Ecommerce isn’t the identical we knew a decade in the past. The rise of social media platforms like Fb, WhatsApp, and Instagram has meant that there’s a brand new strategy to promote on-line – via social media platforms. And that is the place Meesho is available in.
Meesho is a social commerce platform that began with the purpose of constructing it straightforward for ladies in smaller cities and cities to promote on-line. However its enterprise mannequin has taken a number of twists and turns through the years. At the moment, Meesho is certainly one of India’s main social commerce platforms, with over 18 million registered customers.
So how does Meesho function and generate profits?
Let’s discover out.
What Is Meesho?
Meesho is a social commerce platform that allows customers to promote merchandise on-line via social media platforms like Fb, WhatsApp, and Instagram.
At the moment valued at $4.9 billion, the platform was based in 2015 by IIT Delhi alumni Vidit Aatrey and Sanjeev Barnwal to make it straightforward for anybody (particularly ladies) in smaller cities and cities to develop and launch their very own ecommerce companies.
However in contrast to different ecommerce platforms, Meesho is a social commerce enterprise. That’s, it doesn’t promote merchandise on to clients. Somewhat, it gives a platform for resellers to attach with producers and suppliers, and promote merchandise via their very own social media channels.
That is the distinctive promoting proposition of Meesho – its customers can ‘resell’ merchandise listed by suppliers to earn a margin charge. That is mainly a dropshipping mannequin of enterprise made easy.
All you want is a smartphone to enroll in a Meesho account. As soon as created, you possibly can flick thru completely different merchandise listed by suppliers. You’ll be able to share these merchandise as white-label on social media platforms like WhatsApp, Fb, and Instagram, at your individual value (price value + your revenue).
The Concept Behind Meesho Enterprise Mannequin
Even when on-line purchasing turned extra prevalent in India from websites like Flipkart and Amazon, many individuals, particularly the older era and folks from non-metro cities, didn’t belief these websites.
For them, comfort shops, small distributors, and different native enterprises had been extra precious and reliable for his or her retail necessities.
Furthermore, a number of visionary entrepreneurs in India lack assets and a platform to promote their merchandise. These individuals embrace housewives, college students, and stay-at-home mothers who need to begin their very own companies however can’t accomplish that due to the dearth of an internet presence.
Seeing this, entrepreneurs Sanjeev Barnwal and Vidit Aatrey started brainstorming concepts for his or her agency, “FashNear,” in 2015. Initially, they targeting growing a hyperlocal enterprise mannequin for vogue and retail, linking native sellers to web shoppers; they dubbed it “Swiggy for Vogue.” However there have been numerous obstacles related to the concept’s execution and the mannequin’s logistics.
After market analysis and data of client behaviour, FashNear was dubbed “Meri E-Store” (My E-Store), aka Meesho. It turned one of many first platforms in India to permit native retailers to cater to an internet person base and promote their outlets via social networks.
Meesho’s enterprise thought shortly gained traction amongst native retailers and secured backing from numerous traders. It was certainly one of three Indian companies chosen in 2016 by Y-Combinator, a distinguished startup accelerator in California, for a three-month $120,000 programme.
Who Are Meesho’s Prospects?
Meesho operates on a two-sided market mannequin and has two important buyer segments:
- Customers: Meesho primarily targets first-time web customers in small cities and rural areas who need good high quality and dependable merchandise at cheap costs. They’re usually extra value acutely aware and don’t belief on-line purchasing a lot as a consequence of concern of scams. In keeping with the corporate, greater than 70% of its clients are from tier 2 and tier 3 cities like Jhansi, Mathura, Dehradun, and so forth.
- Resellers: Resellers are clients who act as middlemen between Meesho and the tip shoppers. They use Meesho’s platform to supply merchandise and promote them additional to their social community at a marked-up value. As of 2022, Meesho has greater than 15 million resellers on its platform from throughout India. These are largely housewives, college students, and younger professionals who use social media platforms like WhatsApp, Fb, and Instagram to succeed in out to their private networks to promote merchandise.
Meesho’s Worth Proposition
Meesho’s energy lies in its social-ecommerce enterprise mannequin. It gives worth to its clients within the following methods:
For Resellers
Meesho gives resellers with a platform to begin and develop their very own enterprise with zero funding. It sources merchandise from suppliers at wholesale costs and affords the identical to resellers to promote to their target market.
Sellers create their branded shops on the Meesho platform and begin sharing merchandise with their contacts on WhatsApp, Fb, and Instagram.
Not simply this, Meesho additionally takes care of
- Packaging
- Logistics
- After-sales actions like buyer queries, product returns, and refunds on behalf of the resellers.
