Introduction to Meesho
Meesho, founded in 2015 by IIT Delhi alumni Vidit Aatrey and Sanjeev Barnwal, is a social commerce platform that enables users to sell products online through popular social media sites like Facebook, WhatsApp, and Instagram. With a current valuation of $4.9 billion, Meesho has emerged as a prominent player in the e-commerce industry.
Overview of Meesho
Meesho’s business model is built around catering to first-time internet users, primarily located in small towns and rural areas, who are in search of quality products at affordable prices. More than 70% of Meesho’s customer base comes from tier 2 and tier 3 cities such as Jhansi, Mathura, and Dehradun. The platform serves as a valuable resource for resellers, including housewives, students, and young professionals, who leverage social media channels to sell products sourced from Meesho.
Founders and Background
Meesho was co-founded by Vidit Aatrey and Sanjeev Barnwal, both alumni of the prestigious Indian Institute of Technology (IIT) Delhi. Their vision was to create an inclusive platform that empowered individuals to become entrepreneurs and generate income through online selling. By utilizing social media platforms as the primary medium for transactions, Meesho has democratized access to e-commerce, making it accessible to a wide range of users with diverse backgrounds and skill sets.
The founders’ forward-thinking approach and understanding of the potential of social commerce have played a pivotal role in Meesho’s rapid growth and success. Their ability to tap into the unique needs of first-time internet users and provide them with a platform to sell products has positioned Meesho as a leader in the evolving e-commerce landscape.
As we delve deeper into Meesho’s revenue model, we will explore the different strategies and approaches that have contributed to its success and examine the company’s future outlook in the highly competitive e-commerce industry. For a comprehensive analysis of Meesho’s strengths, weaknesses, opportunities, and threats, refer to our article on Meesho SWOT analysis.
Meesho’s Business Model
To understand Meesho’s revenue model, it’s important to explore the various components that contribute to its financial success. Meesho employs a combination of strategies to generate revenue and sustain its business operations.
Commission-Based Revenue Model
A significant portion of Meesho’s revenue is derived from its commission-based revenue model. Sellers on the platform pay a commission on every successful sale made through Meesho. This commission typically ranges between 10% to 20% of the selling price. By charging this commission, Meesho earns revenue while providing a platform for sellers to reach a wider customer base and grow their businesses (Feedough).
Sourcing Division and Margin on Sales
Meesho also earns revenue through its sourcing division. This involves buying products in bulk from manufacturers and selling them to resellers at a higher price, thereby earning a margin on each sale. By leveraging its sourcing capabilities, Meesho can offer a wide range of products to resellers, providing them with profitable opportunities to sell on the platform. This sourcing division adds to the overall revenue generated by the platform (Feedough).
Payment Options and Logistics Partner Services
Meesho offers various payment options to customers, including cash on delivery, credit or debit card payments, UPI, and net banking. Providing multiple payment options makes it easier for users to make purchases on the platform, enhancing the overall customer experience. Each successful transaction through these payment options contributes to Meesho’s revenue (Feedough).
Additionally, Meesho benefits from its logistics partner services. The company earns a commission for every successful delivery made by its logistics partners. This mutually beneficial partnership ensures efficient order fulfillment and adds to Meesho’s revenue stream. By focusing on reliable logistics services, Meesho can enhance customer satisfaction and drive repeat business.
By employing a combination of a commission-based revenue model, a sourcing division, and revenue streams from payment options and logistics partner services, Meesho has built a robust and sustainable business model. This model allows the company to generate revenue while providing value to its sellers and customers.
Revenue Generation Strategies
In order to sustain its growth and profitability, Meesho employs various revenue generation strategies. These strategies allow the company to leverage its unique business model and cater to its target audience effectively.
Leveraging Social Media Platforms
Meesho has successfully leveraged social media platforms, such as WhatsApp and Facebook, for marketing and customer acquisition. By utilizing these platforms, Meesho has been able to reach a large audience and drive sales, contributing to its revenue growth (Feedough). The integration of WhatsApp has been a key aspect of Meesho’s revenue model and growth strategy, enabling small entrepreneurs to reach customers and grow their businesses (Economic Times).
Zero-Commission Model and Reseller Growth
One of Meesho’s unique selling propositions is enabling users to “resell” products listed by suppliers to earn a profit margin. This functions as a simplified dropshipping business model, where users set their own prices (cost price plus profit) for products listed on the platform’s marketplace. Meesho earns commissions from both the suppliers and resellers, providing a revenue stream for the company. This zero-commission model has been instrumental in driving reseller growth and expanding the platform’s reach.
Integration of WhatsApp for Business
Meesho has integrated WhatsApp for Business into its platform, allowing resellers to connect with customers and manage transactions seamlessly. This integration enables resellers to leverage the popularity and accessibility of WhatsApp, further enhancing their ability to reach potential buyers. By facilitating efficient communication and order management, Meesho can generate revenue through increased sales and customer satisfaction.
Focus on Affordable Products and Average Order Value
Meesho’s revenue generation strategy includes a focus on offering affordable products to its target audience. The average order value on Meesho is around Rs 600 per transaction, indicating a strategic emphasis on smaller, more affordable products. This approach allows Meesho to cater to a wider customer base and stimulate more frequent purchases, contributing to its revenue model’s success (Economic Times).
Diversification of Revenue Streams
To ensure sustained growth and profitability, Meesho has diversified its revenue streams. In addition to earning commissions from suppliers and resellers, Meesho also monetizes its social commerce platform through fees on logistics and payment services. This diversification of revenue sources has been crucial in sustaining the company’s growth and profitability (Economic Times).
