You will be amazed to know India’s e-commerce sector is expected to reach $111.40 billion by 2025 from $46.20 billion in 2020 and is expected to surpass the US by 2034.

This rise in the e-commerce sector has paved the way for many online businesses to thrive in the fresh ecosystem and create value for themselves as well as others. 

One such growing e-commerce startup is Meesho, started by IIT Delhi alumni Vidit Aatrey and Sanjeev Barnwal. 

With over 50,000 users relying on the e-commerce platform to grow their businesses, Meesho enables small retail merchants to connect with a vast network of suppliers and customers all over India and sell their products effectively.

The brand has gone on to be one of the most sought after Indian unicorn startups in a short span of time and has established a strong foothold in the industry, thanks to the interesting Meesho business model. 

We found the Meesho business model to be fascinating and of value to anyone interested in learning about growth oriented businesses and how they operate. So we decided to have a detailed discussion on the Meesho business model and discover the diverse revenue streams and esteemed investors who have helped fuel its meteoric rise. 

So buckle up and let’s dive in…

Journey Of Meesho Business Model

Here’s a quick recap of Meesho’s fascinating journey in chronological order:-

• August 2015: Vidit Aatrey & Sanjeev Barnwal began ‘FashNear’- a hyperlocal platform for fashion-related goods and allowed customers to buy clothes and fashion accessories from the shops in their locality.
• March 2016: The founder duo developed a mobile app platform to help shop owners sell on WhatsApp and Facebook. Thus, Meesho ‘Meri-Shop’ was born.
• June 2016: Meesho became one of the 3 Indian companies selected by Y Combinator. It secured $120,000 in seed funding.
• October 2017: Meesho raised series A funding of $3.4 million led by SAIF Partners and others.
• Sept 2018: Meesho achieved a milestone of over 1 million resellers on its platform.
• Nov 2018: Series C funding of $ 50 million from Shunwei Capital, DST partners and others.
• Feb 2019: Meesho hit 1.2 million monthly orders and ~200K transacting users.
• June 2019: Facebook invests in Meesho.
• Feb 2020: Mesho 1st ESOP(employee stock ownership plan) buyback worth $1 million.
• June 2020: With 3 million resellers across 700 towns, Meesho secured a spot in ‘Fast Company’s world’s 50 most innovative companies’.
  Meesho launches Meesho Mandi- essential delivery during the lockdown.
• Dec 2020: 2nd ESOP buyback worth $5 million.
• April 2021: Enters Unicorn club by raising $300 million at a valuation of $ 2.1 billion led by SoftBank group.
• July 2021: Meesho became the first e-commerce platform to announce 0% commission to its sellers.
• Sep 2021: Meesho clocked 51 million monthly orders & 18 million transacting users, this was 50X growth in 2 years.
  Mesho became the world’s most downloaded e-commerce mobile app.
• Nov 2021: Meesho has done 3 ESOP buybacks in 2 years, helping create wealth for Meeshoites

Here is what its co-founder and CEO Vidit had to say about his inspiring journey of making Meesho a success.

“Sanjeev and I fulfilled every role during this period. We did the inventory of every shop, spending entire days taking photos of all the products and cataloguing them on our app. I also worked as the delivery person in the beginning, because I wanted to hear my customer’s feedback first hand.” Vidit said speaking about FASHNEAR’s initial days.

Interested in learning about the fascinating “Business model behind Paytm“? Check out our in-depth analysis here

Revenue Model of Meesho

Meesho business model is helping manufacturers and resellers increase their sales while charging fees and commissions to keep their operations running. But let’s talk more about how they make their money from commissions, logistics, advertisements and data.

Here are the major sources of Meesho’s revenue:-

Commission

Commission is one of the main sources of revenue for Meesho. When suppliers sell a product on their platform, they charge a percentage of commission from them. 

However, as per the company’s website 0% commission is charged from the suppliers on specific categories of products and no charges at all from the resellers.

Logistics

Meesho also provides logistics services to its suppliers and charges a fee for their efforts. 

Showing good business ethics Meesho claims their team is actively trying to reduce logistics charges to increase sellers’ profits.

Advertisements

Advertisements are another way Meesho earns revenue. As the number of sellers increased on their platform, the competition between products in the same categories rose. Every seller who wants their products to stand out is paying Meesho to advertise their products on the platform. It’s a win-win situation for both parties

Data

And finally, data.

As we all know, data is the new oil, and Meesho got the data game going too, but they’re only selling data that doesn’t breach any privacy policies. So, you can trust them with your data.

Financial Analysis of Meesho

Meesho reported a significant increase in its revenue but also a rise in losses for FY22. While the revenue saw a 4.5x jump to Rs 3,232 crore from the previous year’s Rs 792 crore, their expenses also rose to Rs 6,607 crore in FY22, leading to a 6.5x increase in losses totalling Rs 3,247 crore.

Advertising, employee salaries, and employee benefits were the major expenses contributing to the increased cash burn.

However, unlike its competitors, such as Amazon India and Flipkart, Meesho does not charge commissions on sales made by sellers on its platform. 