This fashion, resellers can deal with constructing their enterprise whereas Meesho takes care of the nitty-gritties.
For Customers
The largest downside with on-line purchasing in India is the dearth of belief. Within the inhabitants of 1.38 billion, only a few individuals store on-line (150 million) and even fewer make repeat purchases.
The rationale for that is the concern of being scammed or duped, particularly relating to shopping for merchandise from a brand new vendor or web site.
Meesho solves this downside by making an individual’s acquaintance (reseller) their contact level in shopping for merchandise on-line.
Apart from this, the merchandise out there on Meesho meet the shopper’s actual wants as they’re largely customised in keeping with their price range, preferences and placement.
How Does Meesho Function?
Meesho’s philosophy is to make ‘Purchasing Social’, i.e. individuals ought to be capable of store with their family and friends with out concern of getting scammed.
The way in which it really works is {that a} buyer contacts a reseller on Meesho, who in flip sources the product from Meesho’s platform and sells it to the shopper at a barely marked-up value.
This combines the normal ecommerce enterprise mannequin with the social promoting and dropshipping enterprise mannequin, which is what makes Meesho so distinctive and profitable.
These are the bottom operations of Meesho. Let’s look into another points.
Meesho’s Key Companions
From wholesalers to monetary establishments, Meesho has partnered with many massive and small gamers within the trade.
The platform is determined by 5 key companions:
- Suppliers: Meesho has partnered with suppliers from throughout India to supply a variety of merchandise. These suppliers embrace wholesalers, producers, and importers who checklist their merchandise on the Meesho platform. These suppliers get worth from the platform by way of 0% fee, 0 penalties for late dispatch, wider attain, and assured funds.
- Delivery Companions: To supply fast and dependable delivery, Meesho has partnered with main logistics firms like Delhivery, Ecom Specific, and Blue Dart.
- Fee Companions: With a view to provide a clean and handy cost expertise, Meesho has partnered with main cost firms like Paytm, Cashfree, and Razorpay.
- Advertising and marketing Companions: Meesho has particular contracts with numerous advertising and marketing firms like DVio Digital to deal with its advertising and marketing wants. The corporate additionally runs an affiliate marketing online marketing campaign to reward influencers and opinion leaders for referring new clients. These associates type essential companions within the Meesho enterprise mannequin.
- Monetary Companions: The corporate is backed by a few of the finest Enterprise firms and angels, together with YC, Fb, Naspers, Sequoia Capital, Shunwei Capital, and SAIF Companions.
Meesho’s Key Actions
Although it began particularly to assist resellers in promoting merchandise on-line, Meesho has now emerged as a excessive authority ecommerce platform in India. The corporate delivers its worth proposition by performing the next key actions:
- Offering a functioning market: The platform permits consumers and sellers to attach with one another and transact enterprise.
- Product high quality evaluation: To make sure that solely high quality merchandise are delivered to clients, Meesho has a group in place that assesses merchandise earlier than they’re shipped.
- Enabling resellers to promote merchandise on-line: It additionally gives a white-label reselling platform that permits customers to supply merchandise from Meesho’s catalogue and promote them on social media platforms like Fb, WhatsApp, Instagram and so forth.
- Producing consciousness and visitors: A two-sided market solely works if there may be sufficient visitors on either side of the platform. To extend consciousness concerning the platform and get extra resellers on board, Meesho runs in depth advertising and marketing campaigns. These campaigns use numerous digital channels like Google, Fb and so forth. to succeed in out to customers.
- Order dealing with: As soon as a buyer locations an order, the vendor has to obtain and ship the product. This requires Meesho to have a group of logistics specialists who deal with the end-to-end strategy of delivery merchandise from sellers to clients.
- Buyer help: In case of any points with respect to orders, funds, refunds and so forth., Meesho has a group of buyer help executives who assist resolve these points.
- Fee dealing with: Meesho acts as a intermediary between the shopper and the vendor. This implies it’s accountable for accumulating buyer funds and transferring them to sellers.
Meesho’s Key Channels
Although the platform targets individuals unfamiliar with web commerce, it nonetheless requires an internet presence to operate. There are three major methods Meesho reaches out to its potential clients:
- Working Channels: Meesho operates totally on its web site and cell software, which is offered for Android and iOS units. These channel type the major touchpoints for the corporate and its clients, the place they will browse and order merchandise.
