Bharat-focused ecommerce app Meesho wants to build a large business by leveraging advertising for small and medium sellers. The ecommerce platform targeted at Tier II cities and beyond wants to leverage its existing business model to grow its business and add newer categories.
“When we started out, we did not start as a zero commission platform,” Vidit Aatrey, Co-founder and CEO, Meesho, told Shradha Sharma, Founder and CEO, YourStory, at TechSparks 2022. He added that this led to an increasingly higher number of sellers on the platform coming in from the fashion and accessories category, which commands the highest margin.
“When we met these businesses, they said that the category made enough margin to pay commissions to the platform and to bear the shipping cost. We decided it did not work and removed commissions for sellers. That brought many unique small sellers and a lot of unique products onto the platform,” Vidit added.
Over time, the share of fashion and apparel on Meesho’s platform has come down. The company managed to reduce the share of women’s apparel being sold from 60% at the end of 2020 to 40% in 2022, he said.
Vidit also said that Meesho has worked towards simplifying its advertising product as most of the sellers using it have never used advertising before.
Instead of replicating the playbook of larger ecommerce companies owning the entire ecosystem of service and experience, Vidit said partnerships with logistics and payment companies have helped Meesho make online selling accessible for small businesses.
Logistics and manpower were the highest cost centre for the SoftBank-backed company in FY 2021, according to filings with the Registrar of Companies. Meesho offers logistics and fulfilment of orders on its marketplace for the sellers.
Vidit said the company was looking at working on a capital-efficient model. He added that the company planned on staying capital efficient by continuing partnering for add-on services and by addressing a single problem statement instead of building multiple verticals.
Meesho has also been in the cross-hairs for counterfeit branded products being sold on its platform. Addressing questions on quality and counterfeit, Vidit said that it was being addressed using technology, as Meesho adds over one million new products on the platform.
“Counterfeit is a technology problem to solve. Quality is relative,” said Vidit.
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