Sunday, June 23, 2024

Meesho – The Quick Rise of an E-commerce Unicorn

Meesho, a homegrown startup that connects local resellers to consumers, is revamping strategies and organisation structure to expand its market. A Vocal for Local company in real is empowering many local vendors, especially women, to run businesses on its platform. The company had recently entered the Unicorn club, is valued at $ 4.9 billion, and is set to go public by the end of 2022 or early 2023.

As the company is coming out as a strong competitor in becoming a pioneer in India’s $ 84 billion e-commerce market, CorpIndiaNews is here to explain why Meesho is in advantage to take on big-time players like Amazon and Flipkart.

Meesho - The Quick Rise of an E-commerce Unicorn

Two IIT-Delhi batchmates, Vidit Aatrey and Sanjeev Barnwal founded Meesho on August 13, 2015, in Bengaluru, Karnataka, intending to democratise India’s e-commerce space. With four lakh sellers currently using the platform, the company aims to onboard 10-12 lakh sellers by the end of 2022. In addition, the startup set a rather optimistic target of achieving 100 million monthly transacting users by December 2022.

In 2020, Meesho hardly had 90,000 sellers onboard, which grew four times in one year, while its business grew 40 times since the first lockdown and is only growing to challenge big players in the e-commerce space. Recently, the company recorded around 1.4 crore orders in just three days during its Holi Sale in March.

The Meesho Concept

The social commerce space, which is expanding along with the country’s e-commerce market, was initially not the Plan A of its founders. Initially, in 2015, founders Vidit Aatrey and Sanjeev Barnwal opened a hyperlocal fashion discovery and commerce app, FashNear, but at the end of the year pivoted to Meesho.

Founders Vidit Aatrey and Sanjeev Barnval visited many local retail and wholesale stores. They found out that shopkeepers were using social media applications listing their products like posts and stories on social media. Hence, the duo came up with the idea of creating a direct-to-consumer platform that would connect sellers to customers directly through an application.

Meesho - The Quick Rise of an E-commerce Unicorn

The concept was simple, to create an application for local resellers to create their inventory of products online and manage it. At the same time, Meesho would charge a commission on each purchase and fees to keep the shop running.

The duo presented a platform that empowers hyper-local businesses (micro and small) to open their online shops with zero investment. Hence, the name Meesho means ‘My shop.’

At first, the startup targeted homemakers and students selling unbranded clothes on Whatapp, Facebook, and Instagram. As a result, Meesho soon became a platform for homemakers from small towns who ran their reselling businesses online to market and manage their products on the app.

These women resellers began to earn as much as Rs 25000 a month selling unbranded clothes. Hence, the founders were able to establish communities and also create women entrepreneurs. Today, the app provides access to over 77 million products from different categories.

Gunning for the Pole Position 

Meesho got selected in the Y category as soon as in 2016. Another milestone for the app was receiving funds from Facebook (now Meta Platform) and finally becoming a Unicorn after getting funded by the Soft Bank group.

While funds and targeted publicity campaigns are helping Meesho challenge its competitors, the e-commerce platform scored another advantage.

Shopee’s (Ind)exit or Shopee’s choice

In October last year, Shopee, after the e-commerce business of Singapore-headquartered internet giant Sea, launched into the Indian market to thrush into the international while expanding its wings in Europe. But, while consumers welcomed Shopee’s entry, e-commerce majors had a clear competitor in the Singapore firm.

But, in the first week of April 2022, it made another major announcement that shocked everyone in the industry. The e-commerce firm declared that it is closing its India operations “in view of global market uncertainties.”

While speculators are rounding up their opinion on Shopee’s exit, industry experts point out Meesho’s direct advantage in this situation. Indeed, eliminating competition from the market is a dream of many.

Meesho, too, openly acknowledged a sigh of relief and bid farewell to Shopee in a quirky tweet. Meesho posted, “Shopee-ing is the simplest, easiest, and fastest with Meesho.” It also invited Shopee’s employees to work at Meesho.

Meesho faced a direct threat from Shopee’s popularity, while its exit has given it some relief. While experts say that Shopee’s exit is a blessing in disguise for the startup, Meesho is already planned to beat its competitors in many ways.

The IPO

The Social commerce marketplace is mulling a public listing in the first half of 2023. However, the company’s top management is yet to choose from either a public listing in India or a SPAC listing in the US.

