Looking on the bright side, the Covid-19 pandemic has increased internet consumption and has also helped in the growth of e-commerce businesses in India. With movement restrictions and the availability of limited products like essential supplies in physical stores during the lockdown period, more and more businesses jumped into the opportunity of online businesses. Accordingly, Mr. Vidit Aatrey and Mr. Sanjay Barnwal started an online e-commerce platform that would allow smaller businesses to sell their products directly to consumers (B2C) and resellers to sell the products to customers through social media channels and networks such as What’s app, Facebook, Instagram, etc.
In the literal sense, Meesho refers to “Meri Shop” or Apni Dukaan in Hindi, which is a connotation to the comfort of affordable and quality products provided through the platform. As a business, it aspires to create an entrepreneurship–friendly environment without any harsh burden of managing financials, especially for women as one of its taglines states- “Not just a home-maker, but also a proud Meesho Entrepreneur.”
Meesho is leading the reselling business of India and takes pride in it. And, it is not just another regular e-commerce business, it has established itself as a “socio-commerce” brand in effect, as it allows small businesses and individuals to do reselling business by listing themselves on the website and earn an extra income with zero investment required, which is especially relevant for homemaker women, or people who lost their jobs during the pandemic and even working professionals who wish to earn an extra income from the comfort of their homes. It became one out of the three businesses selected for Y combination funding for the year 2016 and one of the earliest start-ups entering the start-up “unicorn’ clubs in April 2021 after successfully raising $300 million in a funding round led by Softbank Vision Fund after which the valuation of the business reached $2.1 billion.
What led to the inception of Meesho?
In 2015, two IIT graduates Vidit Aatrey and Sanjay Barnwal started an e-commerce retail platform ‘FASHNEAR’ which would be similar to Swiggy and Zomato in the business model. The FASHNEAR would allow local shop retailers offering apparel and fashion accessories to register themselves and list their products on the platform and allow the customer to choose fashionable clothes and accessories from the online platform and the products would be delivered to them through the shops in the near locality of the customer to ensure faster delivery through delivery persons. But, FASHNEAR failed to work well due to reasons such as-
- Failure to effectuate faster and instant delivery.
- Low-profit margins on unbranded items.
All of these inspired the founders Vidit and Sanjeev to research more and revamp the business model with a new name “Meesho” by the end of the year 2015. They visited multiple stores, shopkeepers, and resellers to identify the problems and expectations. Some shopkeepers pointed out that selling through social media platforms like what’s app was limited in certain ways.
Meesho was started in has its headquarters in Bengaluru, India. It is primarily engaged in e-commerce and retail business through its e-commerce platform website and app ().
Meesho has managed to carve a distinct niche for itself and gained popularity and consumer loyalty equally by making the process of shopping for customers and resellers equally convenient and hassle-free with time. Over time, Meesho has established itself well in the Indian retail market due to its ability to create social connections and its trustworthiness. During the process, a reseller will get its commission only after a sale transaction is completed within time securely and all the payments to the sellers and resellers are made on time to ensure a smooth process. The Bangalore-based start-up aspires to build an environment where anybody can establish a business without having to worry about the initial financial investment involved.
Founders & Team
As provided above, Meesho was founded by two IIT Delhi Graduates -Sanjeev Barnwal and Vidit Aatrey in 2015. Mr. Vidit Aatrey is the founder and CEO of the Meesho business and worked briefly with the mobile marketing platform’ InMobi’ where he used to design growth strategies for the company. On the other hand, Mr. Sanjay Barnwal is the founder and Chief Technological Officer (CTO) of Meesho, who worked as an Android Camera Hardware Abstraction Layer Architecture Designer and Developer at Sony Mobile Communications for a brief period, before starting Meesho in the year 2015. Due to their hard work and actions, they have been recognized by ‘Forbes India in its 30 under 30’ list of young entrepreneur achievers in India.=
Awards and Recognition
Meesho has established itself as a “Socio-Commerce” business retailer due to its emphasis on entrepreneurship and especially women empowerment allowing women to manage her household along with her work as a proud Meesho reseller. It has been widely recognized with various awards and accolades such as “Top five apps for social commerce in India” (2017) by Deccan Chronicle”, One of the Fastest growing Y Combinator incubated start-ups (2016)” by VC-focused data platform Mattermark, “Top 25 start-ups to work for based on talent pull, employee growth, jobseeker interest and level of professional engagement with its employees” by LinkedIn in 2018.
