Meesho’s Road to Success

Meesho, founded in 2015, is a social media platform that allows people to resell products using their own social network. The very first problem faced by start-ups is to come up with a concrete business idea and so Meesho also faced a similar challenge. The very first idea was of FashNash, which was based on hyper-local demand for fashion. After working for quite a few months on this idea, it came a hard way to Vidit Aatrey (co-founder) that it wouldn’t survive and so they had to halt. This is the first stage when start-ups fall back after investing resources and getting no result out of it makes people lose motivation and leads to a lack of funds and resources, which is the second challenge faced by start-ups.

 The local traders who were already doing business through Whatsapp, Facebook, and other social media, Aatrey asked them to use the tool made by him and his small team. At the beginning of this phase, they were not earning but the free tool made by them was constantly growing. The shortfall of constant funding forces many start-ups to shut off, but it was not the case with Meesho. After some time, the two teams were created and both were doing good but running both of them for the long term would become troublesome and so they shut off one of the two profit-making teams and Meesho became their only focus.

Currently, Meesho managed to raise $300 million with a revenue of INR 307 crore in FY20.

We hear a lot that there is a lot of scope for development in India, but is it actually true? As a matter of fact, Yes and No. India being the second most populated country with an open economy and entrepreneurial spirit in the people, gives India a positive boost for economic growth, especially with streaks of start-ups emerging in the economy. According to a recent study, 90% of startups fail within the first five years of their inception. Meesho, a fast-growing unicorn in 2021, stood out. Meesho does not sell or resell any of its own products, rather all products listed are sold by third-party sellers with the help of social media. It uses a simple yet effective way of audience targeting and marketing model. It has four major entities running the business. These are:

  1. Seller- He/she manufactures the product and is the supplier of goods to be sold. 
  2. Reseller/User- He/she is the customer base for the meesho. The person browses the product and promotes the product among his/her social network with the help of various social media platforms.
  3. Meesho itself- The app or the website provides the platform for the users to run their business through reselling. 
  4. End users- These are the people who do not have direct contact with meesho, rather they are people from a reseller’s connection who wishes to buy the product. 

With the selling of each product by the reseller, Meesho charges delivery charges along with 10%-20% commission based on the product. 

Let us find out the reasons for Meesho to experience a success streak in a short span. Undoubtedly, the Indian consumer market is growing and other external factors are responsible.

Accessible and Affordable internet

The oncoming of Jio made it cheaper for people to get access to the internet and so Meesho now has customers from two-tier and three-tier cities. Along with Jio, Whatsapp was also growing and it was the first social media with the largest number of people using it. Social commerce was getting popular around the corner when Meesho was budding but there were challenges of lack of supply, logistics, payment options, and so on. To take care of this issue, it simply started connecting with sellers who in turn connect with customers through social media platforms which looked after logistics, payment methods and provided real-time updates. Soon, the platform took pace and delivered orders from 100K+ registered suppliers to over 26,000 pin codes in more than 4,800 cities, helping generate over Rs 500 crore in income for entrepreneurs and serving customers in more than 4,500 Tier 2+ cities. 

A large amount of competition is also a reason that start-ups close down. In the case of Meesho, there is still a possibility of competition as other large social media platforms might start the same. But it is believed that the competition will not survive for long because it is almost impossible for such a big platform to have a ground relation with all its users. Also, this business model is entirely new in practical working which gives Meesho the first-mover advantage. Meesho has already caught the pace and is grabbing a lot of customers to its platform. In case of any competition, it will be difficult to gain such a user base without any uniqueness that makes the business stand out from Meesho. Even in that case, Meesho will always have the first-mover advantage as it will already be ahead in knowing the market. So there is a slight possibility of competition but to date, Meesho is running in monopoly. 

Building Customer Ecosystem

Another reason for start-ups to fail is that they fail to gain the trust of the people. Meesho built an ecosystem online that includes the people of their own community making the factor of trust deficit to get reduced to a very minimal level. There are a lot of small and micro start-ups in India. Also, there are a lot of females who wished to be entrepreneurs but lacked in terms of funding, logistics, proper supply of goods, and many other things. And here is when Meesho comes into the picture, providing support to these budding businesses who lacked resources of any kind. It made the perfect use of the existing technology and provided a virtual business store to all the people, especially women who wanted to run their own business. Meesho provided all the resources required to run a business, all the customers had to do was promote the product within their connection and make a sale. People who resell the product are required to just promote the product and the final users who buy the product make a purchase from their connections. This framework avoids trust deficit from being a challenge. 

Price Advantage

The last and very important factor which causes even a blooming start-up to fall shut is gaining unrealistic expectations. This means when a business starts growing, people start focusing on making more profit, which is not a good approach in doing business. For any business to grow, sustainability is a very important factor. People start compromising with quality over quantity. This was also faced by Meesho and in order to avoid the situation, the founder of Meesho makes sure that after every 6 months a team is set out to look after all the faults and they make sure to clear all the debts.,at%20a%20decrease%20acquisition%20cost.