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Meesho's monthly active users count about 55% of Amazon, Flipkart: Report

Meesho is India's third largest e-commerce retailer with CY22 GMV of $4.5 bn and 7 per cent market share, growing much faster than overall e-commerce market, according to the brokerage firm Jefferies.

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Peerzada Abrar Bengaluru

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E-commerce firm Meesho is witnessing rapid growth with improving profitability in an intensely competitive market and may break even ahead of large rivals such as Flipkart and Amazon in India.

While Meesho is much smaller in size (Gross merchandise value terms) versus Flipkart Group and Amazon India, its average monthly active users count is about 55 per cent of the incumbents, according to a report by brokerage firm Jefferies.

Meesho had an impressive 120 million average monthly active users on its platform during CY22. Over the last two years, Meesho added about 100 million MAUs, much higher than additions by peers. 

The report said that Meesho scores well on all stages of an online purchase journey, including awareness (measured by app downloads), consideration (measured by MAUs) and transaction (measured by MTUs). 

“Meesho is India's third largest e-commerce retailer with a CY22 GMV of $4.5 billion and a 7 per cent market share, growing much faster than the overall e-commerce market,” said the Jefferies report.

The report said that in an intensely competitive market, Meesho has created a niche through a competitively priced, diverse and unbranded assortment that targets value-conscious customers. Effective lower seller commission translates into strong volumes with MTUs (monthly transaction users) comparable to incumbents. 

The company’s monthly transacting user count rose 26X over CY20-22, resulting in a 9X increase in GMV. It clocked 1 billion orders, up 2.2X year on year, and 140 million transacting users in 2022. The firm recently became India’s fastest e-commerce platform to onboard 1 million sellers, with more than 600,000 small businesses signing up in the last one year.

The firm achieved this feat within just 8 years of inception driven by industry-first policies such as zero commision and its promise of creating a level playing field for all sellers

Meesho is already contribution margin positive (pre-marketing and indirect spends). The company is nearing zero cash burn and is on track to achieve EBITDA breakeven over the course of CY23, said Jefferies report. Ad income has seen a sharp rise over the last eight quarters. It currently stands at 6 per cent of revenues, which the company intends to double over time. The company’s asset-light business model has helped the company rein in costs significantly

“Over the last few quarters, we have seen rising traction with users across the country flocking to the platform. With economies of scale kicking in and our strong focus on profitable growth, we are very close to becoming EBITDA positive,” said Dhiresh Bansal, Chief Financial Officer at Meesho, in a statement. “Our key business differentiators such as an asset-light business model have proven to be effective levers in this journey. On our mission to democratize e-commerce, we will continue to scale the business in a profitable and sustainable manner.” 

Founded in 2015 by IIT graduates Vidit Aatrey and Sanjeev Barnwal, the report said that Meesho has a leading position across multiple fashion and lifestyle categories. During the early years, Meesho primarily focussed on apparel, but has diversified into other lifestyle categories over time as it evolved into a truly horizontal pureplay marketplace. Today, nearly half of its GMV comes from non-apparel categories.

As of Q4 CY22, about 50 per cent of Meesho's GMV was from non-apparel categories as against just 30 per cent in Q4 CY20. 

Meesho is also the biggest e-commerce contributor to the 3PL (third-party logistics) ecosystem. It accounts for a majority of 1.8 billion annual shipments handled by third-party logistics players. 

About 65 per cent products on Meesho are cheaper by 20-30 per cent versus other platforms. The firm strives to remain the lowest-priced channel for customers as it continues to focus on users underserved by the traditional players. Of the 100 million product listings on Meesho, 65 per cent of the assortment is unique to the platform. The platform is also seeing traction from customers from metro and Tier-1 markets across income classes, who are looking for affordable shopping alternatives.

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First Published: Apr 21 2023 | 11:26 PM IST

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