Meesho building portfolio to tap next billion users: CXO Utkrishta Kumar

At a time when a growing number of tech-startups have halted their expansion plans, Meesho is expanding and diversifying its product portfolio. The SoftBank-backed e-commerce firm aims to become a horizontal shopping destination for the next billion consumers in India.  For this, Meesho would offer a wide and quality assortment at the lowest price while penetrating both urban and Bharat consumers.

This the company is planning to do even as it brings down its burn rate. Meesho has cut monthly cash burn by 90 per cent to $4 million. Though spending has come down significantly, the company said it continues to be on a fast growth trajectory. 

These efforts are expected to help Meesho achieve profitability and prepare the firm for its public listing. Meesho’s revenue jumped 4.5-fold to Rs 3,232 crore in FY22 from Rs 792 crore in FY21. However, losses widened to 7.5x to Rs 3,247 crore, according to data accessed by the business intelligence platform Tofler. 

Meesho said the levers of profitability include improvement in user acquisition costs with an increase in organic traffic (85 per cent of the traffic is now driven by repeat users).

“We are focusing on profitability because we have reached a certain scale and we plan to get ready for an IPO roadmap,” said Utkrishta Kumar, CXO, Business at Meesho, in an interview about the strategy to diversify the company’s product portfolio. 

With 273 million installs in CY22, Meesho said it was India’s most downloaded shopping app. Annual transacting users surged to 140 million, up 80 per cent, while the company saw a record 910 million orders in CY22, up 135 per cent, showcasing the platform's growth momentum.

“It's a natural evolution,” said Utkrishta Kumar, CXO, Business at Meesho, in an interview about the strategy to diversify the company’s product portfolio. “From being on a platform that was over-indexed on fashion, we are seeing categories such as beauty and personal care, consumer electronics as well as home and kitchen as the next growth frontiers for Meesho.”

Kumar said these categories are now almost at par with fashion and will drive maximum growth. Throughout 2023, Meesho expects them to grow by 40 per cent on its platform.

Meesho competes with players such as Walmart-owned Flipkart, Amazon and Reliance's JioMart. The firm has raised a total funding of about $1.1 billion from investors such as B Capital, Prosus Ventures, SoftBank and Facebook. Meesho was last valued at $4.9 billion in September 2021.

The platform now has 100 million lifetime product listings. Customers from tier 2 markets like Deodar, Malegaon, Port Blair, Amaravathi, and Bikaner account for 80 per cent of all shoppers on the platform.

In the past, new e-commerce customers preferred to shop largely for fashion. Meesho is seeing this trend slowly changing. New to e-commerce customers are increasingly veering towards categories such as personal care and wellness, home and kitchen, office supplies and stationery, pet supplies and books. 

As more people adopt pets, the demand for pet supplies has increased. At Meesho, orders have grown by 1300 per cent since November 2021 with Anantapur, Bangalore, Delhi, Nellore and Panipat; emerging as top contributors. Products related to fish and dogs contribute to 65 per cent of the orders. Customers tend to purchase multiple pet accessories such as leashes, harnesses and collars. Within this category, grooming has gained immense popularity over the past few years. Meesho is witnessing increased demand for body scrubbers, toothbrushes, nail trimmers, shampoos and toothpaste for pets. 

In the sports and fitness category, 80 per cent of the orders are coming from tier 2, 3, and 4 cities. The major contributors are Lucknow, Srinagar, Jaipur, Noida and Surat. The rising popularity of unconventional sports such as baseball, skating, camping and fishing is fuelling the growth of this category through e-commerce. Generally, Meesho said these products are not easily available in tier 2+ regions. On Meesho, the fitness category primarily sees traction from young users between the ages of 18-30. The firm also sees maximum traction for items geared towards children. Young children tend to place orders on their parents’ phones. 

The firm recently crossed the milestone of 1.1 million sellers on its platform with more than 600,000 small businesses signing up in the last one year. More than 80 per cent of these 1.1 million sellers are new-to-e-commerce and Meesho was their first exposure to the world of online selling. Nearly 50 per cent of these sellers come from Tier 2+ regions and remote corners of the country.