By leveraging social media platforms, implementing a zero-commission model, integrating WhatsApp for Business, focusing on affordable products and average order value, and diversifying its revenue streams, Meesho has established a robust revenue generation strategy. These strategies contribute to the company’s overall success and position it for continued growth in the e-commerce market.
Meesho’s Unique Selling Proposition
Meesho, with its innovative approach to e-commerce, has a unique selling proposition that sets it apart from traditional online marketplaces. Let’s explore the key elements that make Meesho’s business model stand out.
Enabling Reselling and Profit Margin
Meesho’s business model revolves around enabling users to become resellers and earn a profit margin on each sale. Users can choose from a wide range of products listed by suppliers on the platform and set their prices by adding a profit margin to the cost price. This reselling model functions as a simplified form of dropshipping, where resellers don’t need to maintain inventory or handle shipping logistics. By empowering individuals to start their own businesses, Meesho opens up opportunities for entrepreneurship and income generation.
Targeting First-Time Internet Users
Meesho’s business model caters to first-time internet users, particularly those in small towns and rural areas. Over 70% of Meesho’s customers come from tier 2 and tier 3 cities such as Jhansi, Mathura, and Dehradun. These users often seek quality products at affordable prices and may have limited access to traditional retail options. Meesho’s platform provides them with a convenient and reliable way to discover and purchase products. By targeting this underserved market segment, Meesho taps into a significant growth opportunity.
Philosophy of “Socialize Shopping”
Meesho operates on the philosophy of “Socialize Shopping,” which encourages customers to shop with their friends and family. This approach creates a sense of trust and familiarity, as users can seek recommendations and opinions from their social circles. By integrating social elements into the shopping experience, Meesho aims to replicate the traditional offline shopping experience where interpersonal connections play a role in decision-making. This unique approach fosters a community-driven environment and enhances the overall customer experience.
Combination of E-commerce, Social Selling, and Dropshipping
Meesho’s business model combines elements of traditional e-commerce, social selling, and dropshipping. The platform provides a marketplace for suppliers to list their products, leveraging the advantages of e-commerce. Simultaneously, it empowers resellers to utilize social media channels to promote and sell these products, harnessing the power of social selling. Additionally, Meesho streamlines the logistics aspect by adopting a dropshipping model, where suppliers directly ship products to customers. This integration of multiple business models creates a synergistic approach that caters to the needs of both suppliers and resellers.
By leveraging these unique selling propositions, Meesho has carved a niche for itself in the e-commerce landscape. The company’s focus on enabling reselling, targeting first-time internet users, embracing social elements, and combining various business models has contributed to its rapid growth and success. As Meesho continues to expand and refine its operations, it will be interesting to see how it further evolves its unique selling proposition to stay ahead in the competitive market.
Future Outlook for Meesho
As one of India’s leading social commerce platforms, Meesho has achieved significant success in terms of gross merchandise value (GMV) and is positioned for future expansion. Let’s take a closer look at the future outlook for Meesho, including its GMV and expansion plans, the dropshipping model and commission-based earnings, monetization strategies, and overcoming challenges for continued growth.
Gross Merchandise Value (GMV) and Expansion
As of 2022, Meesho’s GMV has reached an impressive $4.5 billion, highlighting its strong market presence and potential for further growth. With its innovative approach to social commerce and a dedicated base of resellers and customers, Meesho is well-positioned to expand its operations and capture an even larger share of the e-commerce market.
Meesho’s expansion plans include targeting new customer segments and geographical regions, both within India and potentially beyond. By tapping into previously untapped markets and catering to the needs of first-time internet users, Meesho can continue to grow its user base and increase its GMV.
Dropshipping Model and Commission-Based Earnings
Meesho’s unique business model operates on a dropshipping framework, serving as a bridge between suppliers and resellers. This model allows Meesho to earn commissions from both parties. Suppliers benefit from increased sales through Meesho’s platform, while resellers enjoy the convenience of a ready-to-sell inventory without the need for upfront investment.
By leveraging the dropshipping model, Meesho has established a sustainable revenue stream based on commission-based earnings. The company charges rates typically ranging from 10% to 20% of the product price from both suppliers and resellers. Additionally, Meesho generates revenue by offering advertising opportunities to suppliers and charging shipping fees to customers.
Monetization Strategies and Revenue Generation
In addition to its commission-based earnings, Meesho employs various monetization strategies to drive revenue growth. These strategies include in-app advertising, subscription fees for enhanced features, and capitalizing on the data gathered from users and vendors. By diversifying its revenue streams, Meesho remains resilient in a competitive market and positions itself for continued growth.
Overcoming Challenges and Positioning for Growth
While Meesho’s future outlook appears promising, it is not without its challenges. The social commerce landscape is highly competitive, with other players vying for market share. Additionally, upcoming regulations in the e-commerce sector may require Meesho to adapt its operations. However, Meesho has demonstrated resilience and agility in the face of challenges, positioning itself for continued growth.
To overcome these challenges and sustain its growth trajectory, Meesho focuses on innovation, customer satisfaction, and strategic partnerships. By continuously improving its platform, enhancing the user experience, and forging collaborations with suppliers, logistics partners, and social media platforms, Meesho remains at the forefront of the social commerce industry.
With its strong GMV, innovative business model, and monetization strategies, Meesho is well-equipped to navigate the evolving e-commerce landscape. By capitalizing on its unique selling propositions and addressing challenges proactively, Meesho is poised for a bright future of growth and expansion.
