In a bold move, Meesho has started accepting orders directly from consumers, taking on Flipkart and Amazon in certain categories. We look at how the six-year-old startup’s new consumer business takes on its core reseller model. Investors are giving Meesho the capital it needs to take on e-tailers.
August 02, 2021
8 Min Read
Every investor Meesho’s pitched to in the last 18 months remembers one key takeaway—that Meesho is the third-largest ecommerce player in India, after Flipkart Group and Amazon. This has been an important selling point for CEO Vidit Aatrey, signalling to late-stage investors that if they want a piece of India’s consumer internet story, Meesho is currently the only entry point.
But a question often raised is if this is the right comparison. After all, Meesho has not been a consumer brand but a B2B platform catering to resellers, mainly women who would like to run their own business but lack the funds or expertise for it.
Not anymore. After raising $300 million from SoftBank in April, Meesho is reaching consumers directly, a business the company is going after knowing it would cannibalize its core reseller business.
Resellers who use Meesho to find interesting products to sell to their family, friends and neighbors at a margin are undoubtedly unhappy with the company’s decision as it hurts their ability to earn money. Social media is full of backlash from these resellers.
One such reseller, Shalini Kharol, complained that Meesho’s aggressive direct-to- consumer marketing is hurting her ability to resell products. “Meesho’s advertisement has increased so much that if you share a product with your circle, they are able to identify that the product belongs to Meesho,” she said.
YouTuber Rohit Sharma questioned that if everyone in a reseller’s circle downloaded Meesho to buy products at wholesale prices, how would a reseller be able to charge a margin?
Some resellers have even urged others to drop Meesho’s new app rating to one.
Meesho’s latest decision is a big shift in strategy for the 6-year-old company, which until recently had pegged its business on connecting resellers, typically homemakers and small business owners, with manufacturers and wholesalers.
To fuel growth and take on the ecommerce giants, Meesho has hit the market to raise a fresh round of capital. And investors are lining up.
Investors including B Capital and Temasek are looking to back Meesho at a valuation of over $4 billion, according to two sources. The startup might look to raise another $400-600 million to build a war chest, one of them said. Meesho was valued at $2.1 billion for SoftBank Vision Fund’s $300 million investment in it three months ago.