The e-commerce landscape has evolved during the past ten years, with social media platforms emerging as new avenues for online sales, thanks to the likes of Facebook, Instagram, and WhatsApp. Here’s where Meesho enters the picture.
Meesho is a social commerce network founded to facilitate internet sales for women living in smaller towns and cities. However, over time, its business plan has undergone several changes. Currently, Meesho boasts over 18 million registered members, making it one of India’s top social commerce platforms.
Meesho: What Is It?
Meesho is a social commerce platform that lets people sell goods online using Facebook, Instagram, WhatsApp, and other social media networks.
Its goal is to make it simple for anyone, especially women, in smaller towns and cities to establish and operate their e-commerce enterprises.
Meesho, however, is a social commerce company, not like other e-commerce sites. In other words, it doesn’t sell goods to clients directly. Instead, it gives resellers a way to interact with suppliers and manufacturers and sell goods via their social network accounts.
Meesho’s USP is that it allows users to “resell” things offered by suppliers and earn a margin rate. This is a simplified dropshipping business model.
A smartphone is all you need to register for a Meesho account. Once created, you can peruse the many products that vendors have offered. You can resell these products under your own brand on social media sites such as Facebook, Instagram, and WhatsApp, charging what you see fit (cost price + profit).
The Concept of Meesho's Business Model
Many Indians, particularly those from rural areas and the elder generation, did not trust websites like Flipkart and Amazon, even as online shopping grew in popularity in the country.
Convenience stores, independent contractors, and other neighborhood businesses were more valued and reliable to them for their retail needs.
Additionally, several ambitious Indian business people lack the means and a venue on which to market their goods. These folks include stay-at-home mothers, housewives, and students who wish to launch their own companies but are unable to do so due to a lack of an internet presence.
After realizing this, business partners Sanjeev Barnwal and Vidit Aatrey started formulating concepts for their company, “FashNear,” in 2015. Following customer behavior analysis and market research, FashNear was rebranded as “Meri E-Shop” (My E-Shop), also known as Meesho. It turned into one of the first platforms in India that let regional retailers serve an online customer base and use social media to promote their stores.
Meesho’s business concept attracted support from some investors and local shops quite rapidly. It was one of three Indian companies selected in 2016 for a three-month, $120,000 program by Y-Combinator, a well-known startup accelerator in California.
Who Are Meesho’s Customers?
Meesho offers two primary consumer segments and uses a two-sided marketplace concept.
Customers: Meesho primarily caters to first-time online shoppers in small towns and rural areas looking for dependable, high-quality products at affordable costs. They are typically more cost-conscious and have less faith in internet retailers because they are afraid of fraud. The organization claims that over 70% of its clientele originates from tier 2 and tier 3 cities, like Jhansi, Mathura, Dehradun, and so on.
Resellers: They source things through Meesho’s platform and resell them to their social network at a premium. Meesho has over 15 million resellers from all over India on its network as of 2022. The majority of these are young professionals, housewives, and students who utilize social media sites like Facebook, Instagram, and WhatsApp to connect with their networks and sell goods.
The Value Proposition of Meesho
Meesho’s social-e-commerce business concept is what makes it strong. It offers its clients value in the following ways:
Meesho offers resellers a free platform to launch and expand their own companies. It purchases goods at discounted costs from suppliers and makes them available to resellers for resale to their intended market. On the Meesho platform, sellers set up their branded stores and began sharing things with their social media connections on Facebook, Instagram, and WhatsApp.
In addition, Meesho handles the following tasks on behalf of the resellers: packaging; logistics; and after-sale services like customer service, product returns, and refunds.
In this manner, Meesho handles the technical details, allowing distributors to concentrate on growing their businesses.
Regarding Customers
The absence of trust is the main issue with online shopping in India. Just 150 million of the 1.38 billion people on the planet shop online, and even fewer make repeat transactions. This is due to people’s fear of being conned or defrauded, particularly when purchasing goods from a new vendor or website. Meesho resolves this issue by acting as a point of contact for acquaintances who are resellers when making online purchases. In addition, since most of the products on Meesho can be personalized to a customer’s location, preferences, and budget, they precisely suit their demands.
How Do You Use Meesho?
Meesho’s guiding principle is to “make shopping social,” meaning that customers can feel free to shop with friends and family without worrying about falling victim to fraud. Customers reach out to Meesho resellers, who then get products from Meesho’s platform and resell them to customers at a somewhat higher price. Meesho’s success can be attributed to its unique blend of traditional e-commerce business model with social selling and dropshipping business model.
These are Meesho’s core business operations. Let’s investigate a few more areas.
Principal Partners of Meesho
Meesho has partnered with numerous large and small participants in the sector, ranging from wholesalers to financial institutions.
The five main partners on the platform are:
Suppliers: To provide a large selection of items, Meesho has teamed up with suppliers around India. Manufacturers, importers, and distributors who list their goods on the Meesho platform are examples of these suppliers. The platform offers these providers benefits including a zero percent commission, no late dispatch penalty, increased reach, and guaranteed payments.
Shipment Partners: Meesho has teamed up with top logistics firms like Delivery, Ecom Express, and Blue Dart to provide prompt and dependable shipment.
Payment Partners: Meesho has teamed up with top payment providers like Paytm, Cash-Free, and Razor-pay to provide a simple and convenient payment experience.
Marketing Partners: To meet its marketing needs, Meesho has exclusive agreements with several marketing firms, including DVio Digital. To compensate opinion leaders and influencers for introducing new clients, the business also offers an affiliate marketing program. Important partners in the Meesho business model are these affiliates.
Financial Partners: YC, Facebook, Naspers, Sequoia Capital, Shunwei Capital, and SAIF Partners are just a few of the top venture firms and angel investors who support the business.