Instead, it provides a platform for small businesses to get started with e-commerce and encourages business growth. A major chunk of Meesho’s revenue comes from advertisements, making it stand out from its larger competitors.

Overall, while Meesho’s losses increased in the 2022 financial year, the company remain committed to providing a platform for small businesses to grow and succeed in the realm of e-commerce.

Lead investors in Meesho

Meesho has been on a remarkable funding journey, amassing a grand total of $1.1 billion in investments. From its humble beginnings to its current status as a unicorn company, Meesho has successfully secured funding from various sources.

Let’s take a closer look at each of the funding rounds that have propelled Meesho business model to where it is today. Each round has been instrumental in allowing the company to expand its reach and offer its customers innovative products and services.

• Angel Round
  Date: Mar 1, 2016
  Investment: $180K
  Investors: Investopad, Rajul Garg, Venture Highway
• Seed Round
  Date: Aug 18, 2016
  Investment: $120K
  Investors: Investopad, Rajul Garg, Venture Highway
• Series A
  Date: Oct 12, 2017
  Investment: $3.4M
  Investors: Elevation Capital
• Series B
  Date: Jun 7, 2018
  Investment: $11.5M
  Investors: Sequoia Capital India
• Series C
  Date: Nov 5, 2018
  Investment: $50M
  Investors: DST Partners, RPS Ventures, Shunwei Capital
• Corporate Round
  Date: Jun 14, 2019
  Investment: $25M
  Investors: Meta
• Series D
  Date: Aug 12, 2019
  Investment: $125M
  Investors: Prosus & Naspers
• Series E
  Date: Apr 5, 2021
  Investment: $300M
  Investors: SoftBank Vision Fund
• Series F
  Date: Sep 30, 2021
  Investment: $570M
  Investors: B Capital Group, Fidelity Management and Research Company
  
  

According to its co-founder, Meesho plans to raise more funds in the coming years with an initial public offering(IPO). He said, once the company gets to profitability, they are ready for an IPO.

The IPO will mark a new chapter in its journey and cement its status as a formidable player in the e-commerce industry(hopefully).

Meesho – Competitors

In this fiercely competitive world of e-commerce, the major rivals of Meesho are:

• Flipkart
• Amazon
• Glowroad
• Dmart
• Indiamart
• Snapdeal
• Shoppersstop

Meesho – Investments

From being a company that attracts investments, Meesho is moving forward by making strategic investments of its own. Meesho recently invested $8M in Elenas, a leading social commerce platform in Latin America.

The investment was done in two parts. First was the seed round in October 2020, where Meesho invested $2 million while the other was Series A funding round, where the company invested a total sum of $6 million. 

This clearly depicts Meesho’s vision to expand its reach and grow its business, so we can expect more strategic investments from the Indian unicorn in the coming years.

Conclusion for Meesho Business Model

Although Meesho business model has been a game-changer for numerous small businesses and entrepreneurs in India, the current economic conditions and rising competition in the e-commerce sector pose significant uncertainty regarding Meesho’s future.

In addition to market competition and economic slowdown, consumers are increasingly demanding better-personalized experiences, faster delivery times, and greater convenience, leading to an influx of options. Meesho’s prime focus on empowering small businesses necessitates maintaining a quality product platform. This can only be achieved if the company navigates regulatory changes intelligently, without losing its market hold.

As the world continues to shift towards digitalization and online commerce, Meesho’s business model offers a valuable lesson in leveraging technology to create inclusive economic opportunities and drive sustainable growth. To stay ahead of market trends, Meesho must continue to innovate and adapt to changing circumstances.

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FAQs on Meesho Business Model

Is Meesho profitable?

In FY22 Meesho’s loss surged six and a half times to Rs 3,247 crores while their revenue also rose by 4.5x to Rs 3,232 crore than last year. This is all due to large expenditure of Rs 6,607 crore.

Who owns Meesho?

Meesho was co-founded by IIT Delhi graduates Vidit Aatrey and Sanjeev Barnwal in December 2015. The current CEO of Meesho is Vidit Aatrey, CTO is Sanjeev Barnwal and Chief Financial Officer is Jatin Mazalcar.

How does Meesho make money?

Meesho makes money by charging a commission to suppliers on its platform, they generate a huge sum of income from the logistic services they provide to suppliers, and advertisements run on the Meesho app are also a source of revenue.

Besides, they also generate profit from customer data they gather from their online platform.

When Meesho started?

Meesho was co-founded by IIT Delhi graduates Vidit Aatrey and Sanjeev Barnwal in December 2015.

Is selling on Meesho profitable?

Meesho charges a 0% commission rate for products of some categories making it the most profitable platform for manufacturers and resellers to sell online.

When Meesho sale start?

Meesho’s special offer sales for the year 2023 are: 

• Meesho Wedding Store (26th to 29th March)
• Mega Blockbuster Sale (23rd to 27th September)
• Maha Diwali Sale (7th to 11th October)
• Meesho’s Christmas Sale (24th to 28th December)

When did Meesho become unicorn?

Meesho joined the unicorn club in April 2021 after it raised funding of $300 million from SoftBank, valuing the company at $2.1 billion.