Meesho was also part of the first batch of the Google Launchpad – Solve for India program and became one of the highest downloaded applications to be downloaded application on Google Play Store for July 2021 for building technology solutions for unique Indian challenges.
Business Model
Being a socio-commerce platform, Meesho follows a B2B and even B2C business model due to the reselling opportunities offered by Meesho. Meesho allows sellers and resellers to register themselves and sell their products through assisted purchasing through social media networks and if based on it any customer wishes to place an order, they charge a certain percentage that includes profits of all parties suppliers cost-saving on marketing and delivery logistics and commission for reseller based on a gross margin to every transaction.
For the sellers and resellers, Meesho undertakes all other activities such as the delivery of the products, facilitates COD options, and managing inventories. Vidit Aatrey once quoted “We wanted to bring small businesses online as still 80% of the Indian population buys from smaller businesses and is not transacting online and there are some great opportunities to bring the next e-commerce buyers online is very large, especially in Tier 2 and Tier 3 cities across India.
Meesho – Growth & Revenue Mode
Though the business model of Meesho is largely based on the facilitation of business for smaller businesses and resellers, the same also is the major source of revenue for the business. Currently, more than 750 employees are working with Meesho along with more than 20 Million resellers. It claims to have 50% of its target market in smaller cities and regions and boasts of having a presence in 1000+ cities, where it facilitates resellers to start promotion with zero investment. Following are the sources of revenue for Meesho-
Product Sale Commissions
Meesho charges a standard rate of commission anywhere between 10-20% along with a delivery fee from the sellers listed on its platform as charged by e-commerce businesses like Flip kart Shopsy and Amazon. Further, a higher rate of penalty is charged in case of product returns.
Shipping & Logistics
As compared to any other e-commerce retail, the shipping and logistics charges are higher in the case of Meesho due to its more focus on smaller cities and towns. But, the company plans to push it down with the help of cutting-edge logistics technology, helping it to save costs and hence more revenue.
Marketing Campaigns
Meesho also earns revenue by advertising the products of sellers who wish to list and sell their products and showcase them on the platform. Considering the increasing number of smaller businesses, it generates a considerable amount of revenue.
User data
Undeniably, data is one of the most important concepts in times of technology. Therefore, Meesho sells data to its partner companies to help them understand customer preferences better and improve their products. However, it strives to keep sensitive user information secure and is remained confidential.
Funding & Financials
Meesho has raised a total of $1.1 billion in total in 11 funding rounds till October 2021. Some of the notable investors include venture companies and angel investors such as Facebook, Naspers, Sequoia Capital, Shunwei Capital, and SAIF Partners among others. The latest funding was received through Debt Financing. All this funding helped the company to double its valuation from $2.1 billion to $4.9 bn. After raising $300 million from Softbank Vision Fund in Series E funding, the start-up joined the unicorn club on April 5, 2021, within six years of starting its business. One of the noteworthy early investments received by Meesho was the Y combinator, Mountain View, a California-based seed accelerator it secured $120,000 in the year 2016 and it became one of the businesses backed by Facebook by the year 2019. Though Meesho has not acquired any business lately, it has made an investment of $8M in one of the top socio-commerce platforms in Latin America, namely Elenas in two rounds – $6M (Mar 2021) and $2M (Oct 20).