- Advertising and marketing channels: The platform makes use of all three – natural, paid, and earned media – to succeed in out to its target market. It runs adverts on on-line channels Google, Fb, and so forth. and likewise makes use of conventional advertising and marketing channels like print ads and tv ads. It additionally has a YouTube channel the place it posts movies associated to reselling and different guides. The corporate additionally has a weblog that it makes use of to put up articles associated to ecommerce and reselling.
Meesho’s Key Sources
From workers to warehouses, the corporate has to take a position lots of assets to make sure that it might present a very good buyer expertise. A few of the key assets for the corporate are:
- Human assets: The corporate has a group of over 6,000 individuals that it makes use of for numerous functions like buyer help, know-how, advertising and marketing, and so forth.
- Monetary assets: Meesho has raised over $1.1 billion in funding from traders like Sequoia India, Shunwei Capital, RPS Ventures, Meta, and so forth.
- Expertise assets: The corporate has constructed a know-how platform that helps it with numerous operations like logistics, funds, and so forth.
- Logistic assets: The corporate has to make sure that the merchandise which might be offered on its platform are delivered to the purchasers on time. For this, it has tie-ups with numerous logistics suppliers.
Meesho Income Mannequin
Whereas offering a one-stop resolution for all of the wants of sellers, clients, and resellers, Meesho has additionally devised a novel strategy to monetise its platform.
In contrast to some other market, Meesho fees:
- 0 fee on product margins
- 0 penalty cost for order cancellation, late dispatch, or for some other mishaps
- 0 itemizing charges
What does this imply?
It implies that regardless of the value distinction is between what a product is purchased at and what it’s offered at, 100% of that goes to the vendor’s pocket.
But when Meesho doesn’t cost something from the sellers, how does it generate profits?
Meesho Income Streams
Meesho has devised a novel strategy to monetise its platform utilizing the next chargeable providers:
Delivery Charge
Meesho fees delivery charges from the resellers or the shopper. This delivery payment varies rather a lot relying on:
- Package deal weight
- Supply space
The corporate has segregated supply into three segments – native, regional, and nationwide and fees completely different delivery charges for every.
Part of the delivery price is paid to the delivery associate, and the remaining is the corporate’s revenue.
Nonetheless, the corporate provides the delivery price within the remaining value proven to the shopper and portrays the product provide to return with free delivery to make it extra likeable.
Ads & Promotion
The corporate affords to run CPC advert campaigns for sellers who need to promote their merchandise. The promoted adverts are given choice in search outcomes, get extra visibility on the homepage, and finally, result in extra gross sales.
The commercial prices are charged each week from the vendor payouts.
Penalties
The corporate fees the vendor delivery payment for merchandise that clients return. The corporate additionally penalises sellers who go for “Subsequent Day Supply” however fail to ship on time, with 2.5% of the order worth per day.
Apart from this, there are a number of different vendor penalties that the corporate fees if the vendor breaches the phrases of its provider settlement.
Meesho Price Construction
Operating a market just isn’t a straightforward feat and it comes with lots of prices. Right here’s a fast run-down of the Meesho price construction:
Expertise Prices
Meesho has constructed a robust know-how group that’s always engaged on bettering the platform. The know-how prices embrace the server prices, CDN prices and different associated infrastructure prices.
Advertising and marketing Prices
Meesho spends some huge cash on advertising and marketing and buyer acquisition. The corporate has run a number of TV commercials and different offline campaigns. It additionally spends a big quantity on on-line adverts.
Operational Prices
The enterprise’s day-to-day operations embrace prices equivalent to hire, order fulfilment, buyer help, and so forth.
Fee Processing Prices
Since Meesho makes use of third-party cost gateways (like Paytm, PhonePe, and so forth.), a small share of every transaction is charged because the cost processing payment.
Logistics Prices
Meesho has to incur the logistics price for every order that’s positioned on its platform. This price is mostly borne by the purchasers, however a small portion can also be borne by Meesho.
Common & Administration Prices
It consists of the staff’ wage, authorized {and professional} charges, and so forth., together with the final overhead prices.
Future Of Meesho
Whereas retaining the reselling mannequin as its core, Meesho is now making an attempt its palms on full-fledged e-commerce wars with the present marketplaces.
As of 2022, Meesho’s 75% of orders come immediately from the shoppers and the remaining 25% from resellers.
It will be fascinating to watch how Meesho makes an attempt to reinforce its reference to resellers, which kinds the muse of its complete social commerce technique. Nonetheless, with sound unit economics, Meesho appears to have a promising future forward.
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A startup marketing consultant, digital marketer, traveller, and philomath. Aashish has labored with over 20 startups and efficiently helped them ideate, increase cash, and succeed. When not working, he will be discovered climbing, tenting, and stargazing.