Meesho’s Principal Tasks
Meesho, which was first developed primarily to let resellers sell goods online, is today one of India’s most reputable e-commerce platforms. The following crucial tasks are carried out by the business to fulfill its value proposition:
Establishing a working market: The platform facilitates communication and commercial transactions between buyers and sellers.
Product quality assessment: Meesho has a staff in place that evaluates products before shipping to guarantee that only high-quality products are provided to clients.
Enabling online product sales for resellers: It also offers a white-label reselling platform that enables customers to purchase goods from Meesho’s inventory and resell them on social media sites like Facebook, Instagram, WhatsApp, and so on.
Increasing traffic and awareness: A two-sided marketplace can only function well if there is enough traffic on both sides of the platform. Meesho launches intensive marketing initiatives to raise platform awareness and attract additional dealers. To reach users, these ads make use of a variety of digital platforms, including Facebook, Google, and others.
Order handling: The vendor must locate and dispatch the item after a buyer places an order. Meesho must therefore assemble a group of specialists in logistics to manage the complete process of product shipment from vendors to consumers.
Customer support: Meesho has a group of customer support executives that assist in resolving any problems that may arise about purchases, payments, refunds, etc.
Payment processing: Meesho serves as a go-between for the buyer and the vendor. This implies that it oversees receiving payments from clients and sending them to vendors.
Important Meesho Channels
Despite being aimed towards users who are not experienced with online shopping, the platform still needs to be online to work. Meesho reaches out to potential clients in three main ways:
Operating Channels: Meesho mainly uses its mobile application, which is accessible on iOS and Android devices, and its website. Customers can explore and order products through these channels, which serve as the company’s main points of contact.
Marketing channels: To reach its target audience, the platform makes use of earned, paid, and organic media. In addition to using conventional marketing channels like print and television ads, it places advertisements on websites like Google, Facebook, and others. It also has a YouTube channel where it uploads guides and videos about reselling. The business also maintains a blog where it publishes articles about reselling and e-commerce.
Meesho's Essential Tools
The business must make significant investments in personnel and warehouses to guarantee that it can offer a positive client experience. Among the company’s most important resources are:
Human resources: The business employs more than 6,000 people for a range of roles, including marketing, IT, and customer service.
Financial resources: Sequoia India, Shunwei Capital, RPS Ventures, Meta, and other investors have contributed around $1.1 billion to Meesho’s fundraising round.
Technology resources: The business has developed a platform for technology that aids in a few of its activities, including payments and shipping.
Logistic resources: The business must guarantee that the goods offered on its platform are delivered to clients on schedule. It has partnerships with some logistical companies for this.
Meesho Revenue Structure
In addition to offering a one-stop shop for all seller, buyer, and reseller requirements, Meesho has come up with a novel method of monetizing its platform.
In contrast to other marketplaces, Meesho levies:
No commission on margins for products
There is no penalty for canceling an order, sending it late, or for any other errors.
There are no listing costs
What does this signify?
This implies that 100% of the price differential between the price at which a thing is sold and the price at which it is purchased belongs to the seller. But how can Meesho generate revenue if it does not charge the vendors anything?
Meesho Income Sources
Shipping Fee: Meesho collects shipping costs from customers or resellers. This delivery cost varies greatly based on:
Weight of the package;
Delivery area
The corporation charges separate shipping prices for each of the three delivery categories it has divided into: local, regional, and national. The shipping partner receives payment for a portion of the shipping costs; the company keeps the remaining portion for profit. To make the product offer seem more appealing, the corporation does, however, include the cost of shipping in the total price that is displayed to the customer and includes free shipping in the offer.
Promotion & Ads
For interested vendors looking to advertise their goods, the organization provides cost-per-click advertising campaigns. The sponsored advertising eventually results in more sales because they are prioritized in search results and have greater visibility on the homepage.
Penalties
When consumers return merchandise to the company, a shipping price is deducted by the seller. Additionally, the firm charges 2.5% of the order value per day to sellers who choose “Next Day Delivery” but do not deliver on time. In addition to this, the business levies further seller penalties if the seller violates the conditions of its supplier agreement.
The Meesho Cost Structure
Managing a marketplace is an expensive and difficult endeavor.
A summary of the Meesho cost structure is provided below:
Costs of Technology
Meesho has established a robust technological team that is always enhancing the platform. Server, CDN, and other associated infrastructure expenditures are included in the technology costs.
Marketing Expenses
Meesho invests a significant amount of money in advertising and client acquisition. The business has conducted various offline and TV ad campaigns. It also makes large expenditures on internet advertisements.
Costs of Operations
Daily operating expenses for the company include things like rent, order fulfillment, customer service, etc.
Costs Associated with Processing Payments
Meesho charges a payment processing fee, which is a little portion of each transaction because it uses third-party payment gateways (Paytm, PhonePe, etc.).
Costs of Logistics
Every order that is placed on Meesho’s platform comes with a logistics cost. This expense is usually borne by the clients, but Meesho also pays a tiny amount.
Costs of General & Administration
It covers general overhead expenses as well as the employee’s wage, professional and legal fees, etc.
Meesho's Future
Meesho is now attempting to engage in full-fledged e-commerce warfare with established marketplaces, all the while maintaining the resale model at its core. Meesho receives 25% of its orders from resellers and 75% straight from customers as of 2022. Meesho’s entire social commerce strategy is based on its relationship with resellers, so it would be interesting to see how it tries to strengthen that relationship. Nevertheless, Meesho appears to have a bright future due to its strong unit economics.
Written by – Sneha Jain
Edited by – Kushi Mayur
