Zerodha Success Story - The Zero Factor in Trading

23rd March 2020; the day the stock market hit its low for a long time. The panic, the tension, the cries all these emotions were experienced by the traders and investors. Covid-19 pandemic had taken over the market and this marked the entry of new investors, desperate for money for their livelihood.

Around 10 million DEMAT accounts were newly opened by investors in 2020. The opportunity was grabbed and money was made because soon after in few months the market showed stellar recovery. But did you know this wasn’t the only stock market crash of the 21st century? Back in 2008, the stock market drastically marking the biggest global financial crisis. This was the time when young traders, like Mr. Nithin Kamath, lost a significant amount of money. But this article is not about what traders lost but about what gem they found, Zerodha.

Mr. Nithin Kamath, the trader who lost his money saw the need to introduce the millennial traders to trading platform which cater to their need of digitalization and cost-effectiveness. This trading platform was named Zerodha and was founded in the year 2010. The ‘rodha’ in the name means ‘obstructions’ and the zero factors the no brokerage fees on the trades. Earlier, investors used to buy stocks in the market due to hefty fees but the company changed the utter scenario, making it win-win for all the young traders.

From stocks to currency to bonds, one has it all in Zerodha. And with a ‘Low margin and high-volume model’, the platform was successful to create a large customer base.

The other factor for the success of Zerodha was time. It was the first broker to introduce zero brokerage fees and this certainly gives them an edge. And in recent times, we have seen many new brokers like Angel- broking, Up-stox, Groww emerge into the same business, where they provide research and advisory facilities to their clients, Zerodha’s customer base remains intact.

Being one of its kind helped this platform to grow without any advertisements. The CEO Mr. Nithin Kamath strongly believed in word of mouth and honestly, this strategy has done wonders for the company. With no to the low cost of advertisement, the profitability of the firm increased and it paved the way for the young entrepreneur to generate a net worth of $1.55 billion.

Additionally, the company also launched many other apps to provide a full-fledged stock market experience to its consumers. Few popular ones are:

• Kite: This is the ultimate platform for NSE and BSE trades. It includes options, futures, and MCX trading as well.
• Coin: A separate platform for people who believe in systematic investing and who prefer mutual funds over individual stocks.
• Console: This platform keeps all your investments be it Mutual funds, stocks, or commodities in one place. It works as a central dashboard and provides in-depth reports.
• Varsity: For a person, who is clueless about the stock market can learn and test his knowledge on this app. From basics to advanced level, one can learn and master the know-how of the stock market.

Other apps include Rainmatter, Sentinel, Z-connect, and Kite connect AP.

But why did it create separate apps for everything? Well, Zerodha explains this by stating that the UI and UX of these applications are designed to cater to these different requirements and target markets.

In addition to that, Zerodha has also partnered with other stock market platforms like Sensibull, Smallcase, Streak to expand the benefits of these apps to their customers directly.

But it’s not all success and glory, Zerodha certainly faces few challenges including

• Technical glitches due to heavy trading
• Customer support not been effective
• Lack of analysis and reports

Even after all these difficulties, one cannot ignore the fact that Zerodha still remains on the top for is termed as a No.1 stockbroker in India, without claiming the title as the CEO Mr. Nitin Kamath doesn’t believe in chasing but letting it float.