The company also offers “zero brokerage charges or no brokerage charges” on Equity delivery transactions.
• A Rs 20 or 0.01% is charged per transaction of Intraday Equity and Equity Futures.
• They charge Rs 20 only per order on all Equity services.
• The charges for opening a Demat Account is Rs 100 only which is quite reasonable.
• The charges for Account Maintenance is Rs 300 per year.
TOTAL REVENUE OF THE COMPANY
Zerodha is leading the online stock trading market with a maximum number of clients. A ten-year-old company has managed to surpass big companies like HDFC Securities, Motilal Oswal, ICICI Direct, Sharekhan, and Kotak Securities. Around, 2 million trades per day have been recorded on their platform which generates a revenue of more than 15 lakhs per day. It’s the only source of revenue is the transaction fee charged to the clients which go a maximum of Rs 20. The secret behind this progress is its exclusive discount strategy. Also, they gained massive popularity and high profits due to advanced technologies. The company also has won several awards like Economic Times Startup Awards 2016, Emerging Equity Broking House Award in 2014, and Retailer Broker of the year in 2018.
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