Meesho leads India's value-commerce market with asset-light model: BofA

The IPO-bound e-commerce firm is expanding its low-cost platform as India's online retail sector heads for 20% annual growth

IPO-bound Meesho leads India’s value commerce, driven by its cost-efficient, asset-light model, Bank of America (BofA) Global Research said. The e-commerce platform, which focuses on low-priced goods, mirrors models like PDD and Shopee in China and Southeast Asia, and continues to expand access for millions of price-conscious consumers across India.

 

The BofA Global Research report on ‘Internet – Asia Pacific’ highlights that India’s e-commerce sector, currently at just 9 per cent of total retail, is expected to record over 20 per cent gross merchandise value (GMV) CAGR between FY26-29E. It further states that India’s online commerce is well poised for sustained growth, led by quick-commerce models catering to affluent users and value-for-money platforms such as Meesho serving the mass market.

 

 

Of the over $1 trillion retail market of India, 9 per cent is catered by e-commerce, 2 per cent by quick commerce, 12 per cent by organised retail and the remaining 78 per cent is the unorganised market catered by mom-and-pop kiranas. Within e-commerce, BofA observes a clear dispersion, where premium users are mainly on Amazon, urban and Tier-I city users are on Flipkart, and mass-market, value-focused users are primarily on Meesho.

 

Value commerce models scaling well

 

Value-commerce models in China, Southeast Asia and India — namely PDD, Shopee and Meesho — have scaled a cost-efficient, asset-light model. These platforms curate cost-effective shopping experiences by leveraging real-time consumer feedback at one end and encouraging competition among merchants at the other.

 

According to Meesho’s UDRHP, the company operates as an asset-light platform with limited capital outlay. A platform-based model enables it to drive growth without owning inventory, investing in warehousing infrastructure or fixed logistics assets.

 

Meesho emerged as India’s largest e-commerce platform by annual transacting users and annual placed orders, with 198.8 million transacting users and 1.83 billion placed orders in Fiscal 2025.

 

Lower logistics costs

 

The report states that platforms like PDD and Meesho do not charge commissions to merchants and instead monetise by charging a markup on logistics and through ads. To expand their market further, these platforms are looking to reduce logistics costs — either by negotiating well with third-party logistics (3PLs) or by in-sourcing more.

 

Reflecting this trend, Meesho is focused on providing ‘everyday low prices’ for consumers, enabling them to find low-priced products on Meesho without having to rely on promotions. This is enabled by a zero-commission model for sellers, which reduces the average cost charged to sellers on Meesho. There is also low-cost order fulfilment enabled by the platform’s scale and Valmo. It also includes a technology-first operating model that enables the company to reduce costs and increase efficiency as it scales.

 

The average fulfilment cost per shipped order on Meesho was Rs 43.08 in Fiscal 2025, as compared to Rs 47.03 in Fiscal 2024 and Rs 50.45 in Fiscal 2023. Meesho’s fulfilment costs are among the lowest in the Indian e-commerce industry, aided by its proprietary technology platform Valmo, and its asset-light model which drives route optimisation, efficient utilisation of capacity and competitive partner pricing.

 

In the same period, Meesho’s average order value (AOV) reduced from Rs 336.71 in Fiscal 2023, to Rs 298.36 in Fiscal 2024, to Rs 274.27 in Fiscal 2025, and was Rs 269.36 in the three-month period ended June 30, 2025.

 

The number of placed orders substantially increased from 1,024.34 million in Fiscal 2023, to 1,341.94 million in Fiscal 2024, to 1,834.40 million in Fiscal 2025, and was 561.86 million in the three-month period ended June 30, 2025.

 

Cash flow

 

The flywheel network effect of value e-commerce is that high users on these platforms attract more merchants. This, coupled with continued reduction in costs, has allowed platforms like PDD and Shopee to generate continued improvement in free cash flows. The report highlights that Indian value-commerce platforms will likely also show similar cash-flow generation as these platforms scale and attract more users and merchants.

 

According to Meesho’s UDRHP, the company became the largest free cash-flow generator among scaled listed e-commerce companies in India as of Fiscal 2025. Last twelve months’ free cash flow swung from negative Rs 2,336 crore to a positive Rs 1,032 crore (with interest income) and Rs 591 crore (excluding interest income). This reflects the benefits of an asset-light, capital-efficient model that allows the company to grow scale and depth without significant capital outlay.