Fuelled by SoftBank, Meesho shifts into fifth gear in uphill climb

Meesho’s been on a tear ever since it scored Facebook as an investor two years ago. In October, the social commerce platform’s sales hit nearly $1 billion, boosted by its army of resellers comprising small store owners and homemakers. It’s now onboarded SoftBank as an investor, with plans to fix its unit economics and dig deeper into categories that aren’t fashion. That’s in part because growth in fashion, which accounts for about two-thirds of Meesho’s sales, has plateaued.

Meesho emerged as a force to reckon with in 2019 following the Facebook deal. For the young startup eclipsed by ecommerce giants, the investment, Facebook’s first in India, meant more than just capital. It was a validation of its business model. It was sharply strategic as well, given that Facebook platforms WhatsApp and Instagram are where nearly all of Meesho’s buyers are.

“Prior to this investment (by Facebook), investors argued that WhatsApp, Facebook and Instagram would make it easy to sell online and resellers would become redundant. But this deal validated the model,” said a person directly involved in SoftBank Vision Fund’s $300 million investment in Meesho that was announced on Monday.

The SoftBank investment has propelled the 5-year-old company into Unicorn territory with a valuation of $2.1 billion.

Meesho, which is at least three times larger by sales than its closest competitor, Glowroad, has redefined India’s playbook for social selling. 

“With about 700,000 orders a day, Meesho is one-third the size of Flipkart and Amazon,” said an investor in the social commerce sector, who has not backed Meesho. “But the biggest threat to a growth-led technology company is the fear of maxing out its market.”