The Rise of Zerodha

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Everyone wishes to explore trading but many hesitate due to lack of knowledge, high commission and brokerage charges, or the uncertainty in the market. To solve these problems, Mr. Nithin Kamath, along with his brother Mr. Nikhil Kamath, founded Zerodha, a Bangalore based discount broking firm, in the year 2010.

Zerodha’s initial motive was to provide a reliable, user-friendly platform through which investors can trade by paying discounted brokerage fees. It has been successful in accomplishing its motive, as a result of which, today it is the number one broking firm in India having the largest active client base.

Origin of Zerodha

Mr. Nithin Kamath had been trading in stock markets since he was 17 years old. After trading for over 10 years, he decided to become a broker and realised that the time had come to provide a different kind of stockbroking services. He thought of starting Zerodha when he felt that digitization and an online user-friendly platform were the need of the hour.

Back in 2010, many youngsters were interested in the idea of trading but were not willing to do so because of the hefty brokerage charges. The founders of Zerodha targeted those young clients by providing online broker services using the latest technologies.

The Sanskrit word ‘Rodha’ means obstructions. Hence, Zerodha means ‘zero obstructions’ which reflects the firm’s vision to provide a hassle-free, low brokerage trading platform.

Zerodha’s Success Formula

Zerodha focuses more on improving its services rather than promoting itself. The firm hardly spends any money on advertising. It believes in ‘word of mouth’ as a promotional tool which helps it to attract a large number of customers with a very low cost.

For equity delivery trades and direct mutual funds, Zerodha doesn’t charge any brokerage. It makes money by simply charging a flat Rs. 20 or 0.03% per trade (whichever is lower) for futures, options and intraday trading. The maximum brokerage that Zerodha’s clients pay for any transaction is Rs 20 regardless of size, amount or segment.

Zerodha works on the business model of ‘low margin-high volume’. This combination of comparatively lower margin from a large number of traders leads to huge revenues. Furthermore, its unique online design allows it to operate at low cost which leads to high profits.

By pioneering the discount broking model, Zerodha has been successful in outperforming Upstox, Groww, and its other competitors. Its client base has increased to over 6 million and around 15% of all Indian retail trading volumes takes place through Zerodha. It will be exciting to see what new heights the firm is able to reach!

Sources

  1. https://tradebrains.in/zerodha-success-story/
  2. https://yourstory.com/2020/04/product-roadmap-online-brokerage-zerodha-evolution/amp
  3. https://www.businessinsider.in/advertising/brands/article/zerodha-has-been-growing-100-month-on-month-during-the-lockdown-without-any-direct-marketing-nikhil-kamath-tells-us-how/articleshow/77068381.cms
  4. https://zerodha.com/about/
  5. https://www.analyticssteps.com/blogs/success-story-zerodha

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