The Meesho Case Study is the best example to realize how a business grows with the ultimate speed with having a proper strategy of the business, marketing, and analysis.
There are many startups that are started every year and months in the world get closed, some become successful.
The difference between these category startups is the strategy, marketing, budgeting, and business plan.
Meesho is one of the fast-growing e-commerce companies. Meesho is the fastest segment in India, however, it’s very tough to launch a startup in the e-commerce field.
The 90% of e-commerce startups fail in the first year of starting, and in this situation, if I tell you that a startup company gains the valuation of 30,000 crores rupees in just five years, you won’t believe it, right?
Yes, and the name of that e-commerce company is “Meesho”, and in this article, we are going to explore how Meesho started its career as a reseller app, and today it is going to become the third-largest e-commerce company in India.
Meesho Case Study
Meesho is one of the fastest-growing social e-commerce companies, and it was launched with a very different business idea.
And the case studies are made only on those business models which have been executed successfully with unique business ideas and strategies.
Similarly, Meesho found a loophole in the market in the reselling industry and then started their own startup, and today you can see where it is!
So, without wasting time, let’s explore the Meesho Case study, and deep dive into Meesho’s business model, business strategy, revenue model, and all things.
About Meesho – Overview
Meesho is one of the fastest-growing e-commerce and social commerce companies in the world.
In the beginning, Meesho was a reselling app that you can call the trading app as well from which the resellers were reselling the products on social media.
Resellers were picking the products from Meesho and reselling them on social media like Facebook and Whatsapp.
When they were getting the order, they were placing it on Meesho, and the suppliers of Meesho were delivering the orders to the customers.
Here the end customer was believing that he or she had bought the products from the reseller, whereas in fact, the product was delivered by the supplier of Meesho to the customers.
By this chain, the reseller was getting the commission, Meesho was keeping some amount of commission with it, and the main supplier was getting sales.
So, basically, Meesho was started by the B2B business model, and with the ultimate growth converted into the B2C business model.
Foundation and Journey of Meesho
Meesho was founded by the two IITians of Delhi IIT institute in 2015 named Vidit Aatrey and Sanjeev Barnwal.
They thought to start a startup and according to their business model, they wanted to carry the local shop business online.
According to this idea, they were supposed to make an application and made the local sellers register on that app and customers can purchase the products from that app from the sellers.
So, we can say that they wanted to develop the zomato of online shops, but they noticed one more abnormal thing in the market.
They observed that there were many people who were not purchasing the products from themselves, they were purchasing the products for their customers, in short, they were reselling the products.
The founders of Meesho noticed this behavior in many people and noticed that the people doing reselling are growing with the ultimate speed in India.
In this situation, they made a little bit of twist in their business model and started to deliver the products to the resellers by becoming the supplier.
Their sales got increased with the passage of time, and they came to know about the potential of this business.
Resellers are increasing very fast in India, and the suppliers who are willing to give their products to resellers are also increasing very fast in India.
Supportive Events Occured in Sourrounding
However, luck is not considered a strong and needy element in the business segment, but some events force us to believe in so.
In the case of Meesho, some events occurred meanwhile which address that Luck was with Meesho.
During this period, the UPI system got launched, at the same time, Jio got introduced with the fastest internet technology, and due to the good featured but cheap rate Chinese smartphones, almost everyone had the smartphone.
Now, after analyzing all these events and opportunities, Meesho was perfectly ready to launch its startup in 2015.
It’s easy to reach this level, but the actual difficulty comes after this when you need money to expand your business.
After making the mobile app, founders need more money to grow and to market on a bigger level, and again Meesho got luck by getting funding from the Y combinator.
Meesho was selected for funding from the Y combination which is the world’s biggest accelerator program.
And this was just starting for Meesho, after that, it got funding from many investors.
- Y Combinator – $1,20,000 – July 2016
- Funding from VC – Undisclosed- July 2016
- Saif Partners – $3.1 Million – Oct 2017
- Sequoia Capital – $ 11 Million – June 2018
- Shuwei – $50 Million – November 2018
- Facebok – Undiscloed – June 2019
- Naspers – $125 Million – Aug 2019
- Softbank – $300 Million – April 2021
- Fidelity & B Capital -$570 Million – Sep 2021
By raising one by one funding, the valuation of Meesho became Rs 30,000 crores in just five years.
Business Model of Meesho
Initially, the business of Meesho was a business-to-business model, it was a trading platform wherein the Meesho app at one end there were suppliers, on the second end there were customers.
Resellers were selling the products through the medium of Meesho app and suppliers were delivering the products to the customers.
Due to this reason, customers were not able to fetch where they received the products from, they seemed that the product was delivered by the reseller.
In this way like a trading platform Meesho was working and marketing itself among the people with the campaign of Join Meesho, Earn Money Online, Create Your Online Business, Work From Home.
Meesho was a agreegator platform which was managing the suppliers and resellers, but there was a FLAW in this business.
Challanges in Meesho Business Model
The flaw was the delivery cost, the deliver cost was too expensive which Meesho was providing free of cost to its resellers, and as the mediator, Meesho was providing the delivery and payment gateway as well.
But the online deliveries are very costly and complex in India and that is why Meesho was providing it free of cost to supplier to solve the problem, and due to this reason, Meesho was committing a very big loss also.
The second problem was the law quality and unbranded products. The suppliers with meesho all were local suppliers and the were not the register brands, and due to this reason, the quality of the end product was very low.
The returns were increasing very much due to the low quality products and it was another reason for the loss.
The third biggest problem of Meesho was that it could not charge a higher commission from the sellers.
If Meesho would charge high to the sellers, the cost of product would increase and the resellers would not able to sell to the end customer.
So that Meesho had to keep its commission very low so that the suppliers can offer the products at lower price and resellers could be able to sell them with ease of access.
Due to these three problems, in spite of having a great business idea, Meesho was committing the loss from the Day 1.
If you check, Meesho committed the loss of Rs 315 crores in 2020, you can see that the company which was saying that we would make your business, or you can start your business with us, that company was not profitable in itself.
How Meesho Deal With Problems
In this business, gaining growth, and doing marketing was easy, but becoming the profitable was challenging.
So, Meesho made the business strategy with smartness, initially, they would grow their business as reselling platform, raise more funding after growing the business, and after raising more funding, they will convert their reselling platform into the e-commerce business platform.
The basic strategy was to do marking a lot, approach to the people to associate their business with meesho and gain a very high growth.
By showing the growth to the investors, they will raise too much funding and then after getting funding from investors, they will convert their reselling business to the e-commerce business.
But by doing this, many people who trusted on Meesho and running their business on the platform of Meesho, they all lost their business as resellers.
Because for which products the resellers were doing marketing to their customers, the same product was being marketed by Meesho don’t he TV and other digital platforms at low cost.
As a result of this, the customers who were buying the products from the resellers, stated to buy the products from mesho directly, and resellers lost their position from the market.
Conclusion on The Meesho Case Study
Fom the case study of Meesho, we came to know that we should change the business idea and strategy when the market moves.
The most fonders do that if they think that tey want to build a product on a particularniche, then the stick within, and if the market trend curves, they ingore that curve and stick their plan and commit loss sometimes.
Meesho noticed in its initial very much resellers are coming in fashioers, and the market of reselling business in growing.
They acted smartly, they found a great market and changed their business idea completely, so it is very important that you love your market than your idea.