"Meesho's Innovative Social Commerce Approach Challenges Amazon and Flipkart in India's E-commerce Landscape”

Meesho, a social-commerce platform based in Bengaluru, India, is gaining significant traction and challenging the dominance of Amazon and Flipkart in the Indian e-commerce market. Here are some key reasons behind Meesho's success and its unique position in the Indian e-commerce landscape:

1. Social Commerce Model: Meesho's unique approach allows users to sell products to their friends and contacts via social media platforms like WhatsApp, Facebook, and Instagram. This leverages the power of social networks for sales, making it easier for individuals to become entrepreneurs and generate income.
2. Mass Appeal: Meesho targets a broader demographic by focusing on simpler goods like clothing and household items, catering to the majority of Indian consumers who are accustomed to shopping at local stores and are transitioning to online shopping.
3. Ease of Use: Meesho's app is known for its user-friendly interface, wide product selection, and competitive pricing, attracting 127 million downloads during the first half of the year, surpassing Amazon and Flipkart.
4. Investment Backing: Meesho has secured substantial funding from prominent investors, including Meta (formerly Facebook), SoftBank's Vision Fund, Sequoia Capital India, and B Capital Group. This financial support has allowed Meesho to grow and expand its reach.This is true especially if you’re building for colder markets like tier 2+ cities. While the data pointed to clear market growth for Tier 2+ cities, COVID-19 accelerated the game and gave Meesho a fresh supply of funds.

5. Profitability Focus: Unlike many other e-commerce platforms in India that operate at a loss to drive growth, Meesho is committed to profitability. It has managed to control marketing and tech costs while maintaining revenue levels, making it a unique and sustainable player in the market.

Meesho has a way to go to catch Amazon and Walmart, which have together pumped more than $22 billion into India since 2014. Each commands around $20 billion of online sales in India annually, combining for about 60% of India’s total, according to a report from U.S. investment firm AllianceBernstein. Meesho is responsible for about $5 billion, or 7% of India’s total sales.

Flipkart burnt over USD 3.7 billion in cash in about a year till September 2022. The company, in July 2021, raised USD 3.6 billion (about Rs 29,000 crore), which has been completely exhausted, according to regulatory filings.

While Flipkart's promotional expenses were alone 1,946 crore in FY22, Meesho managed to get its marketing costs down by 80% and tech costs by 60% over the last year - and maintained revenue levels.

6. Market Growth: India's e-commerce market is on the rise, with expectations of significant growth in the coming years, especially in smaller towns and villages. Meesho is well-positioned to capture this market share.in 2022 Meesho surpasses Amazon in festive order volumes, and Flipkart leads the market.

E-commerce firms such as Amazon, Flipkart, Meesho, Reliance's JioMart and Tata Group have been running various parallel sale events. With The Conclusion Of Festive Sale 1, The Online Retail Platforms Have Seen A Robust 27 Per Cent Year-Over-Year Growth, Clocking A Sale Of $ 5.7 Billion ( Rs 40,000 Crore), According To The Report By Redseer.

Meesho has emerged as the second-largest player by order share in this year’s festive sales till now, surpassing Amazon, while Flipkart Group platforms topped the market in both orders and gross merchandise value (GMV), according to a report by consultancy firm Redseer

Flipkart/ Amazon's AOV is ?1.5K to 2.5K ??

Meesho's average order value is ~ ?500 ??

But, it's profitable & it's the silver lining ??

6. Customer Retention: Meesho's success is not just about acquiring new customers; it excels in retaining existing ones. A substantial 85% of Meesho's orders come from returning customers, emphasizing the importance of customer loyalty.

7. Potential IPO: Meesho's profitability puts it in a favorable position for a potential initial public offering (IPO). This contrasts with other loss-making e-commerce companies that face challenges in the stock market.

One of the reasons PayTm IPO went south at the start (and boy they have recovered so well) is the whole loss-making perception by retail investors. Meesho's profitability puts it in a comfortable spot for the coming IPO

8. Ecosystem Maturation: Meesho's shift from a "growth at all costs" strategy to a "profit first" approach signals the maturation of the Indian startup ecosystem, where profitability is becoming more critical.

9. Inspiration for Bharat Startups: Meesho serves as an inspiration for startups targeting the Indian market, particularly those focused on serving the "Bharat" demographic, which represents a significant portion of the population.

In summary, Meesho's unique social-commerce model, focus on profitability and appeal to a broader customer base have allowed it to challenge the dominance of Amazon and Flipkart in the Indian e-commerce space. While it still has a long way to go to catch up with these giants in terms of market share, Meesho's success highlights the potential for innovative approaches in the rapidly growing Indian e-commerce market.