In recent years, India has witnessed a remarkable transformation in its e-commerce sector, with new players emerging to challenge traditional giants. Among these players, Meesho stands out as a trailblazer, becoming the country’s first horizontal e-commerce platform to achieve positive cash flow. This significant achievement comes at a time when many other e-commerce companies are struggling to maintain profitability amid an increasingly competitive landscape.
Backed by major investors like SoftBank and Prosus, Meesho has carved a unique niche by focusing predominantly on customers in smaller towns and cities across India. The financial year ending in March 2024 marked a pivotal moment for the startup, as it reported an operating cash flow of ₹232 crores (approximately $27.6 million). More impressively, Meesho’s operational revenue surged by 33% compared to the previous year, reaching ₹7,615 crores (about $905.6 million). This growth trajectory is remarkable, especially when considering that the Indian e-commerce market is experiencing a general slowdown; projections indicate a moderation in growth to around 17% in 2024 before rebounding to approximately 20% in 2025.
Challenging Industry Dynamics
While Meesho’s growth trajectory is impressive, the broader e-commerce landscape in India poses challenges. With consumption patterns evolving, the apparel industry, a major contributor to online sales, is also experiencing slower growth. Major competitors like Flipkart have managed to increase their revenue—21% to $2.12 billion—but not without incurring significant losses, which, despite a 41% reduction to $280.4 million, remain substantial.
In addition to established players like Flipkart and Amazon, the rise of quick commerce platforms has introduced a new dynamic in urban areas. Companies like Blinkit and Tata-owned BigBasket are expanding rapidly and reshaping consumer expectations with lightning-fast delivery times. For instance, Blinkit has doubled the number of stock-keeping units available, illustrating the growing competitive pressure on traditional e-commerce platforms to innovate and adapt.
To maintain its edge, Meesho is not only expanding its customer base but also enhancing its logistics capabilities. The launch of its own logistics service, Valmo, is a testament to this strategic move, allowing Meesho to optimize shipping costs and improve delivery efficiency. Currently, Valmo handles approximately 35% of Meesho’s orders, reflecting the company’s commitment to managing its supply chain more effectively than many competitors who rely heavily on external partners.
Meesho’s growth is further fueled by its deep penetration into Tier 4 cities and beyond, with 45% of its customer base coming from these underserved markets. This strategy of targeting less saturated regions is yielding a significant increase in unique transacting users, projected at around 145 million annually. This represents about 10% of the Indian population and underscores Meesho’s vital role in democratizing e-commerce access across the country.
Looking forward, Bank of America predicts the entrance of around 120 million new online shoppers in India by the end of 2027, with a significant portion coming from Tier 2 and 3 cities. This influx marks a transformative opportunity for e-commerce companies eager to tap into new customer segments. Approximately 75% of these new consumers will be first-time online shoppers, emphasizing the potential for sustained growth in the sector.
Meesho’s strategy of focusing on traditional markets while innovating its logistics and service offerings places it at a unique advantage. By catering to the needs of underserved markets and leveraging technology to streamline operations, Meesho embodies the future direction of e-commerce in India. As the competition heats up, it will be fascinating to observe how Meesho continues to evolve and redefine the shopping experience for millions of newfound digital consumers.