Every three years, a new but well-funded ecommerce startup challenges the duopoly of Flipkart and Amazon India. Snapdeal made a run at it in 2015, Paytm Mall in 2018, and it’s Meesho in 2021.

Access to capital was not a problem for Snapdeal and Paytm Mall as they were backed by Chinese ecommerce giant Alibaba and Japan’s SoftBank. Meesho is also incidentally backed by SoftBank besides Prosus and Facebook. All are eyeing the same target audience — mass Indian consumers who prefer affordability to convenience and shop for a variety of low-value items.

While the pool of consumers and the seller base have widened over the past two to three years, especially after the Covid-19 pandemic, the nature of the industry’s struggles has not changed. In the long-tail goods category, for instance, monetising sellers, product returns, high logistics costs and fraud continue to trouble players.

Meesho, however, is going all out, expending significant amounts to acquire and retain sellers and customers. The efforts to entrench itself in the market have coincided with the festive season, one of ecommerce’s most important months.

Investors are betting on the team’s razor-sharp focus on this segment to repeat the success of platforms like China’s Pinduoduo, which is profitable and has emerged as a strong competitor to older ecommerce platforms in that market, including Alibaba and JD.

This was not always Meesho’s business model. The company started off as a platform for resellers to source goods from wholesalers. The resellers offered the merchandise to potential customers through WhatsApp and Facebook, negotiated the price and returned to the Meesho app to place the order with the wholesaler.

No holding inventory, no burden of logistics or payments. Just punch in an address and leave it to the wholesaler to ship the product to the customer. The CapTable explains this model and its limitations here.

But after raising $300 million from SoftBank in April, Meesho made a major shift, choosing to undercut the reseller and reach the consumer directly. The CapTable reported about the changes in the company’s plans.

In September, Meesho announced raising $570 million at a valuation of $4.9 billion, taking its overall fundraising to $1 billion. The new capital was secured largely on the promise of Meesho being a branded ecommerce marketplace that sells directly to consumers.

A billion dollars is a lot of capital at Meesho’s disposal, considering the latest developments in the industry. Flipkart is cleaning up its losses in the lead-up to a public offering and Amazon is busy fighting legal and regulatory battles in the country.

Meesho doesn’t plan to lower its ambitions. In its very first window of opportunity after the pivot to a consumer internet company, it is moving quickly to build an ecosystem and cater to its customer base of more than 1 crore.

“The focus areas are new seller onboarding, growing the supplier base and building a competitive platform,” said a person aware of the developments in the company. “Other aspects like our ad business and pricing tool will kick in for monetisation and keep the marketplace competitive. At least that’s the bet.”

Ahead of the largest sale period in the country, Meesho said it had onboarded more than 100,000 sellers by doling out offers such as zero commissions, free shipping, no fixed fee and no collection charge.

Orders subsequently went up, and during Meesho’s Dussehra sale, they peaked at 2.5 million a day. Its monthly cash burn has now increased to $50 million, according to people aware of the company’s dynamics. In the pre-festive times, Meesho operated at 1 million shipments a day. The burn rate then, the sources said, was $20-25 million, which is still one of the highest for a consumer internet startup in India.