Social commerce platform Meesho targets 20 million resellers by 2020

Meesho claims to have created an alternative distribution channel by empowering housewives, aspiring entrepreneurs, students, to launch, promote their online businesses using social media channels

Ahmedabad-based homemaker Kavita Khatadia wanted to be an independent woman. Now she earns around Rs 20,000 a month using her smartphone while sitting at home, that too without much investment or a brick and mortar store. 

Khatadia, who is linked with Bengaluru-headquartered Meesho, an online mobile platform for social sellers, sells products via social media and messaging platforms like WhatsApp and Facebook.

Sanjeev Barnwal, co- founder of Meesho

Founded in 2015 by IIT Delhi graduates, Vidit Aatrey and Sanjeev Barnwal, the start-up has recently raised $50 million in a Series C funding round led by Sequoia India. Shunwei Capital, DST Partners, RPS Ventures, SAIF Partners, Venture Highway, and Y Combinator also invested in this round.

Meesho will use the fresh funds to build a stronger product, scale its technology team, besides expanding to more categories and scaling domestic and international supply base.

“Social commerce enables anyone across all age groups to become micro-entrepreneurs. Women can now start their businesses online without much investment,” said Mohit Bhatnagar, managing director, Sequoia Capital India Advisors.

Product concept

Meesho claims to have created an alternative distribution channel by empowering housewives, young mothers, aspiring entrepreneurs, students, and teachers to launch, build and promote their online businesses using WhatsApp, Facebook and other social media channels. 

“Our product allows users to start their boutique on social platforms such as WhatsApp and Facebook and sell products via drop shipping (and hence, no capital needed)," said Aatrey.

The company currently caters only for the lifestyle segment, but it is planning to foray into other categories, too.

“First, our idea was Fashnear (Swiggy for fashion) but we soon pivoted to Meesho, an online platform for social sellers,” he said.

Vidit Aatrey ,co- founder of Meesho

Meesho has more than 5,00,000 resellers on its platform. The average monthly income of a reseller is around Rs 10,000 per month, the co-founder said.

It has a presence in more than 500 cities and towns.  

The company has set a threefold future plan — creating more demand by penetrating into newer geographies, adding product categories, and finding more suppliers from India and abroad.

Revenue model

Meesho charges a commission from its suppliers on the platform. “Commissions vary between 10 and 20 per cent of the product value,” said the co-founder. A reseller on Meesho’s platform gets 10-20 per cent commission for selling a product.  

Opportunity

Sales through social media platforms account for over 79 per cent of the total online sales of goods and services in India, according to a PayPal report. 

“We are targeting the unorganised, offline retail commerce market by moving these shopowners from offline to social platforms. This is about 80 per cent of India's total commerce market. No other player is comparable to us," claimed Atrey. Other players in this space are Wooplr, Glowroad, and Shop10.  

He said Meesho is “unit economics positive”.

The growth rate of the company has attracted marquee investors to invest in it. Meesho’s social selling platform aims to create “20 million successful entrepreneurs by 2020”, he said.

Challenges

Aatrey said tapping vernacular users in towns is a key challenge for the company. We have launched our app in six languages and will add more soon, said he. More than 30 per cent of Meesho’s user-base is non-English speaking.

Fact Box: 

Founded: 2015

Funding  

2016: $500,000 (Seed; led by Y Combinator, Venture Highway)

2017: $3 million (Series A; led by SAIF Partners)

2018: $11 million (Series B; led by Sequoia India)

2018: $50 million (Series C; led by Sequoia India )

Area of business:  Social commerce, currently in lifestyle

Expert Take:  Build ad network for suppliers

Farid Ahsan COO & co-founder, ShareChat

Meesho is definitely a great platform for enabling new e-commerce. The potential for hyperlocal e-commerce is immense, especially with our new internet users. I believe that as the average Indian internet user's maturity rises (the average of the overall 500 million internet users of India), and our content and community become entirely digital, our commerce would eventually see a spike via digital media, just like the way the early Indian internet adopters from early 2000s witnessed over the last decade.

A challenge for Meesho to solve would be around increasing demand side for their suppliers. Their e-commerce dynamics should be different from what we now have as the “traditional e-commerce” — more similar to PPDAI in China, eventually and Shopify in the shorter term, less like Amazon. Key to maintaining growth in this segment would be to keep fuelling the chicken and egg of demand and supply. A method can be building an advertising network for its suppliers or spreading the word via content or community on platforms like WhatsApp groups, ShareChat, and Clip.