Sources claim that the company is preparing itself for the big opening and is busy working on a strict timeline to ensure that its governance, financial reporting, and internal processes are in place to meet regulatory requirements by the end of the year.

After a blockbuster IPO year in 2021, stock market investors are excited to cash in on Meesho’s stock market debut. Hence, the company is currently developing its compliance framework to plan its public offering next year.

Boundaryless Workspaces

Meesho has announced a permanent boundaryless workspace model that allows employees to choose between working from the home, office or chosen locations.

The announcements came as a part of the company’s cost-cutting strategy. Meesho has earlier asked its employees to practice restraint while spending the company’s money. Additionally, the company has been downsizing its business due to restructuring and reorganisation moves.

Meesho - The Quick Rise of an E-commerce Unicorn

Adding affordable brands

The company that started as a platform for selling unbranded products will be introducing a new segment of branded products under its social e-commerce business.

The company shall offer affordable brands under its beauty and electronics segment. Meesho has been looking to compete and acquire a major segment of India’s e-commerce market through this strategy.

Meesho’s strategy largely comprises achieving two goals; firstly, it wants to attract more male customers through branded electronic products and take on its biggest rivals in the e-commerce industry, such as Flipkart and Amazon.

Hence, the company is also mulling over rebranding its logo to a more gender-neutral design.

Change in seller’s policy

Meesho has effectively changed its 15-days-payment policy to a weekly payment cycle. The company to the step to attract more local, small, and medium vendors to its platform. The new policy is supposedly helping the company achieve its target of onboarding more than 1 million vendors on its application.

Moreover, the company has also reframed its cancellation policy by announcing zero charges on order cancellation. Earlier sellers were charged 2.5% of the order product’s price per day of delay till cancellation.

While explaining Meesho’s new strategy, Lakshminarayan Swaminathan, vice-president and general manager of supply growth at Meesho, said, “With the new ‘Zero Penalty’ and ‘Seven-Day Payment’ initiatives, we are confident we will be able to accelerate further the trajectory of seller acquisitions and success on Meesho.”

Hence, the company is working on reframing and applying different strategies to ride on the current e-commerce wave and expand its businesses to a more significant market share. Hence, Meesho tapped into the grocery shopping segment during the pandemic.

Meesho integrates with Farmiso

In 2020, when the government announced a country-wide lockdown to contain Coronavirus, all the businesses except for essential services came to a halt.

Being a delivery-based startup, Meesho and its vendors on the app lost business every day. As a result, the company’s revenue tanked, and there was a temporary disruption.

However, turning the crisis into an opportunity, Meesho decided to sell groceries in Tier-II cities in India. Meesho’s idea was to make consumers in these cities comfortable purchasing groceries online.

While big e-commerce brands focus on faster deliveries to cater to their large consumer base, Meesho focuses on offering affordable discounted groceries.

Meesho - The Quick Rise of an E-commerce Unicorn

Farmiso’s opened its first store in Karnataka, providing 500 products across categories like fresh fruits, fresh vegetables, groceries, home care, and packaged food. However, in less than a year, it has successfully scaled its operations in five other states- Maharashtra, Telengana, Andhra Pradesh, Gujarat, and Madhya Pradesh. While Farmiso is gaining positive traction in all six states, it aims to expand to twelve other states this year.

Meesho announced the integration of its grocery business within the core application to become a single shopping destination in India. Through this merger, the company plans to expand its core business by taking advantage of Farmiso’s first-time customers base.

Founder Vidit Aatrey explained, “Driven by our user-first mindset, the integration will provide millions of Meesho users a unified shopping experience, while giving us an opportunity to drive stronger synergies across areas such as customer acquisition, technology and product and talent.”

Meesho going live

Meesho is exploring the launch of its live commerce business by the end of the year which is in its pilot stage. The live commerce feature enables instant purchasing of a featured product and encourages audience participation through chats and reaction buttons.

Meesho has been actively strategising and reframing its core policies while restructuring its business for a year. Unfortunately, this is sending mixed signals to customers. Some believe Meesho’s strategies would pay off, while others call it a sign of nervousness. In addition, experts believe that too many strategies may bring negative results to the company.

However, Meesho’s founders are pretty optimistic about its reforms and aim to take advantage of the momentum.

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