Meesho – Growth and Revenues
Till now, Meesho claims of having more than 2.6+ million resellers and sellers registered(out of which 15 million are women) on the platform with more than 90 lakhs of products including food, clothing, fashion accessories, furniture, utensils, etc. listed and having a presence over more than 5000 cities in the country. In the beginning, it raised around $215 Million from the investors with an intention to establish a network of small businesses and markets around them. In FY 20, Meesho announced revenue of Rs.
341.6 Cr was 4times higher than the revenue generated in the year 2019 (Rs. 84.8 Cr). Though, the expenses continued to increase by 3.5 times and reached a total of Rs.657 Cr, thereby implying losses worth Rs. 100.42 Cr in the fiscal year.
But, the company pointed out that the sellers and merchants got to save around Rs 13.6 crore during the Christmas sales due to the 0% commission scheme, introduced earlier. Further, during a sale festival (i.e. Maha Indian Shopping League), the business saw a 314% raise in seller participation causing a ten-fold increase in revenues as compared to the previous year.
Meesho – Business Marketing Strategy
Meesho has a robust marketing strategy for the promotion and advertisement part. Therefore, there are commercials in the form of TV ads, social media marketing, and YouTube marketing. One of the earliest commercials was published in Sep 2020, showing a homemaker could be just more than a wife, daughter, sister, a daughter-in-law, despite all household responsibilities handled by her, i.e. a proud Meesho reseller with her own unique identity.
Next, the company targeted the price hike caused due to the middlemen in between through an ad on Sep 21 appealing to the Tier 2 markets and beyond them with the tagline “Sahi lagaya hai”!. (At the right price) .It also highlighted how consumers could benefit from a wide range of products among diverse categories at affordable prices without any unnecessary hike from sellers across the country.
Another marketing campaign released by Meesho on February 2022, targeted the customer dilemma ‘Loon ya na loon?’ (Whether to buy or not?) and remedy the situation by helping the consumers from the dilemma of choosing one over the other due to pricing and thereby allowing them to maximize their spending.
However, this marketing strategy was not able to convince resellers to come on board with Meesho. Therefore, the company adopted a strategy of providing micro-credit loans (a small amount i.e. Rs. 5000) to the resellers to ensure they get a certain amount of income without much paperwork or any formal screening since they had all bank account related details of resellers) that helped the business to continue with the trust of resellers in the business and even strengthened trust among customers and resellers on the business.
For ensuring higher sales, Meesho also onboarded more than 1 lakh, small business vendors, ahead of its mega sale festivals among other initiatives including fixed time offers such as free ad credits and no return shipping charges in case of the first 30 purchases made on the website and helped customers to save around Rs 60 crore in discounts, thus all of this helped to generate huge traffic on the platform.
Meesho gained a lot of success in its fashion segment as the number of customer orders and sales have increased by 623% in the case of women’s fashion and about 640% in the case of men’s apparel since last year.
Conclusion- What lies ahead for Meesho?
Despite stiff competition from already established market competitors like Amazon, Limeorad.com, shoppersstop.com, delhivery.com, etc. Meesho has done well for an e-commerce platform with a special focus on reselling business. The company plans to bring its fresh IPO by early 2023 and started preparing for the compliance part for the issue. Further, it intends to use the funds raised through investments to improve its technical and product skills and expand the list of products and sellers to offer better services to the customers up to 50 million products, and to gain more popularity by being the most preferred platform for its users, small businesses and entrepreneurs. Further, Meesho is also planning to expand the grocery and fast-moving consumer products services through its community group purchasing (CGB) company, Farmiso to over 200 cities in India by enabling customers from Tier-2 cities to purchase online grocery at affordable rates from a large assortment of foods. After raising Series F round of funding in September 2021, Vidit Aatrey stated “This new round has brought our company a step closer to fulfilling our mission to democratize internet commerce for all of us to increase regional participation in the digital world and at the same time add momentum to local businesses. It is for sure that the next wave of digital growth consumerism is going to come from India. With this, our efforts will enable entrepreneurs to expand their businesses and would uplift the economy.
