Meesho Business Model With Deep Exploration 2022

The Meesho Case Study is the best example to realize how a business grows with the ultimate speed by having a proper strategy of the business, marketing, and analysis, this article will reveal the meesho business model with the complete case study.

Many startups are started every year and months in the world get closed, some become successful.

The difference between these category startups is the strategy, marketing, budgeting, and business plan.

Meesho is one of the fast-growing e-commerce companies. Meesho is the fastest-growing segment in India, however, it’s very tough to launch a startup in the e-commerce field.

90% of e-commerce startups fail in the first year of starting, and in this situation, if I tell you that a startup company gains the valuation of 30,000 crores rupees in just five years, you won’t believe it, right?

Yes, and the name of that e-commerce company is “Meesho”, in this article, we are going to explore how Meesho started its career as a reseller app, and today it is going to become the third-largest e-commerce company in India.

Meesho Case Study

Meesho is one of the fastest-growing social e-commerce companies, and it was launched with a very different business idea.

And the case studies are made only on those business models which have been executed successfully with unique business ideas and strategies.

Similarly, Meesho found a loophole in the market in the reselling industry and then started their startup, and today you can see where it is!

So, without wasting time, let’s explore the Meesho Case study, and deep dive into Meesho’s business model, business strategy, revenue model, and all things.

About Meesho – Overview

Meesho is one of the fastest-growing e-commerce and social commerce companies in the world.

In the beginning, Meesho was a reselling app that you can call the trading app as well from which the resellers were reselling the products on social media.

Resellers were picking the products from Meesho and reselling them on social media like Facebook and Whatsapp.

When they were getting the order, they were placing it on Meesho, and the suppliers of Meesho were delivering the orders to the customers.

Here the end customer was believing that he or she had bought the products from the reseller, whereas in fact, the product was delivered by the supplier of Meesho to the customers.

By this chain, the reseller was getting the commission, Meesho was keeping some amount of commission with it, and the main supplier was getting sales.

So, Meesho was started by the B2B business model, and with the ultimate growth converted into the B2C business model.

Foundation and Journey of Meesho

Meesho was founded by the two IITians of Delhi IIT institute in 2015 named Vidit Aatrey and Sanjeev Barnwal.

They thought of starting a startup and according to their business model, they wanted to carry the local shop business online.

According to this idea, they were supposed to make an application and make the local sellers register on that app and customers can purchase the products from that app from the sellers.

So, we can say that they wanted to develop the Zomato of online shops, but they noticed one more abnormal thing in the market.

They observed that many people were not purchasing the products from themselves, they were purchasing the products for their customers, in short, they were reselling the products.

The founders of Meesho noticed this behavior in many people and noticed that the people doing reselling are growing with the ultimate speed in India.

In this situation, they made a little bit of a twist in their business model and started to deliver the products to the resellers by becoming the supplier.

Their sales increased over time, and they came to know about the potential of this business.

Resellers are increasing very fast in India, and the suppliers who are willing to give their products to resellers are also increasing very fast in India.

Supportive Events Occured in Surrounding

However, luck is not considered a strong and needy element in the business segment, but some events force us to believe so.

In the case of Meesho, some events occurred meanwhile which address that Luck was with Meesho.

During this period, the UPI system was launched, at the same time, Jio got introduced with the fastest internet technology, and due to the good features but the cheap rate of Chinese smartphones, almost everyone had the smartphone.

Now, after analyzing all these events and opportunities, Meesho was perfectly ready to launch its startup in 2015.

It’s easy to reach this level, but the actual difficulty comes after this when you need money to expand your business.

After making the mobile app, the founders needed more money to grow and to market on a bigger level, and again Meesho got luck by getting funding from the Y combinator.

Meesho was selected for funding from the Y combination which is the world’s biggest accelerator program.

And this was just starting for Meesho, after that, it got funding from many investors.

  • Y Combinator – $1,20,000 – July 2016
  • Funding from VC – Undisclosed- July 2016
  • Saif Partners – $3.1 Million – Oct 2017
  • Sequoia Capital – $ 11 Million – June 2018
  • Shuwei – $50 Million – November 2018
  • Facebook – Undisclosed – June 2019
  • Naspers – $125 Million – Aug 2019
  • Softbank – $300 Million – April 2021
  • Fidelity & B Capital -$570 Million – Sep 2021

By raising one by one funding, the valuation of Meesho became Rs 30,000 crores in just five years.

Business Model of Meesho

Initially, the business of Meesho was a business-to-business model, it was a trading platform wherein the Meesho app at one end there were suppliers, and on the second end, there were customers.

Resellers were selling the products through the medium of the Meesho app and suppliers were delivering the products to the customers.

Due to this reason, customers were not able to fetch where they received the products from, it seemed that the product was delivered by the reseller.

In this way, like a trading platform, Meesho was working and marketing itself among the people with the campaign of Join Meesho, Earn Money Online, Create Your Online Business, Work From Home.

Meesho was an aggregator platform that was managing the suppliers and resellers, but there was a FLAW in this business.

Challenges in Meesho Business Model

The flaw was the delivery cost, the delivery cost was too expensive which Meesho was providing free of cost to its resellers, and as the mediator, Meesho was providing the delivery and payment gateway as well.

But the online deliveries are very costly and complex in India and that is why Meesho was providing it free of cost to the supplier to solve the problem, and due to this reason, Meesho was committing a very big loss also.

The second problem was the law quality and unbranded products. The suppliers with meesho all were local and they were not the registered brands, and due to this reason, the quality of the end product was very low.

The returns were increasing very much due to the low-quality products and it was another reason for the loss.

The third biggest problem of Meesho was that it could not charge a higher commission from the sellers.

If Meesho would charge high prices to the sellers, the cost of the product would increase and the resellers would not be able to sell to the end customer.

So that Meesho had to keep its commission very low so that the suppliers could offer the products at lower prices and resellers could be able to sell them with ease of access.

Due to these three problems, despite having a great business idea, Meesho was committing the loss from Day 1.

If you check, Meesho committed the loss of Rs 315 crores in 2020, you can see that the company which was saying that we would make your business, or you can start your business with us, that company was not profitable in itself.

Meesho Business Model chart

How Meesho Deals With Problems

In this business, gaining growth, and doing marketing was easy, but becoming profitable was challenging.

So, Meesho made the business strategy with smartness. Initially, they would grow their business as a reselling platform, raise more funding after growing the business, and after raising more funding, they will convert their reselling platform into an e-commerce business platform.

The basic strategy was to do marketing a lot, approach the people to associate their business with Meesho, and gain a very high growth.

By showing the growth to the investors, they will raise too much funding, and then after getting funding from investors, they will convert their reselling business to an e-commerce business.

But by doing this, many people who trusted Meesho and ran their business on the platform of Meesho, all lost their business as resellers.

Because of which products the resellers were doing marketing to their customers, the same product was being marketed by Meesho don’t he TV and other digital platforms at low cost.

As a result of this, the customers who were buying the products from the resellers started to buy the products from Meesho directly, and resellers lost their position in the market.

Final Words on The Meesho Case Study

From the case study of Meesho, we came to know that we should change the business idea and strategy when the market moves.

Most founders do that if they think that they want to build a product in a particular niche, then they stick within, and if the market trend curves, they ignore that curve and stick to their plan and commit loss sometimes.

Meesho noticed in its initial release that many resellers are coming into fashion, and the market for reselling business is growing.

They acted smartly, they found a great market and changed their business idea completely, so it is very important that you love your market more than your idea.

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