Meesho is an India-based social commerce platform set up by two IIT Delhi graduates (Vidit Aatrey and Sanjeev Barnwal) in December 2015. The platform enables small businesses and individuals to start their online stores via social channels such as WhatsApp, Facebook, Instagram, etc. Meesho operates a three-sided marketplace that connects suppliers and resellers with customers on social media.
How does Meesho work?
Meesho asks small manufacturers, who largely sell unbranded products, to upload their catalog on their platform. Once these catalogs are available on the platform, distributors could browse the catalog and share them via Whatsapp. End-user continued to get the product information via Whatsapp. What’s in it for the distributor?
Meesho as a platform allowed distributors to add a profit margin to the total cost. The total cost here corresponds to the Manufacturer’s cost plus shipping cost. The margin would be anything that the distributor will take and that would be her profit. Over and above this, both distributors and manufacturers had a large network at their disposal to expand their business.
Basis the WhatsApp details shared, any person who received the message could purchase the item. In the Non-Meesho model, the distributor would have to take care of the delivery. Meesho, in their way of doing business, took out the delivery pain from the distributor’s bucket. This helped in eliminating the need for Inventory. Inventory is usually the major cost in a supply chain business. If you eliminate product delivery, most of your cost becomes zero.
How it started
Their motto to start this startup is Empower the Women. They aimed to celebrate the financial Independence of Indian Women.
It was in 2015, Vidit Aatrey (Founder & CEO) of Meesho decided to quit their Job from InMobi and start his own venture. They both were batchmates (2008-12) and came up with the idea to build a platform to help MSMEs (Micro Small and Medium Enterprises).
Vidit Aatrey, an IIT alumnus, along with his friend Sanjeev Barnwal started conceptualizing an idea in the fashion space. They came up with Fashnear, a hyperlocal startup in the fashion startup. This startup planned to follow the O2O model (online to offline). Fashnear as a business idea could not take off. However, it did provide some valuable insights to Fashnear team.
Learnings from FashNear
Vidit and Sanjeev, during the FashNear experiment realized that in India, an elaborate supply chain of wholesale > distributor > mom and pop store is deeply rooted. This supply chain governs the retail business in India. 90% business is concentrated in these retail stores. There was an upcoming trend that caught their attention. Many small business owners in India, especially Gujarat, bought various fashion segment items from small manufacturers. They distributed these items using WhatsApp. Another use case was of stock clearance. Manufacturers would circulate their stock clearance information via WhatsApp. Basically, WhatsApp was taking shape of a business platform.
They realized that the “Fashnear” business model was not working because people were less interested in their products being local and more about sales. Where an online store sells its products 24/7, 365 days, the offline stores they were tying up with could only offer end-of-the-season sales.
For instance, when they met with a local shop owner in Koramangala, was especially enlightening the new concept. This happened because we were told that he was already selling his products online through the social media platforms Facebook and WhatsApp groups where he uploaded photos regularly.
These customers would place an order and one of his employees would make the delivery and collect the cash. Therefore, this simple yet powerful business model was very inspiring to them.
Working on an alternate
Vidit Aatrey (Founder CEO) said “Meesho” stands for “Meri Shop” or apni dukaan. Meesho helps individuals to start their own online selling business with Zero Investment because most individuals want to start their own business but they do not have access to capital. It helped many individuals turned self-employed people to grab the opportunity and do something by own.
Meesho Raises $570 Million
Meesho has more than doubled its valuation in less than six months, to $4.9 billion, as a growing number of high-profile investors back the Indian social commerce startup that is reporting strong growth despite the pandemic. Prosus Ventures, SoftBank Vision Fund 2, Facebook, Good Capital, Symphony International Holdings Limited, and Trifecta Capital also participated in the new round, which didn’t involve any secondary transaction, according to Messho’s Co-Founder Vidit Aatrey.
However, the startup has aimed to help women start their business without need for any capital.
As of April this year, 13 million entrepreneurs and over 100,000 suppliers were using Meesho. Aatrey declined to share new figures, but said “we have grown 3x since the previous fundraise.” Meesho, which like other e-commerce firms was severely impacted by the first wave of the pandemic last year, has fully recovered.
Also, the startup has become a complete “horizontal player, where customers are buying from every category, including fashion, lifestyle, personal care, electronics and accessories, and automotive.”
Earlier this year, Meesho expanded to the grocery category. Aatrey said that the startup is making fast inroads in the space. The startup plans to deploy the fresh capital in part to broaden its research and development efforts and it hopes to increase its team by three times in the next 18 months, he said. It has set an ambitious goal to reach 100 million transacting users by the end of next year.
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