MEESHO: Providing zero-investment online business solutions

Saksham Jain
4 min readDec 14, 2021

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image credits: meesho.com

About —

Meesho means “meri shop”, and this start-up was started with the simple goal of giving a shop to people who couldn’t start a business. It allows small and medium-sized businesses and homemakers to start their own online businesses on social media platforms like Facebook, WhatsApp, Instagram, and so on, without having to spend money.

· Founder — Vidit Aartrey and Sanjeev Barnwal

· Founded — December 2015

· Headquarters — Bangalore, Karnataka

Mission –

Meesho is on a mission to enable small businesses and individuals to start a business online without any investment.

Revenue —

Generated revenue of $11.2 Million in FY2019 and registered a loss of approximately $13.2 Million.

Valuation –

· Raised $570 million in a funding round led by B Capital and Fidelity

· Valuation jumps to $4.9 billion as of September 2021

· Few leading Investors: SoftBank Vision Fund, Prosus Ventures, Facebook, Fidelity, and B Capital

How it works? –

1. Meesho links up with the person who manufactures and distributes the product and puts their product on the Meesho platform

2. They sell their product on Facebook, Instagram, and other social networks, as well as on Meesho

3. The customers place the orders to the reseller

4. Reseller add their profit margin to the price of the item and sell it

Business Model –

1. More than half of the Meesho’s Rs. 80 crore profit came from commissions. They earn a commission of around 10–20% for every product sold on their platform.

2. Meesho also assists its merchants with delivery and shipment and earns through these shipping services.

3. Meesho charges the business a penalty fee if an order is not delivered.

4. Sellers may choose to have their items appear at the top of the Meesho platform. This boosts their products’ exposure to resellers and sales. Meesho earns a substantial profit by charging a fee for it.

5. Data is the new currency, and Meesho has acquired all vendor and buyer information for future use. If they so desire, it may sell the data and profit handsomely.

User Base –

· Meesho’s customer base is made up of over 50% of people from Tier 2, 3, and 4 cities and overall consists of approximately 90% women.

· According to the company, it has a presence in more than 1000 cities across India with 2 million, active sellers and 20,000 manufacturers on its platform.

User pain points and their solutions by Meesho –

1. The initial investment is the biggest problem faced by most small business owners in India to start their own shop. — Meesho provides online shops to them.

2. Sellers from tier 2,3 and 4 cities especially women were still hesitant to sell online — Meesho’s initial focus was a majority on women entrepreneurs from these cities, giving them totally digital and convenient platform to expand their business

3. Unwillingness to buy online due to trust issues — Through the community model, customers will be buying from someone in their community, hence greater trust.

Resellers User Flow –

Competitors –

Meesho is following the community leader model and similar models are used by other social commerce sites such as DealShare, Citymall, Glowroad etc. to market their products.

Unique Propositions –

1. No cost of setting up for resellers

2. Business catalog can be shared on any social media platforms

3. Extra income by selling across India as well as earning through referrals

4. Meesho is utilizing the community leader model which is helping them in bringing down the logistics cost which helps in having a strong unit economics base

5. Their asset-light, capital-efficient strategy, coupled with its understanding of small business, will enable them to compete with retail behemoths.

Challenges –

1. Meesho is currently spending between $20 and $25 million each month on customer acquisition

2. Intense competition from already established and upcoming e-retailers like Flipkart, Amazon, Jiomart, Ajio, etc. to become the market leader

3. Meesho’s customers complain about the quality of products delivered and hence it's leading to high return order percentage.

Opportunities –

1. The company has data from over 2 million merchants and 20,000 manufacturers. By doing thorough analysis, they may establish their own manufacturing and generate a higher profit.

2. They also intend to directly compete with e-commerce behemoths like as Flipkart and Amazon by developing their own platform with an established user base.

3. Currently, they have over 650 categories, majorly in Jewelry and Clothing segment. They are looking to expand it to a few other segments.

Conclusion –

Meesho is growing rapidly even after intense competition from e-commerce platforms like Flipkart, Amazon, Myntra, etc. This is happening because of their model and approach, which is solving problems for somewhat distinct users. However, this distinction may not last long, as other e-commerce behemoths want to expand farther into the rural areas. For example, Flipkart started its ‘Samarth’ initiative in July 2019 to assist under-served groups like craftsmen and weavers in establishing an online business. It claims that it now has over 500,000 such entrepreneurs on its platform. Amazon has pledged $1 billion over the next five years to help small and medium-sized companies digitally transform.

Disclaimer — This is not affiliated with the official website/organization. This case study is purely educational in nature. All photos are attributed to their respective owners.

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